How Wayfair’s Messaging Around Layoffs Has Evolved

Wayfair announced Friday morning that it would lay off more than 1,600 employees, the fourth round of layoffs since early 2020, which have now cost about 3,000 employees their jobs. 

In CEO Niraj Shah‘s memo to staff, he says the Boston-based company went “overboard” in pandemic hiring and lost sight of its core principles, The Wall Street Journal first reported. After laying off about 500 people in 2020, the company laid off another 900 in 2022 and 1,700 in 2023 in its attempts to “right-size” its staffing levels, according to Shah, who says that company goals have been hit faster with smaller teams. He believes that having too many people “causes inefficiency, coordination costs, and investments in lower return activities. That is what we have been experiencing and what we need to end.” Presumably that’s what the company plans to achieve by laying off 13 percent of its workforce.

But Shah’s messaging around productivity hasn’t always focused on the numbers. In December 2023, he wrote to employees in an end-of-year memo that “working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success.” He also used the memo as an opportunity to let employees know that the company had become profitable again. 

Many publicly scrutinized Shah for being tone-deaf in his messaging, and for his unrealistic management strategy. Nicholas Bloom, a professor of economics at Stanford University, told CNN, “If Wayfair wants to run a business where people work 80 hours a week, he’s going to have to [increase] their salaries by 50 percent to pay them for it.” And one user on X (formerly Twitter) refers to Wayfair’s slew of layoffs as a “clown show.” 

Another Journal article from earlier this year about the Wayfair memo notes that senior managers across industries feel that employee engagement is “horrible” at the moment. It also quotes Henri Taush, former CEO of 5E Advanced Materials, a boron and lithium supplier, who said, “If you tell people to work hard without giving them the motivation to do it, that doesn’t go very far.”

For this most recent layoff, Shah’s messaging has been a tad more palatable. He noted that Wayfair has overhired, and otherwise focuses mostly on the numbers. This round of layoffs will cost upwards of $80 million, mostly in severance, and will save approximately $280 million annually. Wayfair’s resizing will reflect nearly 20 percent of senior positions, as well as engineers in business, design, and research roles. Wayfair plans to replenish its headcount throughout 2024, but in lower-ranking positions, specifically jobs where people can execute on tasks instead of leadership roles where people oversee actions, the company said.