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How Tech Companies Can Enhance DEI Despite Layoffs

How Tech Companies Can Enhance DEI Despite Layoffs

The tech industry has been grappling with a brutal new normal – a surge of layoffs that has impacted countless employees. Many companies have cited reasons, such as declining revenue amid slowing demand, high operating costs ( including high compensation), and over-hiring during the pandemic. However, not all companies are laying off staff due to these reasons.

Some are adapting and pivoting towards the future, investing in cutting-edge technology like AI and strengthening its efficiency. Microsoft’s recent investment of $10 billion in chatbot developer OpenAI, made just after the company let go of 10,000 people. Facebook’s investment in the Metaverse. Google’s investment of $500 million in “Bard”, as a rival to the AI chatbot sensation ChatGPT- are three examples of this. Yet, It is important to note that not all Tech organisations resort to layoffs. Apple, for instance, has avoided the need for job cuts, chiefly because it didn’t make any significant increase in hiring over the past two years.

How Tech Companies Can Enhance DEI Despite Layoffs
According to Aaron Terrazas, chief economist at Glassdoor, three main types of companies are resorting to job cuts: those facing rising debt costs due to Federal Reserve tightening and increase in interest rate, those uncertain about the economic outlook, and those using the economic climate as an excuse to cut employees they would have let go regardless.

Unfortunately, these job cuts have been devastating for many individuals, with over 150,000 affected in 2022 and a continued trend of over 68,500 layoffs in January 2023. These job cuts not only take a financial toll on those affected but also have a ripple effect on the company’s policies and initiatives, including those related to diversity, equity and inclusion (DEI).

The Impact of Layoffs on DEI

The harsh reality of the boom and bust cycle is that it often leads to painful layoffs. 

Despite years of investment and effort put into recruitment, training, and inclusion, DEI gains can be wiped out in an instant. New hires, particularly those from underrepresented ethnic groups, are often the first to go during layoffs. 

Research shows that companies exhibit a bias towards new employees, resulting in a “Last-In, First-Out” pattern. This is reflected in the average length of service for laid-off workers, which is only one year. Since the call for more diversity didn’t gain the desired attention until George Floyd’s murder, Black and ethnically diverse professionals are most likely, the last in, first out.

According to Layoffs, which tracks the dismissals in the tech industry, this trimming also extends to roles, like HR and DE&I teams, which are often dominated by Black and ethnically diverse employees. This is particularly concerning, as diverse perspectives and experiences are crucial in building and maintaining an inclusive workplace culture. Unfortunately, companies like Twitter, which at one time prioritised hiring and attracting diverse talent, have now significantly reduced their DEI team sending a clear message of a lack of commitment to the cause.

However, the real challenge is not just in hiring ethnically diverse talent as we have seen organisations embrace this very quickly and let said talent go easily at the first sign of difficulties. The real work lies in thawing the “frozen middle” where many ethnically diverse employees are stuck and unable to advance to senior positions. This is where the true potential of DEI lies- creating a supportive and inclusive environment that empowers ethnically diverse employees to succeed and reach the zenith of their careers rather than simply hiring and letting go.

Any Real Gains From DEI?

A diverse workplace leads to better optimisation for representation, increased innovation, and a deeper understanding of customer needs. So, before making any final decisions, ask your team about the reasons and results of their journey towards diversity and inclusion.

The tech sector has the power to shape our lives and shape our future, and a lack of diversity in the industry will only exacerbate inequalities in our society. As Professor Sarah Kaplan warns, “If you do not have a diverse workforce, you will get technologies that exacerbate inequalities in our society.

A Way Out

During a period of layoffs, it can be difficult for tech companies to maintain their focus on DEI initiatives. However, there are several steps that companies can take to enhance DEI during this time:

1. Pririotise DEI during the layoff process:

Businesses should make sure that their layoff process is transparent, and fair, and does not disproportionately affect historically underrepresented groups. When making decisions on layoffs, unconscious bias can easily slip in, but tech companies must retain objectivity and transparency when deciding what metrics to use in deciding on cuts.

Carefully assess the potential effects on ethnically diverse groups and the importance of diversity in the tech sector. A business that prioritises DEI and fairness in its layoff procedures will have a higher chance of keeping its employees, fostering a great work environment, and upholding a positive reputation.

2. Continue to invest in DEI initiatives:

Despite budget constraints, companies should make an effort to continue to invest in and prioritise DEI initiatives, as they are critical to creating a diverse and inclusive workplace. Employee Resource Groups (ERGs) for instance, can be a powerful source of comfort and support in these trying times.

Beyond offering a supportive community, ERGs can also help their members navigate the job market and find new employment opportunities. This could include connecting members with recruiters in the tech industry, and providing access to job search resources and training programs.  It could also mean working with the company to ensure that the process is transparent and unbiased.

3. Encourage open and honest communication:

Layoffs can be a stressful and emotional time for everyone involved. Tech companies can support underrepresented employees who may be impacted by the changes by promoting open lines of communication and enabling employees of different ethnic backgrounds to express their worries and offer suggestions.

To prevent trust from being lost, these recommendations must be considered in the decision-making process and will go a long way in minimising quiet quitting.

4. Re-assess and align DEI goals:

Tech organisations should first examine the impact of layoffs on underrepresented minorities and how it has disproportionately affected them. By examining the effects of layoffs on ethnically diverse employees, companies can gain a deeper understanding of the challenges they face and work to address them.

This not only helps to promote diversity and inclusion in the workplace, but it also ensures that the company’s DEI goals are aligned with the current layoff situation and addresses the needs of these employees.

5. Cultivate a culture of inclusivity:

Even during layoffs, companies can take steps to foster a culture of inclusivity. One effective way to do this is to increase the pipeline for ethnically diverse talent to grow into senior positions.

Many of these employees are already stuck at lower or mid-level positions, and the loss of job opportunities through layoffs only exacerbates this issue, making it more challenging for these individuals to advance and reach their full potential within the organisation.

By taking these steps, tech companies can continue to prioritise DEI even during a period of layoffs, setting a positive example for the industry and helping to create a more diverse and inclusive tech workplace for all.

At Career Masterclass, we understand the impact that layoffs and economic realities can have on a company’s DEI initiatives. Despite these challenges, we remain firm in our belief that an engaged and diverse team is crucial for success. As a leading career growth platform, we offer solutions to help companies embed inclusivity into their culture and overcome unique challenges.
To learn more about how we can help, Click the LINK to schedule a call and take the first step in empowering your team and advancing your DEI initiatives.