 "You won't be fired, you may be 'promoted outwards', thanks to LVMH CEO")
LVMH CEO Bernard Arnault described Mark Zuckerberg’s decision to lay off underperforming Meta employees as an opportunity for them to be “promoted outwards, so to speak.”
Arnault, who leads the luxury goods conglomerate behind brands like Louis Vuitton, Fendi, and Sephora drew a parallel between Zuckerberg’s recent layoffs at Meta and similar actions taken at Tiffany’s, suggesting that being laid off could be seen as a form of promotion.
During a Tuesday earnings call, Arnault mentioned that he had discussed the layoffs with Zuckerberg, noting that the affected workers were being “promoted outwards, so to speak.” In mid-January, Meta announced an internal memo revealing it would reduce its workforce by 5% due to performance issues, equating to about 3,600 jobs.
Despite the cuts, Meta plans to hire new employees to fill the vacancies, as the company employed approximately 72,000 people as of September 2024.
“I’ve decided to raise the bar on performance management and move out low-performers faster,” Zuckerberg wrote in an internal message, according to Bloomberg. “We typically manage out people who aren’t meeting expectations over a year, but now we’re going to do more extensive performance-based cuts during this cycle.”
During LVMH’s Tuesday earnings call, Bernard Arnault shared that a similar approach was taken with employees at Tiffany’s, the iconic jewelry brand acquired by LVMH in 2021. Arnault described Tiffany’s as a “sleeping beauty,” which had been awakened only through LVMH’s acquisition, and stated that the company “didn’t have a choice” but to make staff reductions. However, LVMH did not disclose how many employees were laid off at Tiffany’s and did not respond to Fortune’s request for comment.
Arnault explained that some employees were unable to adapt to the new demands at Tiffany’s, noting, “When you’re used to sleeping for 10 years, and you’re all of a sudden asked to become fierce, and when you’re expected to achieve high objectives, some people can’t. Unfortunately, we were not able to keep everyone.”
Impact Shorts
More ShortsLVMH’s decision reflects a broader trend in corporate jargon surrounding layoffs. For example, Amazon managers have referred to layoffs as “unregretted attrition,” and other companies have labeled job cuts as “rightsizing.” While such measures may offer short-term benefits like cost reduction and increased efficiency, the Academy to Innovate HR warns of several drawbacks, including decreased employee morale, damage to the company’s reputation, and potential legal risks.
Research from Harvard Business Review suggests that job cuts rarely help senior leaders meet long-term goals, and a study from the University of Texas at Arlington found that layoffs often negatively affect stock prices. Economic historian Stephen Mihm, writing in Bloomberg, also argued that an increase in layoffs signals a revival of outdated corporate strategies, which, if continued, could severely harm these companies.
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