How Are HR Departments Affected By Layoffs At Google, Amazon And Others?

As 2024 starts to unfold, layoffs continue, including at big tech giants such as Google GOOG -1.8% and Amazon AMZN -1.8%, according to The Economic Times. These job cuts are happening as companies enhance their fiscal discipline by streamlining operations and prioritizing key business areas. They also coincide with businesses like Google exploring the many untapped benefits that AI has to offer, according to the Wall Street Journal. This ongoing restructuring we’re seeing signals that things are far from stabilizing. It is likely that this volatility will continue to impact HR teams in particular for some time to come, which will trigger a demand for the evolution of the function as a whole.

Over the past decade, HR has evolved into a strategic function in many organizations. However, this landscape is shifting once again as HR teams get impacted by these layoffs. Talent acquisition teams have been significantly downsized due to decreased hiring goals, and the rest of the HR functions have seen proportional reductions in headcount to support organizational needs. This shift reflects a concerning trend for the HR function to potentially regress and lose their hard-earned seat at the table, something that took a long time to achieve.

AI’s Role in Reshaping HR Functions

The rise of AI is a key factor in the recent layoffs at companies like Amazon, according to Fortune, and continues to transform HR functions and how we partner with the business. HR teams must significantly upskill, not just in training others but in enhancing our own competencies to ensure we can adapt to the impacts of AI on organizational design, ways of work, and overall employee engagement and productivity.

This is crucial for all disciplines within HR in a post-AI era and marks a new phenomenon for people teams: acquiring a skill that is rapidly evolving in the world of work while simultaneously being expected to have expert opinions and programs ready to upskill the rest of the organization.

Adapting to New Challenges

The future of HR extends far beyond the tech industry. It is not just about adapting to new technologies or economic shifts but about a fundamental transformation of HR as a whole. This leaves us with a big question on the future of HR, both at the executive level and for internal HR team structures. Will HR evolve to reach its full strategic potential, or will it revert to the primarily administrative, back-office role it has played in the past?

Organizations that don’t have strong people leadership in place (either because they never thought it was important or because they were laid off to help with the bottom line) may not be able to keep up with this transformation – inadvertently forcing the rest of the HR function to report back into Finance or Operations, thereby losing its seat at the executive leadership level. Alternatively, organizations that continue to double down on strong people leadership and HR functions in this environment will be ones that will be able to rebuild from the layoffs and support the business to focus on the new goals for success.

Over the past decade, big tech has become famous for its extravagant compensation packages, employee perks, and benefits that set the bar for many companies around the world. However, the current economic climate, marked by ongoing layoffs, cost optimization efforts, and the widespread adoption of remote work in various forms, is bringing about a humbling moment for these practices in the tech industry. Many of the pre-pandemic perks, like gourmet food and childcare services, are now being scaled back.

Companies are introducing new compensation models - for example, Airbnb has already transitioned to value-based rather than location-based models, according to their blog. Shopify SHOP -3.8% has redefined employee choice by allowing employees to determine their own pay structures, according to their blog.

This ongoing shift is prompting both employers and employees to rethink how benefits packages and compensation policies fit into the broader employee value proposition as businesses draw clearer lines between how these factors impact business results, productivity, a sense of belonging, and spending. This will change the current skills and competencies that total rewards (compensation and benefit) leaders and teams will need to creatively design programs in the future and evolve their role into a core business partnership.

Talent acquisition professionals will also need to start focusing on striking the right balance of quality vs. speed to ensure we are hiring the right talent for the organization's evolving needs effectively. The emphasis previously has been on filling positions quickly to support hypergrowth, thereby impacting cash burn negatively. However, as businesses adapt to the demands of layoffs, AI integration, and financial prudence, talent acquisition must become more strategic. We will need to act as marketers and business partners who deeply understand the skills and competencies needed to drive the business forward in conjunction with the right organizational design. We will have a pivotal role in shaping the organization’s future by understanding its evolving needs, partnering closely with internal decision-makers, and strategically sourcing the right talent.

Preparing for the Future

It is clear that HR teams, like all functions, could be significantly smaller in the future by leveraging technologies like generative AI to do more with less. As such, we can expect to see new iterations of HR team structures and required skills. HR executives and teams will need to think more like designers than program creators to deeply connect with business problems and reimagine programs like recruiting and performance management to lean into this evolving landscape.

There could also be a future where all operations and employee servicing for HR, IT, and Finance get consolidated into one group called ‘Business Services.’ The role of HR Business Partners will converge with the role of total rewards and talent acquisition skills into the role of a single Business Services Partner. These BSPs can be readily equipped with information across all the general and administrative disciplines with the help of custom generative AI tools like ChatGPT to be holistic business partners.

Fiscal discipline and impact would be driven simultaneously by this approach. Does this mean the Chief People Officer of the future would be a Chief Business Officer? Or could the unique journey of Leena Nair, according to BusinessChief, from Chief Human Resources Officer to CEO of Chanel be a glimpse of what the future may hold?

The future of the HR function will undeniably be driven by an increased demand to be thought partners and all-round business leaders. HR professionals who have always been driven by business objectives are likely to achieve even greater success in this new environment. Those who have primarily focused on employee advocacy or maximizing engagement will need to adapt quickly. Although this shift may be challenging for many, a clear opportunity exists for HR to move even closer to the strategic core of the business.

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