Trying to explain layoff benefits

Inconclusive evidence for what kinds of companies share benefits publicly

I’ve had a few comp leaders point out to me that layoff benefits disclosed in CEO memos are probably a distorted view of the market because only top tech companies are flexing their lucrative benefits.

We’re seeing 20+ weeks of severance, equity acceleration, even keeping your laptop — for thousands of employees.

It does seem top of market.

But I wanted to see if any data shows any patterns substantiating that idea, and the tl;dr is, so far, I’ve found none.

Results of my inconclusive analysis below.

I’m curious what you think drives the decision for a CEO to layout in detail to the public exactly what benefits impacted employees receive.

Methodology

I looked at tech companies that have announced layoffs since August 2022, filtering to public companies over $1 billion in market cap for a total of 59.

20 (34%) of those companies have disclosed layoff benefits, which I track here.

I explored a few data sources in search of a pattern.

• Size: market cap using Google Finance. Because maybe it’s a big company thing

• Reputation: Glassdoor overall NPS score, as a proxy for how important talent brand is to these folks. I tried to use Great Places to Work ranking, but only a few of the companies were participating

• Comp Philosophy: Levels.fyi average total comp for entry-level software engineers. The idea here is to capture top-of-market pay. I wanted to use market positioning from proxy statements, but they weren’t consistently disclosed. I used SWE because it has the most data, and entry-level because it seemed the safest way to measure apples-to-apples.

• Transparency: I did consider using pay range disclosure quality using my framework as a proxy for level of transparency, but I believe companies are only just getting their act together and it’s too early to make for a good source; maybe worth revisiting down the road

And for my fellow stats nerds — I only looked at simple correlations. We’ll save a multivariate regression for another day.

Results

By Company Size

Note the y-axis is logarithmic to make it readable — the top 10 companies account for 86% (5.7T) of the market value.

Disclosure does seem to slightly lean large enterprise, but, only kind of.

I notice a thick band of companies from ~15 to 50 billion valuation where almost everyone discloses layoff benefits, but I’m not sure what might explain it.

For the other two analyses I plotted the variables against market cap to see if it helped visualize a pattern.

By Reputation

I was hopeful for this one because a company actively managing its talent brand on a site like Glassdoor seems like a great candidate for stronger disclosure.

But my hopes were squashed.

I see some correlation between market cap and Glassdoor score, but it’s pretty weak (R-squared of 0.08).

By Comp Philosophy

There’s just no pattern in this chart. I’ve had more peanuts look like Abraham Lincoln than dots on this chart look connected.

So what’s the deal?

It’s tempting to think the pattern is:

“We’re only giving out 3 weeks of severance, so no way we’re telling everyone.”

But my guess is it’s more cultural than anything else. Or companies savvy enough to play the long game on talent brand as they navigate a challenging economic climate.

What do you think?

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