Is ‘shareholder supremacy’ driving the layoffs in tech?
In the world of public corporations, the interests of shareholders come first. This legal obligation can create tension and force executives to make decisions that favour shareholder profits, often at the expense of employees and innovation. In the tech industry, companies have faced difficult decisions around investments in innovation, hypergrowth, and layoffs, all in the name of appeasing investors.
Tech companies like Uber, Meta, and Salesforce have all experienced the pressure of shareholder supremacy in recent years. Uber’s IPO in 2019 was valued at over $120 billion, but the company eventually pared back its valuation to $75 billion and saw its stock price drop significantly on the first day of trading. Meanwhile, its research and development teams worked on ambitious projects like Uber Chopper and Uber Submarine, which led to confusion and frustration among employees. Uber eventually laid off over 6,700 employees in 2020 and 2021, despite CEO Dara Khosrowshahi’s promise of no company-wide layoffs.
Meta, the parent company of Facebook, also faced the pressure of shareholder supremacy with its push into the Metaverse and subsequent layoffs of 11,000 employees. Salesforce followed suit with a stock buyback and layoff of 8,000 employees in January 2022.
The tension between satisfying shareholders and investing in innovation and employees highlights the inherent conflict in corporate governance. However, experts suggest that the focus on shareholder supremacy may be short-sighted and ultimately detrimental to long-term corporate success.
Related Facts:
– Shareholder supremacy is a legal concept that suggests corporations must prioritize shareholder profits over other considerations.
– Tech companies like Uber, Meta, and Salesforce have faced pressure from shareholders to prioritize profits over innovation and employees.
– Layoffs have become increasingly common among tech companies, with thousands of employees laid off in recent years.
Key Takeaways:
– Shareholder supremacy can create tension between short-term profit and long-term success.
– Prioritizing shareholder profits over innovation and employees can be detrimental to a company’s success and reputation.
– Tech companies must balance the interests of shareholders with the needs of employees and investment in innovation for sustained success.
Conclusion:
The tension between shareholder supremacy and long-term corporate success is prevalent in the tech industry, with layoffs becoming increasingly common in recent years. Tech companies must balance the interests of shareholders with the needs of employees and investment in innovation for sustained success. Ultimately, prioritizing shareholders over innovation and employees may be shortsighted and detrimental to a company’s long-term success and reputation.
