Revenue vs. Morale at Meta

Meta Reported Record Profits While Employee Morale Hit Record Lows. Understandably, Workers Are Upset.

Meta shareholders and employees probably shouldn’t exist in the same universe. Meta reported record quarterly revenue earlier this month. At the same time, employee morale at Meta is at an all-time low. The workers who build Facebook, Instagram, and WhatsApp for a living are understandably shocked. Allow me to explain. First of all, revenue and morale don’t always correlate. Revenue is a lagging indicator. Morale is a leading indicator. Revenue tells you what decisions employees have already made. Morale predicts how employees will decide in the future. They are not mutually exclusive. One is just slower to report than the other. Record profits have not translated to happy Meta employees.

Despite Meta reporting its largest quarterly revenue in company history this week, employees are far from celebrating. The company announced it earned over $40 billion in revenue last quarter. To put into perspective how ridiculous an amount of money that is, only nine months ago, Meta boasted quarterly revenue of $30.69 billion. Instead of rejoicing, employees are frustrated. Why? Because when a company is raking in money left and right, employees are expected to do more with less. Meta embarked on what Zuckerberg has coined the “Year of Efficiency.” Cut teams. Layoffs. Layoffs. And more layoffs. Meta did great on Wall Street. But morally, it was atrocious. Employees were let go left and right. It’s mentally taxing work in an environment where you’re not confident that your job will be there tomorrow. And if the company is raking in billions of dollars in revenue, why do I have to work so hard? Guess what employees’ morale tells us about decisions like these?

In the future, employees will decide not to work as hard. Meta used to be one of the best places to work in Silicon Valley. Salaries were great. The benefits were fantastic. And best of all, employees felt like they were working toward something bigger than themselves: connecting the world. But times have changed. Employees took notice when thousands of their co-workers got laid off. They haven’t forgotten about Zuckerberg prioritizing efficiency above all else. When your company’s revenue is higher than ever, and you’re still asked to pick it up, employees will inevitably feel slighted. Balancing revenue and morale is hard. But companies that focus too much on one at the expense of the other will find their financial victories to be self-terminating. Leading indicators do not always immediately follow strategic changes. Remember when Zuckerberg announced the start of Meta’s year of efficiency? In the short term, shareholders rejoiced. Why? Because Meta would be leaner and more cost-efficient. Investors saw this, and Meta’s stock price skyrocketed. However, organizational psychology suggests that across industries, employee morale takes a massive hit after mass layoffs. Employees experience higher levels of job insecurity, lower levels of commitment to the company, and a plummeting trust in leadership. When employees feel this way, productivity decreases. Voluntary turnover increases, especially among your best employees. And more importantly, employees are less likely to take creative risks.

Meta’s current financial situation is the result of investments made years ago. If Meta doesn’t right the ship on employee morale, its financial performance will inevitably suffer years down the road. This creates a PR nightmare for Meta leadership. How do you tell employees who just had their work cut credited for increased revenues? You can’t. Meta can’t compensate employees enough to make up for the loss of psychological safety many employees have experienced over the last year. What employees want, what we all want, is stability. We want to know that our work matters. We want to know that leadership has a plan for us. And most importantly, we want to know that you care about us as humans. Sure, Zuckerberg has opened up more this year than last. And Meta has made attempts to reconnect as a company. But when you ask any employee what would improve morale, they’ll look you right in the eye and say, “Stop laying us off.”’ Meta isn’t the first company to experience this phenomenon. In fact, it’s pretty trendy right now. When the pandemic hit, companies threw perks at employees. If they weren’t offering thousands of dollars to work remotely, they were installing ping-pong tables and hiring gourmet chefs. Now that companies have the upper hand again, they’re reeling back on these perks. Employees are expected to return to the office. And if you don’t? Too bad, because your paycheck isn’t changing.

What’s happening at Meta is not an anomaly. Employees are mad because Meta promised one thing (a thriving company where we are allowed to work remotely) and are showing up day after day to realize it doesn’t actually work that way. And that, my friends, is where employee morale goes to die. Meta can report record revenue all they want, but if they don’t fix morale, they’ll report low revenue someday. When companies decide it’s time to run leaner and more cost-efficient, they are making a tradeoff. They are saying financial gains are more important than your company culture. And that is fine! If you’re willing to accept the cultural costs of your decision. Meta did this. They decided financial efficiency was more important than Kylie Jenner working from Bali. But at what cost? Employee morale is at an all-time low. And if Meta doesn’t fix it, employees will decide somewhere down the line that they don’t want to work as hard. And if they don’t work as hard, Meta will not be reporting record revenue for much longer.