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January 4, 2023
Salesforce layoffs are earning the company the dubious distinction of being the first major cloud company to shed workers in the new year. And some impacted staff are getting the word electronically, rather than directly from their managers.
Let’s start with the memo from Salesforce CEO Marc Benioff. There’s nothing quite like a person worth almost $6 billion invoking family to announce the cutting of nearly 7,500 jobs.
But that’s just what Benioff did on Wednesday in a memo to the company’s more than 73,000 employees as he led up to the news of the latest round of Salesforce layoffs.
Salesforce’s Marc Benioff
“As one Ohana, over the last 23 years, Salesforce has built the #1 CRM that drives incredible customer success across every line of business for every industry around the world,” Benioff wrote in the first line of the message, a note Salesforce filed with the Securities and Exchange Commission.
Benioff went on to use more industry buzzwords (“mission-critical,” “unparalleled”) in describing the company’s success — until coming to the point about layoffs. The macroeconomic environment, he said, “remains challenging and our customers are taking a more measured approach to their purchasing decisions. With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks.”
The news does not come as a complete surprise. In December, Salesforce told its managers to identify employees who weren’t performing so well. And that instruction arose a couple months after a previous round of layoffs; those took place in October.
Benioff contemplated how Salesforce, a company worth $140 billion, arrived at “this moment.” Like other tech CEOs announcing layoffs, he blamed overhiring during COVID-19. That was the time when any company with “cloud” in its repertoire added employees because of the frenetic global demand for technology that supported remote work. And, like other tech CEOs, Benioff shot off a line about taking responsibility for the overhiring. The problem is, these top leaders seem to be able to get away with token acknowledgement of job losses; meantime, families take the brunt.
To make matters worse, TheLayoff.com is showing comments that some affected employees have learned of their firings through email and Slack.
“Email layoffs and no call from a manager. Unbelievable,” wrote one impacted staffer.
“Cowards,” wrote another.
Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact.
“Unable to access Slack. Completely blindsided. I was on a finance all-hands call recently and no mention or hint from senior leadership,” said another.
There seems to be a corporate disconnect somewhere. Benioff promised in his memo that “[l]eadership will reach out directly to these employees, and provide clarity for their teams about changes within their organizations.”
Apparently, though, not all supervisors are conducting their layoffs face-to-face.
Benioff said laid off workers in the United States will receive the following: “a minimum of nearly five months of pay, health insurance, career resources and other benefits to help with their transition. Those outside the U.S. will receive a similar level of support, and our local processes will align with employment laws in each country.”
He then rounded out the message with words that, in a time of mass job losses, sound like nothing less than empty treacle — and pay the bills just as well.
“The employees being affected aren’t just colleagues. They’re friends. They’re family. Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever. And most of all, please lean on your leadership, including me, as we work through this difficult time together.
“I’m grateful for every single one of you who has contributed to our continued success as a company, and the hard work and sacrifices you have made to generate success for our hundreds of thousands of customers. You’ve built our company – for all of our stakeholders – and you’ve shown incredible resilience every step of the way,” he added.
Layoffs have plagued the tech sector since fall of last year. In other words, the last five months or so have been a veritable bloodbath of job losses.
But layoffs aren’t the only steps Salesforce is taking to save money as it reels itself in from pandemic overstepping. The company also is shutting offices in certain, unidentified markets, it said in a Jan. 4 SEC filing.
Salesforce expects to take a hit of up to $2.1 billion related to the layoffs and real estate exits. Those charges will show in the company’s fourth-quarter fiscal 2023, which closes at the end of this month. Expenses for the Salesforce layoffs will total about $1.4 billion, while the cost to break contracts and reduce office space will amount to at least $450 million. The figure could reach $650 million.
Contributing Editor, Channel Futures
Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.
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