8,000 layoffs don’t exactly scream family values

IN Silicon Valley, that magical and mystical utopia where tech CEOs and entrepreneurs describe their companies as one big happy family, the biggest family man of them all has always been Marc Benioff.

To the Salesforce chief executive officer, the cloud-based software enterprise company he co-founded isn’t just a company but what he calls “ohana” – a Hawaiian word meaning family and support system. Its massive annual Dreamforce event that takes over San Francisco isn’t a conference but a family reunion. Even earnings calls and investor days – where Benioff has been known to wax poetic on everything from dolphins returning to the Venice canals during the pandemic to his Ukrainian ancestry – can feel a little bit like dad presiding over a family dinner.

That worked just fine for Benioff during the happy-go-lucky boom times when Salesforce and its tech brethren seemed to think that “permanent acceleration” was a real thing, as my colleague Justin Fox has written.

But what happens now that Benioff and Salesforce are facing the kinds of problems that don’t have very family friendly solutions: three activist investors circling, Wall Street questioning the price tag of recent deals including the US$28 billion acquisition of business communications app Slack, growing criticism that Benioff’s celebrity schmoozing with the likes of Will.i.am and Matthew McConaughey is a distraction, and profits that have not kept up with the pace of sales growth.

On Jan 4, the company announced that it would lay off 10 per cent of its workforce, or about 8,000 people. “The employees being affected aren’t just colleagues. They’re friends. They’re family,” Benioff wrote in a memo announcing the cuts. “Please reach out to them. Offer the compassion and love they and their families deserve and need now more than ever.”

The conflicting messages in Benioff’s staff memo were jarring. If the people impacted really were family, wasn’t it kind of awkward and heartless to put them out of a job? According to Insider, one employee wrote on Slack during a company all-hands, that given “the ‘family’ who were laid off, should we consider retiring the phrase ‘ohana’?”

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The answer is a resounding yes. And not just to retiring ohana, but to all the family metaphors and tropes that Silicon Valley now relies on as shorthand for the culture it wants to project. It’s language that might have been effective and even appealing when these companies were those fabled five-person teams working out of someone’s garage.

But today, many of these enterprises are decades-old behemoths, topping the list of some of the biggest companies and employers in the world. Trying to sell themselves as a “family” requires a suspension of disbelief that’s insulting to the talent they are trying to attract.

As much as Benioff might want his employee base to think otherwise, this framing around family is a business decision above all else. Salesforce readily admits to that in its annual report, noting that its culture’s “sense of family” is part of what “allows us to attract and retain the best talent, which is critical for our continued success.”

Salesforce is far from alone here. The Stanford Project on Emerging Companies, which launched in the 1990s and for years tracked Silicon Valley startups, reported that a good chunk of founders wanted their companies’ cultures to follow a “commitment” model – “a strong family-like feeling and an intense emotional bond with the workforce that would inspire superior effort and increase retention of highly sought employees.” The researchers found that these “commitment” companies were the least likely to fail and the most likely to IPO.

In the last five years or so as Silicon Valley has evolved, the commitment model as it was originally envisioned has come under strain and scepticism. This way of working relies on a blurring of the lines between work and personal life, with the expectation that you will prioritise your “work family” at the expense of your actual family.

Three years of pandemic living has led workers, especially younger ones, to demand more definitive boundaries between these two worlds. The free meals, massages, and foosball that tether employees to the office are nice, but getting to work from home and take the weekend away from your email is, maybe, nicer.

The rise of labour organising in tech, long considered taboo, is yet another indicator of workers’ growing wariness that their employers will take care of them in the ways that they have promised. 

While distrust and cynicism of the family rhetoric might be more widespread today, let’s be clear that it’s a model that never worked for employees who don’t subscribe to the expected Silicon Valley mold. Even back in 2002, well before most companies were even talking about diversity and inclusion, the Stanford researchers were already pointing out that the commitment model’s reliance on “fitting in” made it harder to attract and retain women in key roles and to build a diverse workforce.

But the real stress test is happening now as a generation of tech workers experience mass layoffs for the first time and the industry enters a new phase in its life cycle. If the goodbyes on Twitter and LinkedIn are any indication, techies are quickly learning about another lazy family trope: tough love. BLOOMBERG