Scaling back budgets, reducing perks, and shrinking its real estate footprint, are some of the steps the company has already undertaken, CEO Mark Zuckerberg has shared in a letter to employees.
After weeks of speculation around the tech sector's performance, Meta CEO Mark Zuckerberg (pictured above) has confirmed that a total of 11,000 employees (or approximately 13% of the workforce) are being let go, in the largest round of layoffs the company has seen in its 18-year history.
In a letter to employees, Zuckerberg shared what he calls as "some of the most difficult changes we’ve made in Meta’s history", including details on becoming a leaner company by cutting discretionary spending and extending its hiring freeze through to Q1 2023. "I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted," he wrote.
Functions impacted by the layoffs, and outplacement support
The workforce reductions have impacted every organisation under Meta, across both its 'Family of Apps' (Facebook, Instagram, WhatsApp, and Messenger) and Reality Labs (12 research facilities working on AR/VR). However, some teams are affected more than others. This includes the recruiting team being disproportionately affected, since Meta is planning to hire fewer people next year.
Zuckerberg added: "We’re also restructuring our business teams more substantially. This is not a reflection of the great work these groups have done, but what we need going forward. The leaders of each group will schedule time to discuss what this means for your team over the next couple of days."
The process sees impacted employees being informed via an email on what this layoff means for them, post which they will have the opportunity to speak with someone to get their questions answered and join information sessions. Access to most Meta systems was removed for people leaving on the day of the announcement (9 November), given the amount of access to sensitive information. Email addresses were kept active throughout the day to support farewell messages.
"There is no good way to do a layoff, but we hope to get all the relevant information to you as quickly as possible and then do whatever we can to support you through this," the CEO wrote.
For employees being made redundant in the US, the following outplacement support has been provided:
- Severance. 16 weeks of base pay plus two additional weeks for every year of service, with no cap.
- PTO. All remaining paid time off will be covered.
- RSU vesting. Everyone impacted will receive their November 15, 2022 vesting (restricted stock unit).
- Health insurance. Covering the cost of healthcare for people and their families for six months.
- Career services. Three months of career support with an external vendor, including early access to unpublished job leads.
- Immigration support. For those working in the US on a visa, there’s a notice period before termination and some visa grace periods, giving the impacted employees time to make plans and work through their immigration status. Dedicated immigration specialists to guide those impacted based on what they and their families need.
Outside the US, support is expected to be similar, said the CEO, and the Meta team is looking to "follow up soon" with separate processes that take into account local employment laws.
"This is a sad moment, and there’s no way around that. To those who are leaving, I want to thank you again for everything you’ve put into this place. We would not be where we are today without your hard work, and I’m grateful for your contributions," he wrote.
Reasons leading up to the layoffs
As with most players in the tech sector, the start of COVID saw the world rapidly moving online and the surge of e-commerce leading to outsized revenue growth. "Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected," Zuckerberg shared.
"Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that."
The chief executive summed up two key reasons as the drivers behind the restructuring: a lower-than-expected revenue outlook at the beginning of this year, and the need for operating more efficiently across both Family of Apps and Reality Labs.
Changes that Meta is making
Citing a need to become "more capital efficient", Zuckerberg has shifted more of Meta's resources onto a smaller number of "high priority growth areas" — like its AI discovery engine, ads and business platforms, and its long-term vision for the metaverse.
He wrote: "We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go."
Calling layoffs as "a last resort", the company has reined in other sources of costs as well, which will likely lead to a cultural shift in how it operates. "For example, as we shrink our real estate footprint, we’re transitioning to desk sharing for people who already spend most of their time outside the office. We’ll roll out more cost-cutting changes like this in the coming months."
Meta's hiring freeze has also been extended through to Q1 2023, with a small number of exceptions. Based on business performance, operational efficiency, and other macroeconomic factors, Zuckerberg expects to determine whether and how much the company should resume hiring at that point. "This will give us the ability to control our cost structure in the event of a continued economic downturn."
The chief executive added he is currently in the middle of a thorough review of Meta infrastructure spending.
Signing off, he shared a message for the rest of the workforce: "To those who are staying, I know this is a difficult time for you too. Not only are we saying goodbye to people we’ve worked closely with, but many of you also feel uncertainty about the future. I want you to know that we’re making these decisions to make sure our future is strong."
He added: "I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever. We’ll share more on how we’ll operate as a streamlined organisation to achieve our priorities in the weeks ahead."
Lead photo / Meta media gallery (CEO Mark Zuckerberg at Facebook Communities Summit 2019)