What is Apple doing to avoid a wave of layoffs?

CEO Tim Cook in a meeting with Apple Store retail staff. Photo: AFP

According to Bloomberg, Apple has avoided the ongoing wave of layoffs thanks to its aggressive cost-cutting strategy. Some inside sources said Apple has changed its bonus payment plan. Normally, the company distributes this amount once or twice a year depending on the division, in April and October. Under the new policy, the divisions will receive it only once in October.

CEO Tim Cook is also on the list of pay cuts. According to Apple’s filing with the US Securities and Exchange Commission (SEC) in mid-January, the company’s total compensation for 2023 is expected to be $49 million, 40% lower than in 2022.

Apple is not short of cash, with about $165 billion. However, the company wants to maintain stability. According to some experts, paying out bonuses at the end of the year will help the company have more money to solve the company's problems. This move also partly helps to streamline the operations of the human resources management system.

To save money, Apple is also said to have pushed back many projects. Previously, according to WSJ, the company moved the development of some home devices, such as the HomePod speaker with a screen, to early next year. This helps the company have more capital for more urgent projects.

Apple has also restricted budgets for some teams. CEO Tim Cook has reportedly instructed executive vice presidents to use their allocated funds more efficiently and to be more strict with their subordinates. Team leaders now require employees to be in the office on time, especially on Tuesdays, Wednesdays and Thursdays. Some employees believe this could be a “prelude to firing underperforming employees.”

Most departments at Apple have been on a hiring freeze since last September, when Cook began tightening spending and clamping down on unforced hires. But when someone leaves a position, Apple leaves it open rather than quickly filling it, a source said.

Since the second half of 2022, at least 11 senior Apple executives have resigned. The company has since reassigned roles to subordinates rather than hiring new ones, or left the positions vacant. It has also cut back on third-party hiring. Since late last year, the company has laid off many contract workers and cut back on contractors to cut costs.

The company has also tightened employee benefits, such as travel budgets. Business trips now require senior executive approval and must be “business critical.”

“We are worried about being laid off if we don’t meet the required hours,” one retail employee told Bloomberg. “The company isn’t doing mass layoffs, but it is laying off individual teams.”

Why doesn't Apple do mass layoffs?

Apple is more profitable than any other tech company, and the company needs to protect its image as it prepares to launch new products like smart glasses, according to Bloomberg analyst Mark Gurman. Mass layoffs would do more damage to morale and public perception of the company’s business.

According to him, Apple's leaders are considered to be the most tactical people in the industry. The staff cuts are a sign that the company has made a strategic mistake. According to Tom Forte, an analyst at investment bank DA Davidson & Co., Apple may still lay off some staff in the future, but only a very small number and will do it quietly.

Meanwhile, Google, Meta, Microsoft, and Amazon are disrupting the tech industry by hiring and then laying off tens of thousands of people. Daniel Morgan, a senior manager at Synovus Trust, said Apple was smart not to hire en masse, especially in positions where it wasn’t good at. “Both Meta and Google made a huge mistake on this,” Morgan told the WSJ.

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