Authenticity is one of our core values at G2, so let’s lean into our authentic selves for a moment and be honest: 2023 is off to a rough start for the tech industry.
News of layoffs from the biggest names in the industry doesn’t appear to be slowing down. For example, 435 tech companies laid off about 121,000 workers in January and February. To put these numbers into perspective, the number of people laid off so far in 2023 is already more than 75% of 2022's total.
If that wasn’t enough, then came the collapse of Silicon Valley Bank in March, which was a brutal blow to our already reeling industry.
As Chief People Officer of G2, I do my very best to try and shield our employees from the chaos outside of our company's figurative and literal walls. But sometimes, those external forces become too powerful. Despite a record-breaking 2021, G2 was unavoidably impacted by the economic ups and downs over the last year, and we had to quickly shift from a fast growth mode to a smart growth mode. We were also not immune from the collapse and takeover of SVB bank, who we had worked with for many years.
Our focus and priority throughout the economic downturn was to keep G2ers actively engaged. Despite the chaos outside our company walls, we want all employees to feel that we have their best interests at heart, feel valued, and feel that they are part of a larger community. Our belief is that if we maintain active engagement, we are better equipped to ride out the storm by retaining top talent, inspiring stronger performance, and setting us up for growth when economic conditions get better.
In other words: if we do what is right for our employees now, we can step on the gas pedal and truly accelerate when the time comes.
This rough patch isn’t new for our industry – the infamous dot-com bust in the late 90s and the 2008 Great Recession – it seems like every 15 years or so, we have to pivot from a rapid growth mindset, hunker down, and dig deep into our resilience. In February, we held our annual global team kickoff event, and our theme was, you guessed it: Resilience.
But what does resilience actually mean at a company-wide level? What does it mean at an individual employee level? Resilience, in general, is the capacity to withstand or recover difficulties – toughness, if you will. But at an organizational level, resilience requires prioritization and making difficult decisions about what is important and what is less important during tough times.
Budget cuts and the long-term effect on employees
Early in 2022, when we just started to feel the economic headwinds, we decided to lean into our leadership principle of smart growth.
Part of smart growth is deciding what our key priorities would be. These would be areas of continued investments for long-term growth, critical to business performance and our ability to serve our customers. For us, a key priority, without a doubt, was our people. Why? Because our employees drive our business. Without motivated, high-performing employees, we can’t innovate, we can’t serve our customers, and we can’t grow.
Shifting into smart growth mode early on allowed us to strategize, prepare, and do all we could to shield our employees from the economic headwinds. Perhaps it’s because of the lessons we learned in the earlier stages of the company, the foresight of our talented finance team, and the agility of our global team to pivot quickly that allowed us to make the necessary adjustments to prioritize our people.
As we continue to hear news about layoffs, I feel incredibly fortunate that at G2, we were able to put our people first. But the news also makes me incredibly sad because, to put it very frankly, layoffs are devastating. It’s devastating for the people who are let go, their livelihoods that are impacted, the managers who have to deliver the difficult news (often to employees they care deeply about), and also to the “surviving” employees.
Research shows that widescale layoffs can often have a long-lasting impact on the business.
After layoffs, surviving employees often see a decline in performance and feel less engaged at work. In fact, layoffs also can lead to more turnover, typically the top performers who feel like they’re on a sinking ship. One study found that a layoff affecting 1% of the workforce led to a 31% increase in the voluntary turnover rate.
Why does this happen? Because layoffs break trust. It breaks the basic employee value proposition between the company and the employee that they will be rewarded if they perform well. Once trust is broken, it’s tough to get back, especially in a robust job market when employees have options. That’s why wide-scale layoffs are a last resort option when all other options have been exhausted.
Another trend in this economic environment is budget cuts to benefits, perks, and cultural programs. In a recent interview, the president and CEO of SHRM, Johnny C. Taylor, Jr., shared that when it comes to cutting costs, employers look for expenses that are totally controllable and managed by the employer; benefits and perks fall under this umbrella. He also shared more frankly that as the labor market has become less competitive, employers simply feel that they no longer have to offer competitive benefits.
According to a recent Fortune report, in addition to layoffs, employers are cutting the generous benefits and perks that the tech industry has become well known for, such as sabbaticals, wellness benefits, and paid time off.
Not surprisingly, DEI also tends to be first on the chopping block. Glassdoor research this past November indicated that corporate investment in diverse hiring, pay equity, and employee resource groups fell in 2022, and a Monster.com report found that 10% of respondents said diversity initiatives are among the “first to go” in bearish economic markets.
These benefits and perks are cut because companies view them as low-hanging fruit and easy cost-saving measures. However, as Chief People Officer, my immediate thought goes to the long-term impact that this has on employee sentiment.
What message is being sent to employees when these cuts are made, and what is the ripple effect on employee engagement?
Investing in, not sacrificing, employee engagement
Before we dive deeper, let’s take a moment to define what employee engagement is. Employee engagement is about the emotions and feelings of employees, so the definition can vary a bit depending on who you ask. However, here at G2, we define employee engagement as the strength of the connection employees feel with us.
Historically, in the employee engagement space, there are 3 levels of engagement: actively engaged, not engaged, and actively disengaged.
So far, our focus and continued investment in our people to keep them actively engaged has made a difference and had a measurable impact. Despite everything going on in the tech industry, we didn’t just maintain our level of engagement – we’ve actually seen our engagement metrics increase. This past year, we recorded our highest eNPS (58) and iNPS scores (71) in company history.
Once again, I’ll lean into authenticity here and be honest with you: I was not expecting this. Did I think we could maintain our engagement scores in a challenging economic climate? With some hard work and effort, yes. But to hit record levels? That was an unexpected and, of course, a pleasant surprise.
But more importantly, I believe it shows that employees notice and recognize when their employers put their people first. Here are some of the investments and focus areas we made in our people in the past year.
Authentic and transparent communication
I’ve already talked about authenticity a lot, but I cannot overstate the importance of this value during tough economic times. Job stability, money, and livelihoods are all top of mind right now.
People are scared and nervous, so the appropriate level of honesty, sensitivity, and compassion is critical for all communications. It provides clarity and reduces chances of misunderstanding (and risk), but most importantly--it’s the kind and respectful thing to do.
To give you a recent real-life example, our team had to go into crisis communications mode due to the SVB collapse. We faced the possibility of our payroll being impacted, but there was so much unknown at the time, and the situation was changing by the hour. Staying true to our values and leadership principles, we acknowledged the human and natural impact of delayed payroll, opened a communication channel for those who may face hardships, and committed to frequent updates.
Ultimately, we received overwhelmingly positive feedback, and employees expressed their gratitude for the timeliness and transparency. But the real significance of an event like this is that employees now see that even during a crisis, they can trust us.
Health and wellness benefits
While some companies have had to cut their health and wellness benefits, we decided to expand them. In July 2022, we launched our Global Employee Wellness Program (you can read all about our program here) and improved some of our healthcare vendors based on employee feedback.
We also remain committed to providing robust PTO globally with extra days off around important holidays, added wellness leave for our APAC team, and Focus Fridays every week, our global practice of no meetings after 2:00 p.m. This decision to expand and not cut these benefits, perhaps counterintuitive to some, is rooted in our leadership principle of Leading Consciously.
Part of Conscious Leadership is the concept and practice of “sprint and recover,” which is about balancing hard work and tremendous effort with rest. We recognize that this is a stressful time, and our employees are sprinting harder than before and are more focused than ever to help G2 ride out the storm. As a result, it’s G2’s responsibility to support and encourage our employees to recover and rest. If we do not value recovery as much as sprinting, we risk burnout and turnover.
The G2 community and DEI
Every quarter, as part of our engagement survey, we ask G2ers what they love most about working here. Far and away, the top response is always our people and our culture. It fuels our teamwork, camaraderie, and motivation to grow and develop. In my opinion, people and culture are pivotal to business performance, so instead of shying away from them for budgetary reasons, we doubled down.
This past summer, we increased our investment in DEI and launched our Global Mentorship Program to connect women and BIPOC employees with leaders, completed a pay equity audit, and have just expanded our Employee Resource Group (ERG) network with our ninth ERG, Divergent Abilities & Allies. This ERG aims to create a safe community, promote acceptance and celebration, and recognize and celebrate the unique strengths of our teammates with different and diverse abilities.
Career leveling framework and pay equity
Related to DEI is the rollout of our global career leveling framework, which we began during the downturn and will complete this summer. This is a critical investment in our people to provide clarity and build equity in career paths, growth opportunities, and compensation. This will be one of the most significant and transformative people programs to be rolled out at G2, and we are excited about the impact this will have on our employees.
It’s no secret that in-person gatherings are expensive. But here at G2, we see it as an investment in our employees to connect with their teammates, meet with leaders, and build our strategy together. We are proud to be a flexible employer with hybrid and remote working options (in fact, we were just named one of the country’s best hybrid employers).
Still, our employees also tell us that they value the ability to gather and come together throughout the year. We continue to hold our annual fiscal year Kickoffs and Mid-Year MeetUps because it helps our employees feel connected to each other and the company, which is the very definition of employee engagement.
Smart growth tips for maintaining employee engagement
Before my career in leadership coaching, training, and HR, I worked in finance. I say this only to share that I’ve been on the other side of an income and cash flow statement, so I understand the realities of budget cuts and making difficult workforce decisions. But now, having the privilege of serving as Chief People Officer, I can balance these two perspectives and offer these smart growth employee engagement tips that any organization, regardless of budget, can apply.
Consider your communications
Is the tone, message, and timing of your employee communications reflective of what is happening across the industry and the economy? Making your communications human-centered and compassionate during a stressful, anxious time for employees can positively impact engagement.
Encourage feedback from employees and make it easy for them to share that feedback with you. This past year, in addition to recording our highest engagement survey scores ever, we also hit 92% survey participation—our highest ever. This was not by chance or a coincidence, it was very intentional, and we did this by making the survey as easy and quick as possible with communications that emphasized the importance and value of every single person’s feedback.
Even more importantly, show your employees that you are actively listening by acknowledging, addressing, and taking action on the feedback they give you.
Many of the most well-received and popular benefits, perks, and programs at G2 have been directly inspired by feedback, such as expanded PTO, Global Wellness Program, and the rollout of our global career-leveling framework.
Don’t be shy about saying, “We’re taking this action because of your feedback.” It’s a powerful message to your employees that you see and hear them.
Encourage community and socialization
You don’t have to have a big budget to build a sense of community and team spirit. This past November, G2 had its first Spirit Week. It was entirely virtual and asynchronous, so every region and time zone could participate. Themes included sports day, heritage day, hobby day, and recreate a GIF/meme day.
Over five days, around 200 G2ers shared over 700 posts, and nearly 600 people viewed or reacted to posts. While we were thrilled with the numbers and participation, what was more important was the opportunity to connect and learn more about each other.
We also continue to empower and celebrate our ERGs here at G2, who are the heart and soul of our community and drive so much of our cultural events, activities, and holiday celebrations. Our Ebony & Allies ERG led the way for discussion and trivia for Black History Month, our LGBTQ+ & Allies ERG led the way for Pride Month and capped it off with a virtual drag show, and our Latinx & Allies ERG put together a month of programming and fundraising for Hispanic Heritage Month.
Ask your senior leaders and executives to double down on their support and advocacy of your ERGs. By giving extra attention to the ERG leaders and their work, you’re also giving them the appreciation and recognition they deserve.
Connect employees to leaders
Engagement is connection, so encourage your leaders to spend more time with newer employees, those just starting out in their careers, and individual contributors. This can be a formal mentorship program like the one we launched here at G2 or informal opportunities like lunch and learns or fireside chats. It's an effective way for leaders to let employees know that the company sees them, values them, and supports them, especially during challenging times.
Another way that we help our leaders stay connected to the pulse of our global team is through our Quarterly Employee Report. This is a compilation and summary of the key people metrics we believe all leaders should know and understand. These metrics include demographic data and Voice of Employees (VOE) metrics like engagement survey scores, exit interviews, and Glassdoor scores. We do this for each business unit at G2 every quarter.
To be fully transparent here, this is a big time commitment, but it’s an investment we believe is critical. Leaders must have a line of sight into their teams: the makeup of their team, how people are feeling, what keeps them engaged, and areas of risk in their teams. Tying this back to communication, ultimately, this is about feedback and listening and taking action on that feedback.
Your people are the heart
When I signed on as Chief People Officer in 2021, I shared how every great endeavor I’ve been a part of has been about the people and my belief that people are the heart of every organization. Without that heart, organizations simply can’t function.
That’s why it’s critical to take care of, engage, and invest time and attention to the heart: your people’s needs. Challenges and stresses will inevitably arise, so when that heart rate goes up, you'll know that your people are ready and strong enough to make it through the storm and come out stronger on the other side.
Start putting your employees first by helping them see a future at your company. Learn more about what it takes to create an employee success plan.