Shopify reportedly ousted 70 employees in August while rewarding the rest of its employees with a pay hike. The move came after the Ottawa-based company laid off 10 percent of its workforce in late July. According to a report published on theglobeandmail.com, those affected in the fresh layoff were provided with similar severance packages to those laid off in July. Besides 16 weeks of pay and an extra week for every year they had been associated with the company, they were also provided with an extension of their medical benefits and outplacement services. Shopify also asked them to keep the home office furniture. However, in order to receive all the compensation, employees were asked to sign non-disclosure agreements. The additional layoff has put Shopify’s plight again on highlight.
Shopify Stock Price Plummets 17% After Layoffs Announcement
Rewards For The Rest
This silent change in the Shopify workforce was followed by rewards and incentives for “valuable or essential” employees, according to theglobeandmail.com sources. Throughout August, Shopify staff either witnessed a hike in their team’s compensation by almost 40 percent or received individual bonuses worth around 5 per cent of their salaries. Sizable increases are different from the automatic salary bumps of Shopify’s compensation overhaul that rolled out in August and will be fully implemented in September. It will let employees decide how much of their salary should be paid in cash and how much in stock while not altering the base wages.
Shopify Reports Net Loss Of US$1.2B In Second Quarter After Layoffs
Sources informed that the fresh layoff is meant to make Shopify leaner overall and allow it to focus on core business. The cuts reiterate what Tobias Lütke, Shopify CEO, wrote in a memo to staff while announcing layoff on July 26. “Across the company, we’re also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” he wrote. According to Business Insider, Shopify slashed 50 staffers before the July layoff, delayed a compensation overhaul and cancelled a few fall internships.
Building companies comes with high highs and low lows. Today I had to share some sad news with Shopify. https://t.co/gNO37lWYpg
— tobi lutke (@tobi) July 26, 2022
More Layoffs To Come?
In July 26 memo, which was later posted on the official website, Shopify’s CEO said, “Give the growth we saw in the pandemic, we bet that the channel mix—the share of dollars that travel through e-commerce rather than physical retail—would permanently leap ahead by 5 or even 10 years. We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match. It’s now clear the bet didn’t pay off. Ultimately, placing this bet was my call to make and I got this wrong.”
Citing a source, the portal claimed that Shopify will not hesitate to downsize its team if the profit margins continue to shrink. To deal with the waning pandemic boom, Shopify plans to slow the hiring process and work with a smaller head count for the rest of 2022. The entire layoff move is an aftermath of post-pandemic market conditions. Shopify shares plummeted over 80% since they peaked in November.
Ex-Shopify Content Manager Gets 25 Job Offers in 2 Days After Layoff
Shopify’s workforce increased from 1900 in 2016 to 10,000 in 2021, according to WSJ. Currently, the e-commerce giant has around 8,800 workers across the globe. According to Crunchbase News, over 30,000 tech workers have lost their jobs in the US in 2022. Netflix removed 300 employees after its subscribers decreased in June 2022. The move came after the company slashed 150 workers a month before. Peloton also decreased 2800 staffers. Companies like BlockFi, Coinbase, Gemini and Crypto.com have also lowered the number of their employees due to the economic drop-off.
