6 months’ salary, free MacBooks, and career support: Why Canva’s layoffs stand out

The spate of layoffs in the tech industry appears to be continuing. Popular design software company Canva has announced that it is reducing its workforce by about 22 per cent, affecting 1,271 employees. The job cuts come amid slowing growth at the company and coincide with a wider wave of buyouts and layoffs announced by some of the biggest names in the tech sector.

Canva’s co-founder and CEO Melanie Perkins, in a memo to employees, said that while the company has scaled considerably over the years, it needed to undergo change to address the slowing pace of growth. Perkins acknowledged the talent, imagination, and care of every single employee who has been part of the company’s journey.

“Over the past thirteen years, we’ve turned a dream in a pitch deck into a platform used by hundreds of millions of people. None of it would have been possible without the talent, imagination, and care of every single person who has been part of this journey. Yet success in our first chapter doesn’t guarantee success in the next. This has been our hardest year yet, and as we shared earlier this year, our growth has slowed for the first time in a decade,” the memo read.

Reportedly, the company is reshuffling its organisational structure, essentially merging its product, growth, and platform teams to reduce communication friction. Some reports also claim that the company may ask its employees to take up more responsibilities than their core duties; this is called reducing ‘subspecialisation’. The company, which is known for its flexible, remote-friendly work model, has also asked employees to work from an office a few days a week.

Lately, to offset costs and reliance on external AI providers, Canva has been developing its own AI models. However, rising AI expenses have forced the company to lower its revenue growth forecast from 30 per cent to 20 per cent. The higher costs have also affected investor confidence, with early investors reportedly cutting Canva’s valuation to around $35 billion earlier this year. Besides, the company is also facing growing competition from AI startups and chatbots such as ChatGPT and Gemini. This is particularly since their image-generation tools are making it easier for users to create posters, presentations and other visual content that used to be Canva’s stronghold.

Reaction to Canva’s layoff

The development triggered a reaction across social media, with many pointing out how the company’s approach to letting employees go is different from what usually happens during mass layoffs. Even though the announcement impacts 1,271 employees, not everyone is necessarily losing their job, as the changes include role transitions and relocations too. What has caught people’s attention is the support that Canva is offering its employees who are leaving the company.

For starters, the departing employees are being allowed to keep their company-issued MacBooks, giving them a device they can use while looking for their next job. They will also receive at least six months’ salary as severance, including statutory entitlements, regardless of where they are based. The support reportedly goes beyond financial compensation. The company is offering departing employees a one-year LinkedIn Premium subscription, one-on-one career coaching, resume assistance and interview preparation. It is also creating an opt-in alumni directory to help connect former employees with potential employers and industry contacts.

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“Layoffs affect people’s livelihoods and their families. Is a little more empathy too much to ask for? Companies should treat employees as people, not merely as resources. What Canva has done is an example of how layoffs can be handled with greater empathy and consideration. The unfortunate reality is that this remains an exception rather than the norm. We should be asking companies to make this the standard way of treating people when they have to let them go,” said Pratham Kohli, an AI engineering professional.

“Canva laid off 22% of their workforce, but they set a benchmark and won the hearts of many employees. A classic example of how to handle such sensitive things generously,” said Anubhav Sethi, a software engineer, in his LinkedIn post.

Healthcare is another important aspect of the package. Employees will receive up to 12 months of continued healthcare coverage in countries where Canva currently provides this benefit. The staff and their families will also retain access to Canva Care, the company’s employee assistance programme, for a year. Moreover, Canva is also making changes to its employee stock arrangements. Those who joined within the past year will not be subject to the usual one-year vesting cliff (a type of compensation), allowing them to retain equity that would otherwise have remained unvested. Also, through its Canva Collective Fund, the company is offering US$10,000 grants to departing employees interested in starting their own businesses or community projects, without taking any equity in return.