Some of the reasons behind the laying off of employees are expected to be adverse market conditions and the need to reduce costs and increase revenues. According to multiple media reports, the search giant plans to introduce a new performance management system, which could drive out thousands of its underperforming employees from early next year. Under the system, the managers have been reportedly asked to categorize 6% (in contrast to the customary 2%) or roughly about 10,000 of Alphabet’s workforce as poor performers. In other words, employees that are identified as low-performing employees under the new “ranking and performance improvement plan” will be asked to go. In addition, the performance ratings may also be used to reduce the number of incentives and stock awards given to employees. The instruction to reorganize the ranking system came in a letter written by Christopher Hohn, a billionaire UK investor to Alphabet, on behalf of TCI, which is a hedge fund that owns $6 billion worth of Alphabet shares. Hohn pointed out that the company has a high headcount, which has increased at an annual rate of 20% since 2017 outperforming the actual needs of the company. He also complained that the employees are being paid too much, compared to other companies like Microsoft. Hohn suggested that the business could be operated more effectively with many fewer highly compensated professionals. Similarly, Meta has announced that it will reduce 13% of its global workforce, which is about 11,000 employees. In addition, Twitter Microsoft, Salesforce, and Stripe have also begun the process of reducing their workforce.
