Spotify CEO Shocked That Laying Off 17% Of His Staff Presented A ‘Significant Challenge’ To Their Company
Apparently, he thought 17% of his staff wasn't a big deal.
r.classen / Shutterstock Spotify is one of the biggest music platforms in the world. But even the most successful companies have their ups and downs.
After taking some financial hits, Spotify announced that it was laying off 17% of its workforce. Now, they seem to be almost regretting that decision.
Spotify’s CEO was dismayed by the ‘negative impact’ of the company’s December layoffs.
According to the financial publication The Street, Spotify’s CEO, Daniel Ek, made the decision to lay off 17% of the company’s employees at the end of 2023.
“When Ek sent a memo to Spotify employees in December announcing the decision to shrink the company’s workforce, he claimed that economic headwinds were the reason for the company’s layoffs,” they said.
His exact words to employees in the memo were, “Economic growth has slowed dramatically, and capital has become more expensive. Spotify is not an exception to these realities. This brings me to a decision that will mean a significant step change for our company. To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.”
Now, he is reportedly regretting the layoffs to some extent. During an earnings call to review the company’s progress for the first quarter of 2024, Ek made some interesting comments.
cottonbro studio / Pexels
“Another significant challenge was the impact of our December workforce reduction. Although there’s no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we [anticipated]. It took us some time to find our footing, but more than four months into this transition, I think we’re back on track,” Ek stated.
According to The Street, Spotify decreased from 9,123 employees to 7,721.
One business expert was upset by Ek’s apparent newfound concern over the layoffs.
Brett Trainor, known on TikTok as @the_corporate_escapee, made a video dedicated to Ek’s recent comments.
“Man, you just can’t make this stuff up,” he said. “Are you kidding me? You lay off 17% of your organization, and you’re shocked that it impacted the day-to-day operations?”
Trainor noted that it was technically a positive sign that losing 17% of the workforce led to difficulties.
“If it didn’t, then shame on you for having 17%, almost 20% overstaffed, meaning they were not doing anything on a day-to-day basis to help the business.”
Referring to the story from The Street, Trainor said, “I know also, later in the article, it mentioned that it took them a while to find their footing, but now they’re starting to gain traction or make up for whatever the impact was. Meaning the folks that are there are now taking on more responsibilities and absorbing into their day-to-day, and I’m sure, based on other headlines we’ve read, that I’m sure they got pay increases for picking up that additional work.”
cottonbro studio / Pexels
Trainor explained why layoffs are never a good idea if you can avoid them. “When you’re going to lay people off, that should be the absolute last resort because it’s rare that companies recover from those types of things because you just don’t have the trust of the employees anymore,” he said.
“But to come out publicly on an earnings call and say you’re shocked at the negative impact that layoffs had on your company? Come on, you gotta be kidding me,” he concluded.
It's certainly ironic that Spotify’s CEO had any qualms about laying off 17% of his employees. After all, it was his decision to go all-in on the layoffs in the first place. It seems that Ek realized all actions have consequences, even when you think they won’t affect you directly.
Mary-Faith Martinez is a writer for YourTango who covers entertainment, news, and human interest topics.