The Ethics of Employment Whiplash
Some may say these situations are unavoidable. But, are they? Really?
OPINION
Whiplash employment, the hiring and then laying off employees after a short period of time without a safety net, is unethical.
WHAT HAPPENED
A few weeks ago I read a LinkedIn post by a person in the game industry who was, to put it politely, screwed over by the current games industry implosion. I'll call them SEASONED GAME DEVELOPER because of their years of experience.
How were they screwed over? By accepting one of multiple offers of employment, relocating 3500 miles across national borders as required by their new employer, but then being laid off after 7 weeks. SEASONED GAME DEVELOPER was left with minimal to no safety net and all the other offers were gone, because 7 weeks. They were abandoned at sea in a raft without a paddle.
The industry is not that big, it just seems like it. It's more like a game of “one degree of Kevin Bacon.”
I found it difficult to talk about this post without cursing because I have good friends to whom this type of thing has happened.
I don't know all the circumstances, but IMO this was unethical employer behavior. The post made me so angry that I started and restarted this opinion piece, trying to figure out how to say something useful without ranting like a crazy person, talking about someone I've never personally met (SEASONED GAME DEVELOPER).
Then about a week later, I read an article in PC Gamer where the head of Microsoft gaming, Phil Spencer, complained about being forced into layoffs, and I understood where this article needed to go.
Quoting Spencer from the PC Gamer article:
"I don't get [the] luxury of not having to run a profitable growing business inside of Microsoft."
Spencer points to how a publicly traded company (a.k.a. capitalism) functions in today's world. Shareholders demand 'growth', meaning an increase in value, and that is what matters. Quoting PC Gamer again:
"When you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth—because why else does somebody own a share of someone’s stock if it’s not going to grow?—the side of the business that then gets scrutinized is the cost side"
In Spencer's world, using layoffs as a fungible substitute for increased profits is just a normal aspect of doing business.
And this wasn’t the end. PC Gamer shared another article a few days later interviewing Matthew Karch, CEO of the newly spun-off Saber Interactive. Karch was also bemoaning the layoffs, and again from the perspective how he has been personally affected:
"The process that we've had to go through to terminate studios has absolutely been... it's killed us," Karch said. "I say 'us' even though I'm no longer part of the company because I feel like… I mean, I still have shares, I still have close relationships and good friends, and obviously the best wishes that they succeed over there. But I would say Embracer tried harder than anybody to save as many jobs as it could."
The bold emphasis in the quote above is mine, because regardless of what Embracer may have done to save jobs, I am not surprised that Karch’s own financial interests top the list of things to mourn.
I think this is an example of what people mean by the phrase, “saying the quiet part out loud.” That could be caused by undiagnosed tone deafness.
WHY IT MATTERS
Sometimes layoffs are necessary to keep a company afloat. I have been personally responsible for that type of layoff, and it sucked. It sucked even more when our agonized choices couldn't save the business, and we ended up dissolving the development team.
Sometimes layoffs do keep the company afloat. In another difficult situation I gave suggestions to my boss that I thought were best for the organization's survival. My own name was on the layoff list. That company downsized by more than fifty percent and is still functioning a year later. And yes, I was laid off.
But sometimes layoffs are purely about spreadsheets, regardless of what happens to people.
Here is a personal example. Years ago I was laid off from McAfee, along with a number of other folks. It was unexpected, and surprising given my responsibilities and performance. I later learned that the round of layoffs was to "improve the bottom line" as part of selling McAfee to Intel. A pre-acquisition layoff, if you will.
FAUX GROWTH
Why layoffs occur matters. Who benefits from the pain caused by growth-subsidizing layoffs?
In the Microsoft games case, Microsoft was going to show a profit with or without game developer layoffs, if I understand the numbers correctly.
In my own situation with McAfee, the company had a great deal of cash in the bank before the layoffs. Like, around $1B. Leadership bragged about the cash cushion, so the company wasn't in any sort of distress.
These two cases of layoffs were not driven by a need to keep the companies solvent, hence to keep folks employed. They were to subsidize profit margins -- to enhance the bottom line as described in the PC Gamer article, and to prop up stock prices.
SHAREHOLDER CAPITALISM
The short description of shareholder capitalism is simple. The only thing that matters is creating ever greater shareholder value, meaning increasing stock prices. Leaving employees in untenable situations, without income, losing a house, or going bankrupt doesn't matter. At least, not to the investors and shareholders.
As long as it’s not explicitly illegal, it's on the table.
Growth goals in publicly traded companies are driven by leadership financial incentives, like bonuses and promotions. Layoffs in these cases are, in fact, choices being made by and for the people who benefit from those choices.
So who benefits?
Phil Spencer is arguably one of the most privileged, and likely highest paid, members of the game development community. The article doesn't say, but I'll speculate that Spencer benefited from meeting the growth requirements he blames for his and Microsoft's layoffs.
Who else benefits from increased stock prices? Here's some data shared by Robert Reich on his Substack:
"By 2024, the richest 1 percent of Americans owned 52 percent of all the shares of stock owned by Americans. The richest 10 percent, 93 percent."
This is an example of how shareholder capitalism works, and for whom.
SUMMARY
The company that laid off SEASONED GAME DEVELOPER was not, to my knowledge, a publicly traded company, but they do seem to be following the rules of shareholder capitalism.
The PC Gamer article quotes describe how publicly traded companies function in a way that implies that shareholder capitalism is inevitable, that it's just some law of physics, but it is neither. It's a corporate behavior favored by how tax laws and executive compensation plans work today. This wasn't always the case, but that history is beyond the scope of this article.
Sometimes layoffs are necessary. It is better for a company to survive and employ someone than to go under and serve no one. Sometimes all efforts fail, layoffs are in vain, and the company goes under.
But profitable, publicly traded companies that subsidize quarterly metrics through layoffs are making a choice to benefit shareholders over employees.
However you slice it, screwing over the people whom you need to create the games that drive your revenue is not just short sighted, it's unethical.