Meta announced sweeping layoffs on November 9, 2022 impacting 11,000 employees (13% of its workforce). While much has been written about the company’s recent struggles – both due to its own operational & strategic blunders and due to the impact of a higher interest rate environment – not much is known about the role of consulting firms in these kinds of decisions.
Consulting Firms’ Role In Layoffs
Let’s take a closer look at why a company like Meta would engage a consulting team at Bain for this purpose:
Adopting a Common Process
Bain (and other consulting firms) develop a process to help companies like Meta identify where the company can afford to make cuts and where it cannot. The use of a framework – the creation of which is informed by years of similar work across industries – also helps to reduce bias as staffing decisions are being made.
This decision is the largest workforce reduction in Meta’s history. As a large publicly traded company, Bain’s “stamp of approval” on this approach is a key part of trying to reassure investors that the cuts will achieve the desired impact. Bain is one of only a handful of firms that Meta would have considered engaging with in this process because of their experience, core competencies, and reputation. Engaging with Bain may also help insulate leadership from some pushback it is sure to receive from employees who remain at the company.
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Identifying Severance Packages
By all accounts, the severance packages that Meta offered to those impacted by the layoffs were more generous than packages recently offered by other tech giants like Twitter and Lyft. Specifically, laid off employees will get 16 weeks of base pay plus two weeks of base pay for each year of service. According to a memo sent out by CEO Mark Zuckerburg, there is no cap on the amount of extra pay per year of service that laid-off employees can receive. In addition, laid-off employees will receive six months of health insurance, three months of career support, and their RSUs that are due to vest on Nov. 15.
There is no doubt that Bain had a part to play in this decision – not only is it the right thing to do for employees who helped make Meta what it is, it aims to position the company as a continued attractive employer for top talent and to potentially insulate Meta from public blowback it may receive for these layoffs.
Covering Leadership’s Ass
Yup, we said it. Companies often bring in firms like Bain to advise on layoff decisions so they have an external party to blame if the cuts don’t have the desired effect, or if the company’s core capabilities suffer a decline in quality. Investors upset? Blame Bain! Current employees upset? Blame Bain! It’s not a defensible reason to us, but one that does play into the decision-making of leadership teams across all industries.
So, there you have it – consulting firms aren’t just brought in for their experience in downsizing operations, but also so that they can act as a “fall guy” for company leadership. We have no doubt that this was a consideration for the leadership team at Meta as they engaged Bain in this work.
And rest assured that lurking somewhere on a 23-year-old analyst’s laptop is a one-of-a-kind financial and operational model made specifically for this big dance.