They say if you’re going to cut, cut deeply so you only have to do it once. Alas, a growing number of companies are realizing that despite layoffs earlier in the year, they need to cut back more now.
Klarna, the Stockholm, Sweden-based buy now, pay later outfit, finds itself in this camp. According to the outlet Sifted, the 17-year-old company told employees on Monday in a video message from COO Camilla Giesecke that Klarna is reducing staff again to “reflect” its new and “more focused nature.”
Around 500 Klarna employees were invited to watch Giesecke deliver the news, including in IT and recruiting, though Klarna tells us in a separate statement that the job cuts will impact fewer than 100 employees globally. Reads the statement:
Klarna, like all other companies, is constantly evaluating and making adjustments to the structure of its organization. Our organization is built on 700 fast-moving teams that are constantly changing, and Klarna employees move between teams and departments every week. However, the adjustments are often small in scale compared to the major change we made this spring, which was prompted by the turbulent environment.
The outfit, which employed 7,000 people at the beginning of this year, now has “around 6,000” employees, the spokesperson tells TechCrunch.
The cuts are part of a broader shift in momentum for Klarna, which long had the wind at its back. In May, the company shrunk its global workforce by 10%; it also raised funds at a $6.7 billion valuation in an $800 million round, down from the somewhat aspirational $45.6 billion valuation that Klarna was assigned by SoftBank when the Japanese conglomerate led a $640 million round in the company in June of last year. (SoftBank is known, of course, for its aggressive markups, a strategy that isn’t working out so well for the outfit.)
Unfortunately, the cuts also come three weeks after CEO Sebastian Siemiatkowski told Bloomberg that the company was done making layoffs.
Klarna isn’t the only buy now, pay later company to be facing major headwinds. Competition, market volatility and the prospect of a recession (not to mention more regulation) is threatening the growth of every company in the category right now.
Still, repeated layoffs are never good news. So called “survivor engagement” is always a problem after deep cuts. When layoffs follow layoffs, as is happening at a growing number of companies (TC’s Natasha Mascarenhas has observed this trend at Robinhood, On Deck, Gemini and others, for example), morale can sink further still.
“During the summer, we appointed a new COO, and it is natural that a new manager makes changes, which is what is happening now,” the company told Sifted of its newest cut.
Klarna meanwhile tells TechCrunch that in the case of these “smaller adjustments,” it “sometimes offers severance pay for some employees, generally up to twice the notice period and thus substantially more than they would have received if Klarna had made redundancies.”
The spokesperson further notes that it’s “always sad when employees leave Klarna, and we support them in every way we can, although we are pleased to note that our employees remain highly sought after in the labor market. Our assessment is that at least 70% of those who left Klarna with severance pay at the beginning of the summer are already in new jobs.”