With waves of layoffs hitting nearly every corner of the technology sector, some companies have been following a trend of flattening their organizations’ management hierarchies. Meta CEO Mark Zuckerberg, for example, said in February it would remove “some layers of middle management” amid its “Year of Efficiency.” Here in Canada, Shopify CEO Tobi Lütke indicated that its latest major round of layoffs, announced on May 4, will target managerial roles.

That has some worrying about what fewer leadership positions could mean for the Canadian tech sector’s work on diversity, equity and inclusion efforts that have picked up in recent years.

“The industry is already largely dominated by white males, and although we’re making progress, we know for sure that underserved, underrepresented [people] are likely to bear the brunt of cuts,” said Abdullah Snobar, executive director of DMZ, Toronto Metropolitan University’s startup incubator, in reference to the recent tech layoffs. “We’re getting some positive steps, but still far away from getting to the point we need to get to.”

More than 200,000 tech workers around the world have been laid off by over 750 companies since the start of 2023, according to website layoffs.fyi. Tech firms buttoning down in the slower economy by flattening hierarchies could diminish prospects for underrepresented workers to advance to leadership positions, according to some experts. While many companies made commitments to diversify their workforces and had the opportunity to do so during the pandemic tech boom, the current wave of layoffs threatens to reverse that progress.

A KPMG study released in January found that three in four Black Canadian workers said they are worried that a recession would hurt the career and promotion prospects of Black colleagues harder than others. Over two-thirds of respondents also said they think Black and racialized people would be first to lose their jobs in a recession.

“When organizations are going through economic challenges and people are trying to weather the storm, some of the knee-jerk reaction could be shutting down DEI efforts,” said Chimaobi Ezeibe, KPMG Canada’s partner of technology risk consulting. Even when opportunities in leadership roles become available, underrepresented people do not always come to mind, especially if there are few of them available on the table, he said.

However, Julia Blackburn, CEO of Toronto-based tech skills training non-profit NPower Canada, is optimistic that Canadian employers continue to be committed to diversity even during tough economic times. Her organization has helped over 5,000 underrepresented tech workers earn IT industry certifications since 2015. “I think people will be eliminated more based on a business case, [last]-in first-out, seniority, tenure, those types of more structured methodologies,” she said.

While using a merit-based policy for layoffs may look fair, Rutgers University’s associate professor Oscar Holmes IV, who recently completed a term on the Canada Research Chairs advisory committee on DEI policy, warned of hidden biases. If a company uses tenure as a criteria for layoffs when underrepresented employees were hired more recently, the cuts could hurt them more.

If there aren’t already members from diverse backgrounds on a team, Holmes recommends having three people from underrepresented groups to avoid tokenization, adding that it’s especially important at senior positions as white employees are less likely to help colleagues of colour.

“You made it to the top, but there’s still another layer of discrimination that even top leaders face,” he said.

Using productivity as a metric for evaluating staff for promotions can also be problematic. For example, women might risk appearing less productive in the workplace because they face harassment in the form of sexual quid pro quo more often than their male counterparts, Holmes said. He added companies need more nuanced employee evaluations that reflect realities such as discrimination and harassment, which can affect output. “They have to look at their entire performance management process to see if there are blind spots,” he said.

In addition to hidden biases, Ezeibe said it’s easy for leaders to overlook the need for diversity in management when they are under pressure to make cuts quickly. To help keep those considerations top of mind during a season of headcount reductions, he recommends implementing accountability mechanisms to ensure they are baked into the decision-making process because diversity is key to the success of an organization.

Efforts need to be tailored to each underrepresented community as they face different challenges, said DMZ’s Snobar. DEI efforts have to be genuine and firms can’t just check diversity off a list. A good start to building a welcoming environment and earning employee trust would be to listen earnestly to understand the pains that exist and not to assume a one-size-fits-all approach, he said. 

“Authenticity honestly translates so damn well with people that come from these backgrounds,” he said.