The company’s CEO took responsibility for the decision to lay off 2% of their workforce.
Nike CEO Announces Two Rounds of Layoffs
Joining several other large companies making severe cuts to their staff, Nike has announced a round of layoffs that will affect over 1,500 people.
The company’s CEO, John Donahoe, shared a memo to explain the decision.
Performance and Leadership to Blame, Says CEO
Blaming poor company performance and issues with leadership, Donahoe said that he hoped the layoffs would ultimately promote growth for the shoe giant.
“I Ultimately Hold Myself and My Leadership Team Accountable”
“We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable,” Donahoe said in the memo.
Store and Distribution Center Employees Not Impacted
Despite Donahoe putting the responsibility for poor performance on himself and other members of the Nike leadership team, the layoffs are not likely to affect executives.
The CEO confirmed that employees in Nike stores or distribution centers would not be affected.
“This is How We Will Reignite Our Growth”
“This is how we will reignite our growth,” Donahoe wrote. Calling the layoffs a “painful reality,” Donahoe explained that the plan was to let employees go in two batches, starting now and ending before summer.
Cost of Living Has Consumers Spending Less
Companies like Nike are resorting to extreme cuts because as the cost of living has soared, consumers are less likely to spend their money on things they don’t need.
With decreased demand for their product, Nike is struggling to stay afloat.
Layoffs Part of Larger Improvement Strategy
The layoffs are just one aspect of Nike’s plan to turn things around. Taking stock of its products, reviewing how it implements technology, and consolidating departments are all part of Nike’s strategy.
Layoffs from Big Companies Trending in 2024
So far, in 2024, thousands of employees have lost their jobs across several industries. Last month, UPS announced a plan to eliminate 12,000 jobs in order to save money.
Many major tech companies, including Google, Discord, Salesforce, and Facebook, have also made huge cuts.
A COVID Rebound
Although the economy is fairly good, companies continue to slash jobs. Some speculate that the reason is that these companies hired too many people over the last few years and are now over-staffed.
Political Impacts
Others blame political changes, like the recent announcement that California’s minimum wage for some fast food workers will be raised to $20 per hour this year.
Restaurant executives warn that prices will increase as a result, and many fear that jobs will be on the chopping block.
Presidential Campaigns Not Immune
Even Dean Phillips, who is running against President Biden for the Democratic nomination, announced that he was making the call to cut “a lot” of his staff, citing fundraising issues and a desire to keep his campaign going as long as possible.
LA Times and Major Media Job Cuts
The LA Times gutted several departments, doing away with a massive portion of their newsroom, a move that readers and politicians criticized as the election cycle continues and fewer reporters are around to cover it.
Companies Claim to be In Good Shape
Most companies making huge cuts deny that they are having serious financial issues but claim that these cullings are necessary to protect the future of the business.
“We Have a Real Plan”
“We are not in turmoil; we have a real plan,” said Dr. Patrick Soon-Shiong, owner of the LA Times.
Zuckerberg Weighs In
Mark Zuckerberg, founder and CEO of Facebook, bought into the narrative that the pandemic contributed to the majority of recent layoffs, especially in tech companies.
Layoffs Help Companies Become “Leaner”
“In terms of the layoffs and stuff like that, I actually think that was more due to companies trying to navigate COVID,” Zuckerberg said.
He went on to claim that continued layoffs are a result of companies changing strategies to “be leaner,” referring to the recent cuts at Facebook.
“We Parted With a Lot of Talented People We Cared About”
“It was obviously really tough, we parted with a lot of talented people we cared about,” he said. “But in some ways actually becoming leaner kind of makes the company more effective.”
Layoffs Not Expected to Be Contagious
Despite recent news, employment experts don’t believe that layoffs will continue at a significant rate this year.
Most of the companies that have been letting people go en masse are in the tech and media industries, and the phenomenon is not expected to trickle out very far.
Nike’s Plan Forward
Nike’s CEO said that he believes the company will recover from the layoffs and move forward successfully using new strategies for improvement.
“We Will Emerge Stronger”
“We will emerge stronger and better equipped to fulfill our purpose to serve all athletes and grow the future of sport,” said Donahoe.
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The post Nike Axes 1500 Jobs, Joins Trend of Large Companies in Mass Layoffs first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
