Google’s CEO, Sundar Pichai, Says Laying Off 12,000 Workers Was the Worst Moment in the Company’s 25-Year History

I’ve said before that if you’re the CEO of a company and you decide that your best strategy moving forward is to lay off a bunch of the people who work for you, that’s a failure of your leadership, full stop. In a scenario where CEOs were held accountable, you would be one of the people who lose their jobs. 

Of course, it almost never works that way. Usually, the CEO gets to carry on being the CEO, and the employees who got laid off stop getting paid and have to go find another way to pay their rent and buy food. 

What I find most interesting about things like this is that there’s always a good reason for the layoffs that has something to do with making the best decision for the future. The thing is, the only reason you’re faced with this decision at all is because whatever you thought was the best option before didn’t work out. 

“We made a set of decisions that might have been right if the trends continued,” Pichai said at the time. What he was referring to is the unprecedented growth Google had experienced during the pandemic. The company hired employees as though that growth was going to continue forever. As everyone knows–and, as the CEO of a $1.75 trillion company should have known at the time–that growth was not going to continue forever. 

And, so, Google had to lay off 12,000 employees. That’s a lot of people who had been showing up to work, only to one day find out that they’re no longer getting a paycheck because the CEO made a bad bet, and they’re stuck paying for it.

To be fair, Google wasn’t the only company to make a similar decision. Microsoft laid off 10,000. Meta laid off 11,000. Amazon laid off more than 18,o00 employees.  Still, just because all of your peers are making bad bets doesn’t give you cover. 

According to Business Insider, which reviewed a copy of the audio from a recent all-hands meeting, Pichai responded to a question about the impact the layoffs had. “This is difficult for any company to go through,” Pichai said. “At Google, we really haven’t had a moment quite like that in 25 years.”

That’s saying something. Of all the changes and moments Google has been through since it started in 1998, according to Pichai, this ranked up there as one of the worst. 

That’s not particularly surprising. A layoff of that scale takes a toll on a company, even one of the size of Google. Pichai acknowledged as much, responding that the layoffs had a “clear big impact on morale,” according to Business Insider.

Still, Pichai defends the layoffs as the right decision at the time, saying that the alternative would have been to put the company in a far worse position. “It became clear if we didn’t act, it would have been a worse decision down the line,” Pichai told employees. “It would have been a major overhang on the company. I think it would have made it very difficult in a year like this with such a big shift in the world to create the capacity to invest in areas.”

To be clear, what Pichai is saying is that Google decided to spend money to hire employees that it later realized it needed to invest elsewhere. That’s a failure of management to plan and deliver on the right strategy. It’s an admission that the company’s top executives made a mistake, without actually acknowledging or apologizing for it. 

A lot of a CEO’s job is making bets on big ideas. You want a CEO to have big ideas and try things because that often has the highest chance of return. At the same time, you want them to make the best bets 

Not only are CEOs not held accountable when their poor management leads to layoffs, they are often rewarded. It’s not uncommon for a company’s stock price to increase as a result of the increase in profitability that comes with reducing overhead by millions of dollars. Of course, it seems reasonable that a better way to increase profitability is to make better bets in the first place. 

Shortly after Google announced its layoffs, an employee posted on an internal message board a simple question: “Is leadership forgoing bonuses and pay raises this year? Will anyone be stepping down?”

It’s a fair question, even if we already know the answer.