HR tech companies' layoffs reveal hard facts
As the economy softens, HR tech companies are trimming payrolls. Several with $1 billion valuations have announced layoffs this month, citing concern for the future.
The layoffs by Google, Microsoft and Meta have eclipsed job cuts at much smaller firms. But a growing list of HR tech firms -- several with billion-dollar-plus valuations -- made some relatively significant layoffs this month.
Among them is Lattice, which makes performance management and other HR tools. It cut about 15% of its workforce in January, or 105 employees.
"It's not lost on me that this is particularly hard as an HR software company whose mission is to make work meaningful," wrote Lattice CEO Jack Altman, in a blog post that walks the employees through his rationale.
When interest rates were low, "organizations hired aggressively to meet market demand, and the war for talent reached a fever pitch. The result, for Lattice, was that growth skyrocketed."
Altman added that the cooling off in the labor market is affecting demand for HR tools, a point made by other HR vendors that cut jobs this month. The broad layoffs, which started in the tech industry, are spreading to other industries and increasing the pain on HR vendors. Goodyear Tire & Rubber, for instance, said Friday it was cutting 500 salaried workers because of weaker demand.
"Many companies -- our customers and prospective customers -- are seeing their demand retract," said Altman, and "they are slowing hiring and spending in all areas to preserve their cash and get to profitability."
Lattice recently raised $175 million in new funding and increased its valuation to $3 billion.
A firm spokeswoman said in an email that the reduction "will not impact customers or our product."
Limeade Inc., an employee experience firm in Bellevue, Wash., said this month that it would lower its headcount by 15% and restructure its R&D, product, customer operations and customer success divisions.
The HR tech company didn't specify the reduction total. A 2021 annual report put Limeade's headcount at 300.
"This restructure is a difficult but necessary step," said Limeade CEO Henry Albrecht in a statement.
In December, Limeade signed a three-year contract with Tyson Foods valued at more than $5 million. In 2021, Limeade acquired TinyPulse, which makes employee well-being tools, for $8.8 million.
'The hard truth'
In December, Beamery, a lifecycle management provider in London, said it had raised $50 million in new funding, putting its valuation to more than $1 billion. General Motors is a customer.
In January, Beamery laid off approximately 12% of its staff, according to a report in Tech.eu.
The HR tech company didn't confirm the layoff number, but a spokesperson said in an email: "We have made some difficult decisions, and our primary focus is supporting employees that may be impacted by this process and helping talented people that have helped to build this company."
Oyster HR Inc., a startup based in Charlotte, N.C. that enables global hiring, also cut staff this month. The firm reached a $1 billion valuation last April and said at that time that it had about 500 employees. It did not specify the size of the staff reduction.
"The macroeconomic environment has dramatically shifted, creating headwinds for many businesses, including Oyster," wrote the firm's CEO, Tony Jamous, in a blog post.
"The hard truth is we don't know when the world will exit this phase of high inflation, high interest and a declining employment market," Jamous said. "As we begin the new year, the economic outlook remains uncertain."