Like many other tech companies, Meta recently resorted to mass layoffs in a bid to cut costs. But they may have been far more expensive than anticipated.
In November 2022, the company cut 11,000 jobs, the biggest in its history and around 13% of its workforce.
Meta paid $975 million on “Severance and other Personnel,” according to a snapshot of Meta’s balance sheet tweeted by journalist Myles Udland, Head of News at Yahoo.
He added that when that figure was divided by the number of staff laid off, it amounts to an estimated $88,636 per person.
The tech giant’s quarterly earnings released Wednesday also showed that it suffered a 55% drop in profits as a result of a $4.2 billion restructuring charge. It led CEO Mark Zuckerberg to reveal that the company’s theme for 2023 will be the “year of efficiency.”
Many current employees are reportedly now braced for even more layoffs in the coming months despite the clear costs. Layers of middle management may be the first to go while engineers will be equipped with more A.I. tools.
Zuckerberg also maintained that he will continue to focus on the Metaverse and developments in virtual reality offerings even though the report shows its metaverse division Reality Labs reported a loss of $13.7 billion for 2022, up from a $10.2 billion loss in 2021.
On the other hand, the quarterly earnings have shown that Meta surpassed expectations in quarterly revenue, ad revenue and daily active user measures.
Layoffs have hidden costs
Layoffs are surprisingly costly—and Meta’s latest figures are not the most expensive.
Microsoft is one striking example. As a result of its recent announcement of 10,000 job cuts, the tech giant said it would take a $1.2 billion charge to earnings to account for its layoffs’ immediate costs, including severance payments, benefit extensions, accrued vacation, and other costs that may be contractually required. That amounts to $120,000 per laid-off employee.
Beyond the immediate costs, companies will have to spend more money on future hiring, including onboarding and training, when the economic climate improves. And, at the same time as they take a financial hit, cutting experienced staff often implies lost productivity, institutional knowledge and potentially cuts to the leadership pipeline.
Meta did not immediately respond to request for comment.
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