Melbourne based HR software firm Culture Amp to lay off nearly 100 staff

The Melbourne-based unicorn start-up most recently valued at $2bn will cut nine per cent of its workforce as it flags difficult conditions ahead.

Culture Amp co-founder Didier Elzinga. Source: Supplied.

Unicorn HR software start-up Culture Amp has joined the deepening ‘tech wreck’ and is laying off 9 per cent of its staff, with around 90 employees to leave the business next week.

Chief executive Didier Elzinga said it was an ‘extremely difficult call’ to become a smaller company, which was most recently valued at $2bn when it raised $US100m ($158m) in funding in 2021.

“In identifying where we had to remove roles we have focused primarily on how we de-layer, simplify, and restructure the company in order to be able to operate more effectively in this different environment,” he said in a letter to all staff on Wednesday.

“We have watched lots of other companies do lay-offs, however we chose to first pull a number of other levers in line with the softening market conditions. Unfortunately as the year has progressed we are not seeing any evidence that the conditions for our customers will improve in the near term.”

Culture Amp co-founder and chief executive Didier Elzinga in his Melbourne office. Picture: Sarah Matray

“In the context of this difficult macroeconomic environment we need to ensure that Culture Amp can deliver on its mission no matter how long the markets take to improve,” he said.

Affected employees will be given a minimum of 10 weeks‘ severance pay, extra stock and healthcare benefits and outplacement services, and will be able to retain their laptops.

“Today we focus on ensuring that anyone affected has been properly notified and then through the rest of the week we will be hosting multiple AMAs in order to give everyone an opportunity to ask any questions that they may have,” Mr Elzinga said.

“In the first instance we should focus on caring for and supporting impacted Campers but also thanking them for all that they have done. Next week will be when we focus on the path forward.”

The company laid off about 8 per cent of its workforce in 2020 when the Covid-19 pandemic hit, but since added staff and currently has just over 1000 employees.

Founded in 2009, Culture Amp produces software for companies to ­collect and understand employee feedback. Its July 2021 $US100m funding round was led by TDM Growth Partners and Sequoia Capital Chin, with participation from Salesforce Ventures and existing investors Felicis Ventures, Blackbird Ventures, Index Ventures, Sapphire Ventures, Skip Capital, Grok Capital and Global Founders Capital.

Its co-founder Rod Hamilton departed the business last August.

In February Culture Amp published research showing the widespread lay-offs roiling Australia’s start-up sector are risking long-term damage to employee engagement, and can detrimentally affect an employee’s confidence in the company and ultimately the bottom line.

It then takes between 12 and 18 months for engagement to reach pre-lay-off levels, for those that do hire, according to the study.

Between them, the world’s largest tech companies and Australian tech start-ups have laid off hundreds of thousands of works in recent months amid an economic slowdown.

“As we have been watching tech company after tech company announce lay-offs there have been many questions internally about ‘will we have to do that too?”, Mr Elzinga said on Wednesday.

“As we have shared in our research there is a greater cost to lay-offs than many people realise – obviously for anyone who is affected but also for the company going forward.

“That is why at several points in the last six months we have been explicit that we were pulling every lever BUT lay-offs. However we are at a point now that I have made the extremely difficult call that we can no longer maintain that position and we are going to have to become a smaller company.”