Job offers

Revoking job offers is an increasingly common cost-cutting strategy

Before accepting a job at Twitter, 23-year-old Iris Guo turned down five other offers. Twitter has paid well — $180,000 a year including bonuses and equity — and it’s a well-established public company. What could go wrong?

A lot: Late last month, Twitter cut the rug, rescinding Guo’s offer for an associate product manager position, along with a handful of others. “You wouldn’t expect a big company to do something like this,” Guo, who graduated from college in December, told Axios.

Why is this important: Tech companies are reining in record levels of hiring over the past two years. It’s happening so fast that instead of the usual mix of layoffs and slower replacements, employers like Coinbase, Redfin, Twitter and some startups are canceling lucrative job openings – a practice last seen widely during the crisis. financial.

  • It’s a surprising trend, coming at a time of record unemployment and labor shortages, highlighting the current weirdness of the economy and its rapidly changing nature.

State of play: It’s a trend that’s accelerating as more leaders see termination as an achievable strategy, says Erin Grau, co-founder of Charter, a media and services company focused on the future of work. .

  • HR managers now see this as a cost-cutting strategy, she says. “A lot of people who never thought it was an option, now it has become an option.”

Besides being disappointing and frustrating for those suddenly out of work – it’s also a bad image for businesses. “It’s totally embarrassing and will hurt your employer brand in the long run, also eroding trust with applicants and current employees,” Grau says.

  • Resuming job openings could also be a sign that an HR team just isn’t aligned with the people in operations. It signals a lack of “discipline and smart planning throughout the company if that is the situation you find yourself in.”
  • “A lot of companies were over-hiring, it’s partly a correction to that,” says Lars Schmidt, founder of HR research firm Amplify.

Yes, but: Canceling job offers is better than layoffs, experts say, and it’s a way to quickly reduce what is often the biggest cost of running a tech company: payroll.

  • Twitter and Coinbase are paying compensation to those whose job offers they have canceled. “Better than nothing, that’s for sure,” Guo said.
  • A product manager who saw his $300,000-a-year role at Coinbase disappear, told Axios he almost would have preferred a layoff. “At least I would have [Coinbase] on my resume,” he says. He is now scrambling to get back to his old job and end his rental agreement for a new apartment – since he no longer needs to move.

What the companies are saying: “While slowing our workforce growth is necessary given the macroeconomic environment, we deeply regret the impact this is having on affected candidates,” Coinbase chief human resources officer LJ Brock wrote in a post. blog.

  • In a Tweeterhe also said that Coinbase will provide legal assistance to anyone who needs visa-related assistance following the withdrawal of his offer.
  • “Obviously we understand that this is not a good situation for us or the candidate,” a Twitter spokesperson told Axios. The decision was “influenced in large part by the global macroeconomic environment,” the company added in a statement, noting that layoffs are not expected.
  • “I’ve never canceled an offer before, and hopefully never have to again,” said Jeff Mahacek, vice president of product design at Redfin, who acknowledged on LinkedIn that he had made the decision to freeze hiring and cancel a few jobs. offers.

The bottom line: It’s a bummer, but it’s been a phenomenon so far mostly confined to technology, and mostly for extremely high-paying roles. Given the relative health of the labor market, these workers are likely to be recruited quickly – however, the market is bizarre, as noted above.

  • Guo says she has an offer on deck from a startup that she rejected in favor of Twitter. “I wish I had chosen [that company] at the time,” she says.