Google, Facebook CEOs warn slackers, what it means

Sundar Pichai and Mark Zuckerberg both issued productivity warnings to staff after facing down quarters

The chief executives of Alphabet and Meta Platforms, the parent companies of Google and Facebook and major heavy hitters in the tech world, are warning under-performing employees to step it up, drawing concern for potential layoffs amid the continued economic downturn

The U.S. economy shrank from April through June for a second straight quarter, raising fears about an economic recession. Consecutive quarters of falling gross domestic product (GDP) constitute one traditional measure, though not definitive, of a recession. 

"Any time there is a recession or warning of a recession, companies start looking inward and saying, how can we get ahead of this?" Julie Bauke, founder and chief career strategist with The Bauke Group, told FOX Business.  

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Bauke is one of many industry experts who told FOX Business that these warnings are indicators of a softening job market — including layoffs. 

Following a disappointing fiscal quarter, Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai both told staffers they have productivity concerns and are "turning up the heat" on managing staff performance. 

Meta's logo on a sign posted in front of the company's Menlo Park, California headquarters

Meta Platforms is considering reducing the money it gives news organizations as it reevaluates the partnerships it struck over the past few years. ((AP Photo/Tony Avelar, File) / AP Newsroom)

According to audio obtained by Reuters, Zuckerberg, whose company suffered its first revenue decline in history, told staffers last week that his hope is to raise expectations and have more aggressive goals.

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"Just kind of turning up the heat a little bit," Zuckerberg was quoted as saying. "I think some of you might decide that this place isn't for you, and that self-selection is OK with me." 

Meanwhile, Pichai issued similar concerns. Pichai reportedly told staffers last week that there are "real concerns that our productivity as a whole is not where it needs to be for the head count we have." The comments were first reported by CNBC. 

Google’s revenue growth during the past quarter decelerated to its slowest pace in two years as advertisers reined in their spending amid intensifying fears of an economic recession. Second quarter revenue rose 13% this year compared to 62% in last year's comparable quarter.

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Google CEO Sundar Pichai speaks during signing ceremony committing Google to help expand information technology education at El Centro College in Dallas, Texas, October 3, 2019.  (REUTERS/Brandon Wade / Reuters Photos)

These notices are signals of potential layoffs, which could lead to greater unemployment, fewer available jobs, lower wage growth and fewer job opportunities at startups, according to economist and Thru the Cycle President John Lonski. 

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"If there are a large number of these warnings of underperformance, it probably will be followed by a reduction in staff unless there is some unexpected revitalization of the economy," Lonski said, adding that if employees are warned of underperformance, they should brace for a possible layoff. 

Gross domestic product — the broadest gauge of the economy — contracted at a 0.9% annual pace from April through June. The decline, reported by the Commerce Department, came just after there was a 1.6% annual drop in GDP from January through March. It's a far cry from the 5.7% growth the economy achieved last year. 

"There’s no denying payrolls are going to be growing much more slowly if at all as the reality of the economic growth of less than 1.5% on average through 2023 takes hold," Lonski added. 

The first thing companies will do is close out any open or unfilled positions which will reduce the number of open jobs facing the market, according to Bauke. The next thing companies will do, is ask leaders to identify the lowest performers to prepare for a possible layoff. 

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META META PLATFORMS INC. 167.11 -3.46 -2.03%
GOOGL ALPHABET INC. 117.47 -0.72 -0.61%

"If all of the low performers are let go and they still need to cut, generally, they look at departments where they can live without people," Bauke said, adding that it will depend on the department. 

Not all industries will be impacted the same because certain roles are hard to fill. People with particular skills, such as accountants or engineers, who are decent performers have nothing to worry about, according to Bauke. 

"If they do get laid off, they will be scooped up in a heartbeat because demand outstrips supply and will for a long time," she added. 

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However, these warnings will also be a sign for employees to reassess if they even like where they are working — especially if they are not giving it their all, Bauke added. 

Robyn Duda, event strategist and founder of Robynduda.com, agrees. Duda said these warnings are also being used as a trick to "weed out those that don't truly want to be there or that can't take that pressure and it's an easier way than having to lay people off."

The Associated Press contributed to this report.