Shopify is letting merchants use NFTs for their customers to unlock special products, perks and experiences.
The idea is that NFTs are a kind of loyalty card that a brand’s top fans can use to access exclusive items.
Despite the crypto crash, Shopify is betting that NFTs will change the way people shop online and in person. The ecommerce giant has a new service to enable customers to use NFTs to unlock special perks, products and real-world experiences with merchants.
Last year Shopify added the ability for merchants to sell NFTs using Shopify so customers don’t have to go to another site to buy them. With this new product, Shopify is taking that a step further through what’s known as “token-gated commerce.” The NFTs can come from anywhere the merchants want.
The idea is that NFTs are a kind of loyalty card — in the form of a cryptographic key — that a brand’s top fans can use to access exclusive items.
The current crash in the crypto markets has hit NFTs as well. But Alex Danco, head of blockchain at Shopify, says he is excited about the current market because it removes distraction and is good for focusing on actual ways NFTs can be used to help merchants and decreases the interest in pure speculation.
As a result, merchants aren’t shying away from NFTs, Danco said. “If anything, it’s the opposite, right? The fact that this is very clearly not about ‘double your money in the next week or whatever by NFTs.’ The fact that it’s not that anymore is actually a great sign for real businesses and real brands.”
Some retailers are dubious, but Danco believes crypto wallets and NFTs will be a big benefit for merchants, once he persuades them to “wander into something that is so drowned out by noise of all of the speculative mania.”
The biggest benefit of crypto and NFTs is crypto wallets, he said. “Everybody sort of jokes about ‘This is a big bubble and it left behind no infrastructure.’ It left one very, very important piece of infrastructure: Everybody has a wallet now.”
The NFT can also be used in person. Shopify tried out the product with Doodles, a popular NFT project, at this year’s South by Southwest. Doodles NFT holders could buy exclusive merchandise or access a Doodles experience at the show. At the NFT.NYC conference this week, NFT project Cool Cats is using Shopify to offer access to special products for token holders.
One other use of NFTs is collaborations between brands, especially between Web3 and non-Web3 companies, Danco said. Superplastic, a toy company, partnered with Bored Ape Yacht Club to create toys for ape holders. Gucci also recently collaborated with Superplastic.
Danco sees this as akin to an old, famous band and a new, popular band playing a show together and sharing fans. NFTs enable that kind of experience, he argues. ”The funny thing is, it’s very hard to authentically do these kinds of exclusive collabs online where people invite each other in. But what people are seeing as token gating is actually just perfect for this.”
He believes companies will move beyond simply using an NFT to buy a product, but that is the easiest way for companies to get started. Danco also sees app developers that build on Shopify adding many more uses for NFTs. “I have an inside view of what some of these app developers are doing in the pipeline, and it’s gonna be nuts,” he said.
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Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.
The revamped huddles will be available to all Slack customers in fall 2022.
Slack huddles are about to offer a whole lot more.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Slack’s huddles are about to get a Zoom-like upgrade, with the ability to turn on video, screen-share and threaded chat.
It’s been a year since Slack first launched the “huddle,” an audio-only chat space you can turn on or off in channels and direct messages. Huddles became the fastest-adopted feature in Slack’s history, according to the company. “Our customers have loved the ease of use and simplicity of huddles,” said Katie Steigman, a director of Product Management. “It was really cool to see even a few months in that the median length of a huddle is about 10 minutes.”
Huddles were meant to enable casual, ad hoc conversations, riding the wave of audio chat made popular by Discord and Clubhouse in 2021. Steigman emphasized that the spontaneous nature of huddles is still at the heart of the feature. They’ll be audio-only by default, so users can keep using huddles the way they always do.
The new huddles are not meant to replace videoconferencing, Steigman clarified: They’re not meant for formal, planned meetings. “This will build on what people already use huddles for: impromptu coworking sessions,” Steigman said. “You’ll just be able to use video when you want to.” People will also be able to share screens in one huddle at the same time, and start a message thread if someone wants to share a link or tag a co-worker to join the huddle. You have Slack’s full selection of emojis at your disposal for reactions.
Steigman’s favorite new feature is the ability to add a topic. If you’re huddling in a public channel, you can name the huddle “Beyoncé’s new single” so your co-workers — and fellow Beyoncé fans — know to join.
The revamped huddles will be available to all Slack customers in fall 2022. Slack is also officially launching GovSlack, a more secure version of the app for government agencies and the private companies they work with, in July. Slack first announced GovSlack back in September 2021, laying out some of the compliance requirements it needed to fulfill. It’s still pursuing FedRAMP High and DoD IL4 certification.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.
Smaller companies like ours are buckling under the weight of unprecedented price increases, supply chain shortages and rising labor prices. To increase our marketing reach on a slim budget, the internet is our best option. Internet marketing is critical to the survival of our business. It’s one of the most affordable, effective forms of marketing at our disposal.
Limiting our options will only hurt us at a time when we need every opportunity possible to stay in business. Small companies like ours are competing with much larger competitors to reach the same customers in a busy, crowded space.
How many Valpaks, grocery store flyers and random postcards from local businesses have you discarded in the last month? We’re all overloaded with physical junk mail. Even if an offer catches our eye, there’s no instant online access or interactivity. Generational shifts have also impacted marketing. For younger generations, digital media is a part of everyday life. How they shop, date and travel: It’s all digital. For most of our customers, shopping online is the norm, and their payment choices are digital too, including at pop-up and live events. The digital economy is a way of life and here to stay. Congress needs to be careful tampering with digital advertising tools that Pot Pie Factory needs to stay in business.
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Over 100 years in business, Virginia Diner has learned and shifted approaches to advertising through changing times and overcome inevitable hurdles.
The idea that politicians could restrict cost-effective online advertising and marketing is daunting. These laws could potentially cripple the way small companies like ours do business in this ever-evolving digital age.
The recent pandemic was devastating for many brick-and-mortar small businesses relying on in-person transactions, especially those in remote, rural areas like ours in Wakefield, Virginia. E-commerce was a lifeline. As consumers spend more time online, they also demand goods be delivered directly to their doorsteps, quickly. Targeted, tailored advertising has become a critical tool for Virginia Diner to identify and serve customers, maintain growth and stay viable in a rapidly changing marketplace.
Traditionally, our core business had been wholesale, with retailers selling our products in brick-and-mortar stores. But during the pandemic, direct-to-consumer sales (DTC) became our biggest revenue channel, generating enough volume for us to stay at full capacity and keep all our team members employed. Proposed restrictions on data-driven advertising would demolish DTC sales. Our ability to identify and advertise to customers inclined to do business with us is at risk. Speaking as a consumer, I enjoy learning about and purchasing unique brands that meet my tastes, which I might not discover without personalized ads. I hope legislation making it hard to use data responsibly and to personalize ads to serve more customers never gets enacted.
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I founded my small business to help other small businesses grow. Whether they need help amplifying a brand, an artist or selling a product or service, our clients rely on S.S. Creative to connect with more customers, and much of that relies on consumer data.
The last few years have been tremendously difficult for small businesses, especially those I represent. For musicians and artists, live venues where they would typically connect with fans suddenly went dark, halting their ability to grow their brands and promote their work. For many, they could only connect with their audiences using social media and internet advertising.
Consumer data and digital marketing aren’t just nice tools to have: They’ve been essential to my clients’ survival. They range from recording studios and musicians to hair salons and lawyers, and the one thing they all have in common is that during the last two years, every one of them has had to move his or her business online to forge a path to success. The only reason my clients’ businesses are still surviving today is because they can connect with their customers digitally.
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Baby Chick is a digital media company covering everything from pregnancy and birth to postpartum and parenthood, helping parents make the best decisions for their families. My wife Nina and I started the company on Mother’s Day in 2015. Since then, Baby Chick has influenced over 26 million (primarily) women over the past seven years and gained over 81 million pageviews. If we didn’t have internet advertising, it would be challenging for us to continue operating the company.
Internet advertising has enabled us to grow our business to what it is today, but proposed regulations limiting advertisers’ ability to reach target audiences would hurt media publishers like us. With less precise information, advertisers would likely reallocate budgets from programmatic ad-buying or bid less money on digital ads, which would negatively impact Baby Chick’s revenue and our family’s income. The readership experience would suffer if site visitors weren’t seeing ads relevant to their interests and Baby Chick’s unique content. If Congress enacts restrictions on using data for advertising, it would be extremely difficult to deliver the content our customers enjoy and to pay our staff.
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New markets are constantly emerging on the internet. That’s why we see the IBM and AOL of one era replaced by the Google and Spotify of the next. That’s why today direct-to-consumer brands like Madison Reed in hair care are winning market share from giants of the industry, and brands like Allbirds are finding entirely new markets. This pace of innovation is only possible because companies are leveraging data about consumer behavior to create truly customer-centric products, services and media.
When television was the main way brands built their businesses, 200 advertisers were responsible for about 88% of network television revenue in the U.S. TV advertising was the only way to reach most households in a visual medium. It was costly, requiring relationships with big ad agencies and minimum campaign spends.
High barriers made it hard for small firms and startups to advertise at all. By contrast, millions of small businesses today are finding customers on Amazon, Facebook, Google and niche platforms like Marriott and Uber Eats with the help of data-driving advertising. There’s also “earned media.” In the open environment of the internet, millions of times a day social media users are promoting their favorite brands on Instagram and TikTok.
Used responsibly and transparently, data does not harm competition and innovation. It fosters it, as my research for the Interactive Advertising Bureau shows. A healthy economic future depends on fair and creative use of data.
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Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.
Chip startup Cerebras has developed a foot-wide piece of silicon, compared to average chips measured in millimeters, that makes training AI cheap and easy.
At the core of Cerebras’ pitch is a chip that is roughly the size of a dinner plate.
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
Inside a conference room at a Silicon Valley data center last week, chip startup Cerebras Systems founder and CEO Andrew Feldman demonstrated how the company’s technology allows people to shift between deploying different versions of an AI natural language model in a matter of moments, a task that usually takes hours or days.
“So we’ve made it 15 keystrokes to move among these largest models that have ever been described on a single machine,” Feldman said.
This, to Feldman and Cerebras, represents a triumph worth noting. Cerebras claims the system that achieved this feat has also accomplished a world first: It can train an entire 20-billion-parameter model on a single nearly foot-wide superchip. Without its technology, the company said scaling an AI model from 1 billion parameters to 20 billion parameters might require users to add more server hardware and reconfigure racks inside of a data center.
Training a natural language AI model on one chip makes it considerably cheaper and delivers a performance boost that is an order of magnitude superior to Nvidia’s flagship graphics processor-based systems, Feldman said. The idea is to give researchers and organizations with tiny budgets — in the tens of thousands of dollars range — access to AI training tools that were previously only available to much larger organizations with lots of money.
“Models have grown really fast in this area. Language processing, and the challenges of delivering compute for these models, is enormous,” Feldman said. “We sort of have made this class of model practical, useful to a whole slice of the economy that couldn’t previously do interesting work.”
The AI models that Feldman is talking about are simply methods of organizing mathematical calculations by breaking them up into steps and then regulating the communication between the steps. The point is to train a model to begin to make accurate predictions, whether that’s the next piece of code that should be written, what constitutes spam and so on.
AI models are typically large to begin with, but those built around language tend to be even larger. For language models, context — as in more text, such as adding an author’s entire body of work to a model that began with a single book — is crucial, but that context can make them far, far more complex to operate. Market-leader Nvidia estimates that AI tasks have spurred a 25-fold increase in the need for processing power every two years.
This exponential increase has led companies like Cerebras and others to chase AI as a potential market. For years, hardware investments were seen as bad bets among venture capitalists who were only willing to fund a few promising ideas. But as it became clear that AI as a class of computation would open the door for fresh ideas beyond the general purpose processors made by the likes of Intel and Nvidia, a new class of startups was born.
Cerebras, which is Latin for “mind,” is one of those startups. Founded in 2015, Feldman and his team, which includes a number of AMD veterans in key technology roles, have raised roughly $735 million — including funding from the CIA venture arm In-Q-Tel, the CEO said — at a $4.1 billion valuation.
At the core of Cerebras’ pitch is a chip that is roughly the size of a dinner plate, or an entire foot-wide silicon wafer, called the Wafer Scale Engine.
The idea of a wafer-size chip like the one that powers Cerebras’ systems isn’t a novel concept; similar ideas have been floating around for decades. A failed bid by Trilogy Systems in the early 1980s that raised roughly $750 billion in today’s dollars is one notable attempt at a superchip, and IBM and others have studied the idea but never produced a product.
But together with TSMC, Cerebras has settled on a design that could be fabricated into a functioning wafer-size chip. In some ways, Cerebras is almost two startups stuck together: It’s interested in tackling the growing challenge of AI compute, but it has also achieved the technological feat of producing a useful chip the size of a wafer.
A Cerebras CS-2 system running inside a data center.Photo: Max A. Cherney/Protocol
The current generation of what Cerebras calls the WSE-2 can offer considerable performance improvements over stringing together multiple graphics chips to achieve the computational horsepower to train some of the largest AI models, according to Feldman.
“So it’s unusual for a startup to have deep fab expertise, [but] we have profound expertise,” Feldman said. “And we had an idea of how they could, within their permitted flexibility in their flow, fit our innovation.”
The advantage of building a chip of that size is that it allows Cerebras to duplicate the performance of dozens of other server chips — roughly 80 graphics processors, for some large AI models — and squishes them onto a single piece of silicon. Doing so makes them considerably faster, because, in part, data can move faster across a single chip than across a network of dozens of chips.
“[Our] machine is built for one type of work,” Feldman said. “If you want to take the kids to soccer practice, no matter how shitty they are to drive, the minivan is the perfect car. But if you’ve got your minivan and you try and move two-by-fours and 50-pound sacks of concrete, you realize what a terrible machine it is for that job. [Our chip] is a machine for AI.”
Max A. Cherney is a senior reporter at Protocol covering the semiconductor industry. He has worked for Barron’s magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.
The financial agreements have had a reputation for misleading consumers. But entrepreneurs say technology can make them more transparent, flexible and efficient.
The decades-old business model is reemerging as a possible solution for customers who are feeling less flush.
Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.
With rising interest rates testing “buy now, pay later,” there’s an alternative way to break up a purchase into manageable payments: lease-to-own or rent-to-own agreements. As the fintech industry refocuses on customers who are feeling less flush, the decades-old business model is reemerging as a possible solution. It carries with it a somewhat unsavory history and potentially higher costs for consumers, making it a tricky business for fintech entrepreneurs and a complex investment for VCs to consider.
Lease-to-own or lease-purchase agreements are payment plans with additional fees, not loans. Under a lease-to-own agreement, a customer pays for a product in monthly lease payments, with some portion of the payment going toward owning the product. After a period of time, customers have the option to purchase in full or continue with their monthly payments until the end of the lease term. Profit is made through the fees customers pay: With many lease-to-own agreements, a customer who sticks with monthly payments through the full term will spend twice the cost of the product than if purchased outright.
Investors know that consumers like the idea of paying for purchases over time. According to a May study from PYMNTS, 10.2% of Millennials use “buy now, pay later” on a monthly basis. Data from LendingTree also published in May suggests that the market is growing, with one in three American consumers considering using a pay-later service.
But the “buy now, pay later” sector is facing headwinds, potentially opening up opportunities for a different approach. Consumers have less money to spend on big-ticket items, and rising interest rates are hiking the lending companies’ borrowing costs. That adds up to rising delinquencies, higher costs of operation and slimmer profit margins. According to The Wall Street Journal, 3.7% of Affirm customers were at least 30 days overdue on a payment in March this year, compared with 1.4% in March 2021. Yields on the company’s securitized offerings have risen sharply from a year ago.
Lease-to-own has some downsides. Retailers like Rent-A-Center and Aaron’s developed a poor reputation for selling low-quality products at high markups. Predatory rent-to-own agreements in the housing sector targeted low-income people of color. States have stepped in to regulate lease-to-own agreements, and four states outlaw them all together: Minnesota, New Jersey, North Carolina and Wisconsin.
But the business model’s advocates say the agreements enable subprime borrowers to make purchases they might not otherwise be able to afford. And fintech entrepreneurs say that technology can disrupt the model to make it more efficient, transparent and flexible so consumers don’t overspend or get left in the dark. “Programs like ours which give customers flexibility and benefits are going to become more prevalent,” says Neal Desai, CEO and co-founder of lease-to-own startup Kafene.
Most of the lease-to-own innovation in recent years has been in the area of home ownership, with companies targeting subprime borrowers who may not otherwise qualify for a mortgage. Divvy Homes, ZeroDown and Verbhouse are just a few. Adena Hefets, CEO and co-founder of Divvy Homes, told Money in April that about half of its customers are able to buy back their properties. The company declined to say how many customers become delinquent on their payments.
Kafene targets customers who would not qualify for “buy now, pay later” loans with their payment plans. Like the pay-later companies, Kafene partners with retailers, but makes money off of markups on the products rather than merchant fees. Customers can buy themselves out of a product’s lease early if they have the funds, saving money on an additional markup.
Retailers benefit from increased customer purchasing power, Kafene says — a pitch similar to that of “buy now, pay later” companies. Delinquency is uncommon under the lease-to-own model, Desai says, because customers who find themselves unable to continue with payments can return the item at no cost. And customers build credit as they make payments — a feature particularly beneficial to young consumers who are the prime market for payment plans, but are often averse to other credit-building products.
Ohad Samet, CEO and co-founder of debt collection startup TrueAccord, argues that lease-to-own operations are not delinquency-proof. His company performs collections for several, he says, though the company declined to name them. He also argues that “buy now, pay later” companies are not under major threat, pointing out that Klarna, a company where he was previously chief risk officer, was founded 17 years ago and is not new to economic changes. Lease-to-own serves a “small sliver of the market,” he says, and should be seen as “another avenue to acquire consumers and underwrite them.”
Many in the industry emphasize the importance of regulatory compliance. Lease-to-own agreements are regulated in slightly different ways in each of the 46 states where they’re permitted, which will require companies to tweak contracts depending on the jurisdiction. Transparency, like with all financial products, is also key for legal compliance: The FTC brought charges against rent-to-own company Progressive in 2020, for example, for deceptive marketing. The company was required to pay $175 million to settle. “Deceiving people about cost strikes at the heart of the FTC Act,” an FTC analysis of the settlement reads.
Still, the appeal of a recession-proof business model is likely to draw entrepreneurs. Though some are still bullish on “buy now, pay later” in a recession, it’s unclear how rising rates will pressure the business. According to Fitch Ratings, the credit quality of pay-later loans is “yet to be tested.” Competition from lease-to-own startups may provide another test.
Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.
Experts say the “last in, first out” mentality puts leaders at a possible disservice during layoffs.
At the beginning of the pandemic, some of the groups most affected by layoffs included women and Black workers.
Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.
As the tech industry continues to suffer a tumultuous downturn, more HR leaders must face the question of who to let go and why. Frequently, leaders go for the most systematic strategies for deploying cuts in an effort to achieve equity. One storied practice for deploying layoffs is the concept of “last in, first out,” but experts now say following this path could come with the risk of losing your most diverse hires and top performers, and it could be discriminatory. But there are alternatives.
At the beginning of the pandemic, some of the groups most affected by layoffs included women and Black workers. In August 2020, the unemployment rate among Black workers shot up to 13%, almost double the unemployment rate of white workers at 7.3%, according to the U.S. Bureau of Labor Statistics. Women during this time also fared poorly compared with their male counterparts. According to the Brookings Institute, in early 2020 the unemployment rate for women rose more than 12 percentage points, while the rate for men increased by less than 10 percentage points.
Star Carter, co-founder and chief operating officer at DEI tech company Kanarys, said layoffs can disproportionately affect women and people of color when companies don’t have diversity spread throughout the organization. Oftentimes, more inclusive representation is concentrated in the entry level and in what are considered to be “nonessential” roles.
“Companies also tend to recruit more aggressively and expand their talent pools when the labor market is particularly hot,” said Julia Pollak, a chief economist at ZipRecruiter. “So company diversity often increases towards the end of an economic expansion. Those more diverse last-in hires are often the first out under a seniority-based system or even a performance-based system, because it can take time for new hires to learn the business and become fully productive.”
When companies decide to eliminate “nonessential roles” that usually means any roles that don’t directly contribute to generating a company’s essential revenue, said Pollak. This means that advertising, talent acquisition or roles that conduct research for potential or future product lines are often first on the chopping block.
“Generally speaking, whenever there are layoffs, that can have a disproportionate impact on women or people of color because they do tend to be over-represented in roles like marketing or HR where layoffs often happen when the economy slows down,” said Glassdoor Senior Economist Daniel Zhao.
But he warned that HR professionals should watch out for the bias that comes with doing the exact opposite of “last in, first out.” He’s observed some companies in the past laying off more experienced workers who have higher salaries and replacing them with younger workers who cost less. “That was something that happened in the financial crisis,” he said. “Companies essentially downsized and replaced more experienced workers with younger workers. And so I think from a diversity perspective, really that speaks to ageism and how that can have an impact on workers.”
Though cuts can at times be unavoidable, Pollak suggests abstaining from implementing blanket solutions like “last in, first out” altogether, as they might not be worth the gamble.
“You risk keeping managers, supervisors and administrators, but losing the ‘worker bees’ who actually do the work and make money for the company,” she said. “You risk disparate impact for a protected class — individuals who are members of a certain race, ethnicity, religion, gender, sexual orientation, gender identity or those with a disability — and a slew of wrongful termination lawsuits.”
Sentiments among employees have begun to shift toward distrust. Following a growing list of job cuts in tech and the stock market’s worst week since the beginning of the pandemic, employees’ confidence in the security of their roles has plummeted. So is there a way for HR leaders to steel the nerves of their employees and go about making cuts in a more strategic and effective way? Experts say there are a few things that can be done.
Lars Schmidt, founder of HR executive search company Amplify, suggests following the lead of what some of the most talked about companies did at the start of the pandemic when layoffs first hit. He points to Airbnb’s decision to deploy its recruiters as an outplacement team to help laid-off workers find new jobs.
“Any company can redeploy the recruiting team, any company can invest in outplacement, any company can offer severance. And yes, it’s a cost, but it’s the right thing to do,” said Schmidt. “Especially when you’re letting employees go in a down market like we are in now, and potentially on the edge of a recession.”
He also recommends considering whether or not layoffs are completely necessary. Many companies he said are correcting for over-hiring during the pandemic. In addition to redeploying talent, he said this is a moment when leaders can think about whether certain teams or workers should be reassigned to more relevant projects.
“If it does get to layoffs you have to really be mindful of designing your program from the perspective of the employees who will be impacted by your efforts and who ultimately will be feeling the pain from this decision,” he said.
Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.
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