How layoffs can affect diversity in tech—and what to do about it

After going on a hiring spree during the pandemic, tech companies are now laying off staff in job cuts that sometimes involve thousands of employees. While the layoffs may be necessary to help boost sagging profit margins, proponents of diversity in the tech sector are concerned that the job cuts may disproportionally affect underrepresented groups.

According to Layoffs.fyi, the online tracker keeping tabs on job losses in the technology sector, 152,542 employees from 993 global tech companies were laid off in 2022.

While the COVID-19 pandemic had a huge financial hit on industries such as events and hospitality, organizations operating in the technology sector experienced a period of hypergrowth, rapidly expanding to meet the perceived needs of customers who were becoming totally reliant on technology.

However, every boom is usually followed by a bust, and during the fourth quarter of 2022, big tech companies were faced with declining revenue and looming recession. Consequently, Twitter’s new owner Elon Musk cut the social media platform’s workforce in half, while Meta announced 11,000 job cuts and reports claimed Amazon would be laying off 20,000 workers, to name but a few of the layoffs the tech industry has seen this year.

Job losses are always going to feel unfair to those affected, but in an industry that continues to be largely dominated by men, employees from underrepresented backgrounds are likely to bear the brunt of any layoffs, as the roles they inhabit are often viewed as the most expendable.

At tech companies, a number of nontechnical departments, such as business development, customer success, communications, and marketing, are more likely to employ women and ethnic minorities. As a result, when it comes to headcount reduction, individuals in these roles are more likely to face layoffs, because they are seen as less essential to the business than those who develop or maintain the product.

But recent events suggest that even on technical teams where women and ethnic minorities hold even fewer positions, underrepresented employees are being disproportionally affected. For example, two women who lost their jobs at Twitter are filing a lawsuit in which they claim the company disproportionately targeted female employees for cuts.

The lawsuit, which accuses the company of violating federal and California laws banning workplace sex discrimination, said that Twitter laid off 57% of its female workers, compared with 47% of men. With regards to engineering roles, the lawsuit claimed 63% of women lost their jobs, compared to 48% of men.

The challenges facing minority employees

While the technology industry is no stranger to the concept of a boom-and-bust cycle, the challenges that come with working in a sector where job stability is not always guaranteed, while often remunerative, is not something that everyone can afford to take a chance on.

The impact of losing your job is always going to be difficult, but for women who have to potentially consider things like maternity leave or factor in their caring responsibilities when job hunting, the prospect of industry instability is unlikely to be appealing, said Hywel Carver, CEO and co-founder of Skiller Whale, a deep coaching platform for developers.

Although employees from technical teams are unlikely to struggle to find an open position if they do find themselves laid off — research by Skillsoft from November 2021 found that around three quarters of IT decision-makers worldwide claimed to be facing critical skills gaps across tech department — for minority employees, finding a job at a company with a good working environment is more challenging.

Research presented in the MIT Sloan Management Review earlier this year found that toxic corporate culture is by far the strongest predictor of attrition and is 10 times more important than compensation in predicting turnover. According to the research, the leading elements contributing to toxic cultures include failure to promote diversity, equity, and inclusion; workers feeling disrespected; and unethical behavior.

For underrepresented employees, Meri Williams, CTO at business-payments company Pleo and an advisor to tech-skill education firm Skiller Whale, said that the risk involved with finding a new job can feel much greater if you’re leaving and joining somewhere new, as you might go out of the frying pan into the fire.

“I know a lot of women, people of color, and LGBTQ+ folks who are much more careful about where they choose to join, because they’re worried about whether the environment is going to be inclusive and positive for them,” Williams said

And while Ingrid B. Laman, vice president of Advisory in the Gartner HR practice, said that businesses have been increasing investment and making progress on DE&I (diversity, equity, and inclusion) programs in recent years, she noted that many employees fear that economic pressures and layoffs, coupled with increased pushback on DEI efforts, will derail these efforts as budget cuts are made and important staff members move on.

“Gartner research recently revealed that underrepresented groups, such as racially and ethnically diverse employees, have lower career satisfaction rates and higher voluntary turnover rates compared to majority groups, preventing many organizations from reaping the performance impact of highly diverse and inclusive work environments,” Laman said.

Additionally, as companies look to minimize their headcount, many business leaders are reverting to prepandemic ways of working in a misguided attempt to shore up productivity. Despite a lack of evidence that in-person working makes a team more productive, companies such as Twitter and Apple have put policies in place that require employees to be physically present in the office for the majority of the working week.

In December 2021, Deloitte reported that, during the pandemic, the inherently flexible nature of the tech industry and its ability to pivot quickly to remote work kept female job losses to a minimum, while research from City & Guilds found that when looking for a new job, 53% of working age women in the UK prioritized flexibility, compared to just 38% of men. Despite this, at both Twitter and Tesla, owner Elon Musk has publicly declared that he will fire employees who do not return to the office.

Williams argued that forcing everybody back to the office is also particularly likely to hurt employees who are from underrepresented groups.

“I think the way that some of the layoffs have been executed and the framing around it, especially forcing people back to the office, has had a really negative impact for DE&I,” Williams said. “If you think about anybody with caring responsibilities, being forced to go back to an office that is usually in a very busy city and includes a significant amount of commuting time, I don’t think that’s a positive.”

“I think it’s a terrible strategy if you care at all about having a diverse mix of people in your team,” they said.

How can companies do better?

Although layoffs have dominated the conversation during the latter part of the year, evidence shows that the Great Resignation isn’t over yet. Online job site Hired found that attracting, hiring, and retaining top talent has proven to be difficult, citing employee burnout as a key challenge, placing the blame on rapid changes in the employment environment and angst over mass layoffs and hiring freezes.

For companies yet to announce job cuts, Laman said that before any decision is made, organizations need to be sure they factor DE&I into decisions around layoffs.

“For example, the company needs to ensure they are maintaining a core of DE&I champions within their team, that layoff discussions are free from unconscious bias, and that representation across the business isn’t inadvertently affected by these layoffs,” she said.

However, Williams argued that there’s a lot of evidence to suggest that we pattern match when we try to spot potential, meaning that one of the really big risks from all these layoffs is that if you disproportionately have just one type of person represented at a leadership level making the decisions about who stays and who goes, they’re not going to have understood or realize the potential of some people who look very different or are very different from them.

Carver agrees, noting that being a good manager and being a good technologist are not one and the same, meaning people are often promoted despite lacking some necessary management skills.

“If companies are trying to evaluate who is in the bottom 10% when it comes to performance and therefore should be laid off, I doubt every company is going to get that right,” he said. “I suspect when they get it wrong, the people that are going to be hurt most by their wrong decisions are the people who they are unconsciously biased against, which is often people from underrepresented groups.”

While job losses might be something of an inevitability in the world of business, the job cuts at some tech companies have been particularly deep this year. However, Tony Lysak, founder and CEO of The Software Institute, doesn’t believe that the turn of events will completely erode diversity efforts that organizations have been putting in place over the years.

“I think that the corporate demand for diversity is so strong, that the industry is actually in quite a good position,” he said, noting that companies don’t only have a corporate social responsibility, but internal initiatives are often in place to ensure more women, ethnic minorities and underprivileged people are making their way up the talent pipeline.

“In the UK, for example, government entities and major organizations are looking at towns in the north, such as Telford, Manchester, and Newcastle, to build centres of excellence and target local underprivileged workers in those places,” he said.

As most countries move deeper into this period of economic strife, Laman said companies must have open conversations and confirm their executive commitment to DE&I strategies whilst clarifying the business, talent, and reputational risks of underinvestment in DE&I and ensure that these initiatives are considered non-negotiable.

“To fully embed DEI into the business, organizations must enable executives to develop their own DEI goals, hold them accountable, and enable them to embed DEI into their business practices,” she said.