'I Got This Wrong': CEO Apologies Abound Amid Mass Layoffs and Losses

(Bloomberg) -- While Elon Musk is dominating headlines with his abrupt dismissal of half of Twitter’s workforce, other chief executive officers are taking a decidedly different approach — blaming themselves for misreading the market and apologizing for having to let people go.  

In lopping off more than 11,000 jobs this week, Meta Platform Inc.’s CEO Mark Zuckerberg took the "empathy management" approach, emphasizing his own poor decisions and providing support to affected workers. “I want to take accountability for these decisions and for how we got here,” Zuckerberg said in a statement that was sent to employees Wednesday and posted on the company’s website. “I know this is tough for everyone, and I’m especially sorry to those impacted.” 

Sam Bankman-Fried, who resigned Friday as CEO of now-bankrupt crypto exchange FTX, apologized for the exchange's mismanagement and liquidity crisis in a series of tweets Thursday.  “At the end of the day, I was CEO, which means that I was responsible for making sure that things went well,” he said. “I, ultimately, should have been on top of everything. I clearly failed in that. I’m sorry.”  

The mea culpas are just the latest in a series that began as the market for tech and e-commerce stocks began to tank over the summer.

In July, Shopify CEO Tobi Lutke fell on his sword in a letter to employees in which he said he wrongly assumed pandemic-era online shopping frothiness would continue. “It’s now clear that bet didn’t pay off,” he said in explaining the 1,000 job cuts at the retail software provider. “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful five-year leap ahead. Ultimately, placing this bet was my call to make, and I got this wrong.”

A month later, Niraj Shah, the CEO and co-founder of Wayfair Inc., also admitted he flubbed the pandemic’s signals. Wayfair’s sales surged in the first year after Covid hit the US, but then declined for five straight quarters. “We were seeing the tailwinds of the pandemic accelerate the adoption of ecommerce shopping, and I personally pushed hard to hire a strong team to support that growth,” Shah wrote in a letter to employees in August that announced about 900 job cuts. “This year, that growth has not materialized as we had anticipated. Our team is too large for the environment we are now in, and unfortunately we need to adjust.”

And let’s not forget Braden Wallake, the “crying CEO” of Columbus, Ohio-based marketing agency HyperSocial. In August, Wallake wrote a guilt-ridden LinkedIn post about having to lay off two of 17 employees, concluding with a teary-eyed selfie. After the post went viral, he declared himself “the crying CEO.” 

These missives stand in stark contrast to Twitter CEO Musk’s approach, which recalls that of longtime General Electric Co. CEO Jack Welch, who infamously made regular — and ruthless — layoffs a management tool.

Welch, however, operated in a very different environment from today’s. Employee expectations have risen significantly. “The willingness of employees to speak out when they feel that they're treated unfairly has increased from a sort of, ‘keep your head down, do your work, do what you're told,’” said Jeffrey Siminoff, who managed Morgan Stanley’s layoffs during the financial crisis and is now senior vice president of workplace dignity at the nonprofit group Robert F. Kennedy Human Rights. “I think executive teams and CEOs understand that very poorly executed processes that are done in very inhumane ways will create a lot of negative backlash that cannot be contained within the four walls of the organization.”

The biggest difference, though, is that Welch downsized while the labor market was weak, which meant he didn’t have to worry as much about GE’s brand as an employer, according to Peter Cappelli, director of the Center for Human Resources at the Wharton School of the University of Pennsylvania. The labor market today, by contrast, is extremely tight, with about 1.9 available jobs for every unemployed person.   

“It's a good question to ask how much of the contemporary scene is playing to the current labor market because they don't want to damage their employer brand too much,” Cappelli said.

In other words, it might not all be a new age of enlightened management, but a heavy dose of self-interest: Some of the visibly empathetic CEOs know they'll probably need to hire back some of the people they laid off and could be positioning themselves to recruit again when the recovery comes. 

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