The CEO of Zoom has attracted both praise and condemnation after revealing he has slashed his own salary by 98% in the wake of the firm’s mass redundancies.
Eric Yuan, who also founded the video conferencing software company announced that 1,300 employees would lose their jobs – approximately 15% of the entire workforce – after a recent slump in profits and user growth.
The company became a household name during the pandemic, when demand for its services rocketed. In order to keep up with this demand, the company tripled in size over a two year period.
But, in the company’s own words, Zoom “didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably.”
With many firms ushering the majority of their workers back to the office, either full-time or on a hybrid basis, and with the global economy shrouded in uncertainty, Zoom’s CEO Yuan has admitted he’s not sure the firm can weather the economic storm.
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“We have made the tough but necessary decision to reduce our team by approximately 15% and say goodbye to around 1,300 hardworking, talented colleagues,” Yuan said in an open letter to employees, colloquially referred to as Zoomies.
He went on: “We worked tirelessly and made Zoom better for our customers and users. But we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities.”
Yuan added: “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today – and I want to show accountability not just in words but in my own actions. To that end, I am reducing my salary for the coming fiscal year by 98% and foregoing my FY23 (Financial year 2023) corporate bonus.”
Members of the executive leadership team will also reduce their base salaries by 20% for the coming fiscal year while also forfeiting their bonuses, Yuan said.
Mixed reactions to Yuan’s salary ‘sacrifice’
Yuan’s revelation that he would give up most of his salary was met with a mixture of praise and scepticism.
Some felt his decision showed accountability and humility, while others felt it was a PR stunt – as of 2023, Yuan’s net worth is an estimated $3.8billion, according to Forbes.
Rob Karpati wrote: “Respect, this is what being accountable looks like. This is also smart, building the kind of shared value in the corporate culture that has the potential of paying back nicely in the long term.”
Sharing similar sentiments, Millie Betty said: “This is an [sic] incredible, when leaders begin to share and admit mistakes and take accountability, we can collectively agree that we are on the right track. It is rare to see words and actions aligned in such circumstances, all I can say is RESPECT!”
However, many took a dimmer view of Yuan’s announcement.
“This is a sham. He baited you, hook line and sinker,” said Andrew Powell, who added: “This isn't accountability, this is legal market manipulation. He essentially purchased a quick round of positive publicity from commentators on social media, and what do you know, the stock went up 10%. Eric made back that one-year salary deficit many times over in a single day of trading.”
Arthur Viente described the move as “an attempt to appear empathetic in nothing more than a PR moment while the... people who were laid off could have easily been kept had management made better decisions.”
Bradley Keenan commented: “The CEO of Zoom is not going to feel any hardship whatsoever by sacrificing his salary. This should give zero comfort to those people who lost their jobs this week.
“We now live in a world where a multi-billionaire can fire 1300 people (for his benefit) and then be praised by everyone for doing it.
“Remember the more we reward this behaviour, the more empowered other companies will be to do the same.”
Employees pay the price for firms’ overexpansion. Déjà vu?
So, Zoom’s CEO has taken the heat for the situation the company currently finds itself in.
Sound familiar? Well, recent headlines have been filled with tech firms admitting their rapid growth during the pandemic has resulted in layoffs, hiring freezes and job offers being pulled.
Just last month, Spotify’s CEO Daniel Ek admitted he had been “too ambitious” in growing the company during the pandemic. Consequently, the firm had to slash six percent of its workforce - approximately 600 employees - to rein in costs.
There have also been thousands of layoffs at tech giants including Google’s parent company Alphabet (12,000 cuts) Amazon, (18,000) Microsoft (10,000) and Meta, (11,000).
‘This isn’t accountability... it’s emotional manipulation’
Yuan is not the first CEO to have sparked a debate with their attempt to convey how much they’ve been affected by making staff redundant have
In August 2022, Brendan Wallake, the CEO of social media marketing agency Hyper Social, went viral for posting a photo of himself crying, alongside a post revealing that he had to lay off a number of staff after he scaled up his business too quickly.
He was quickly dubbed ‘The Crying CEO’ and his post sparked a fierce debate about bosses making public declarations of sadness and support for the employees they’ve just terminated.
Speaking about the Wallake situation at the time, Kristin Dell’Orso, a trauma therapist, told HR Grapevine: “Accountability is great, it's crucial for any kind of growth and recovery. This, though, is not accountability, but rather emotional manipulation. The selfie is truly a next-level manipulation tactic. I see this sort of behaviour among abusive parents who want their children to pity them for the abuse they committed.”
She continued: “This is not how you rectify your mistakes, sir. Public declarations of ‘love’ may or may not be genuine, but either way, the end goal is managing your image, not supporting the people you've wronged. What actions are you taking to repair the harm you've done? This doesn't count.”
How to properly support employees during difficult times
As a CEO earning unfathomable amounts more than the average worker, posting a statement about your own sacrifices is about the least productive show of support possible.
So, what can leaders do to genuinely show compassion and support for their outgoing workforces?
Tina Hyland, Employment Law Adviser and Solicitor at WorkNest, recently told HR Grapevine: “2023 is going to be a challenging year.
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“Unfortunately, this does mean employers will be looking to make some difficult decisions, such as making redundancies or restructuring the workforce, as staffing costs are usually a significant expense for a business. Suppose that’s an avenue they decide to take; in that case, employers must be prepared to negotiate with employees to ensure they receive a fair deal.
“We highly recommend businesses reduce the chances of making any employees redundant by making alternative choices where possible, including implementing pay freezes or reducing benefits. However, each option comes with its own risk, so obtaining proper legal advice is critical in making the right decision for your business while minimising the negative impact on employees.
“Unfortunately, in the context of the recession, any cuts inflicted on employees due to employers’ decisions, such as restructuring or pay freezes, may be detrimental to employee’s mental health, especially with further worries to their financial wellbeing throughout this time. Supporting employees with additional benefits that might be available to them already, including Employee Assistance Programmes to retailer discounts, could help improve an employee’s bottom line in other ways.”