Online game company Zynga Inc., behind infamous Facebook timewaster Farmville, is cutting staff, offices and games to try to cut costs. Office in Japan and the UK could also be affected.
Staff in the Boston office were informed this week that their studio would be closing down. In an email to all staff CEO Mark Pincus said “We don’t take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us. We appreciate their amazing contributions and will miss them.”
However, with rumours of layoffs circulating over the last few months, technology news site TechCrunch reported that many employees felt “in the dark” about what was happening.
A Boston employee told the site the office had been close to launching a product the company was excited about. Instead the entire team is being let go.
“That game will not see the light of day. They didn’t want to cancel that title. It was painful, but they wanted to save cash,” said a former employee. “I think they just needed to cut hundreds of people off the payroll and this was the easiest way to do that. They looked at who was not working on a live game.”
The decisions follow sinking stock values and decreasing earnings over the past year.
“Pincus wants to be able to say that the company’s profitable but that’s harder as revenue goes down,” a former employee told TechCrunch. “They’re doing short-term things that don’t make any sense at all if you’re thinking about this being a stable company with $1.6 billion in cash in the bank.”
The biggest HR concern for the company going forward will be keeping current employees engaged and loyal, experts said.
“The people who stay often have a massive volume of work to do, they are feeling guilty about friends who have left and they’re unsure about their own jobs,” Chhinzer said. “That leads to management mistrust and a drop in productivity which impacts the financials post down-sizing.”
Without efforts to renew energy and reassure doubts the company could see significant productivity and retention issues in the next few years. What’s more, Chhinzer said many companies did not see their profit margins improve as much as they expected because of factors like the unanticipated drop in productivity.