5 ms·

The article doesn't spend 1 second explaining the answer promised in the title but keeps reinforcing how good and flowery it is that Zildjian doesn't lay off an

The article doesn't spend 1 second explaining the answer promised in the title but keeps reinforcing how good and flowery it is that Zildjian doesn't lay off anyone. I'm in the audio hardware industry, and the answer is clear. Yes, being a no-growth company is a big reason, and yes, they're incredibly selective of their new employees. And they're a stable company, which helps. Go to NAMM, ship products to retailers, design next year's product, repeat. Incredibly stable. But they have ups and downs just like every other company, which at best follows the trend of the industry's economy. There are two options a company will do to cope with this situation. 1) Lay off X% of their workforce, shielding their existing employees from the financial "downs". 2) Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits. This is incredibly common in the "tech arts" industries like pro audio hardware because their employees can easily find better paying (2x) jobs elsewhere but choose the audio industry because they're following their personal dreams. They're much more willing to make large sacrifices at their job, so they are less adverse to leaving if their boss says they need to hammer out 120 cymbals a day instead of 80. And of course some people quit and often decide their dream isn't worth it anymore. It's a bit easier for the company because there's less paperwork when someone quits, and they're guaranteed to keep their most passionate employees (by the algorithm's design). To hire more employees during the financial "ups", they just continue their campaigns that working them is the best job ever despite the low pay, because well, to some wanna-be-cymbal-builders, that's the truth. Imagine loving your Zildjian cymbals since you were 7 years old, finally with the opportunity to work for them when you're 20! (fine print: 46 hard hours at $28k/yr) Nothing's really bad about this. It's just high supply and low demand of workers, so I'm not saying one method is better than the other. I'm just trying to offer my view on the topic of the article, since the actual article fails to address their own question at all. (The only near-answer I in the article is that the employees aren't fully replaced by automation but instead moved to other jobs, but come on, how is Zildjian different from the other tens of millions of jobs in America that can't be replaced by automation? This is hardly the real reason in Zildjian's case.)

daliusd 8y ago
3) Lay off 0%, everyone agrees on decreesed salary temporary. Or that's not an option?
- Cthulhu_ 8y ago
  There's only so far you can go down - plus, modern day companies like Amazon and McD's are already competing to pay as little as possible to their employees.
- vortico 8y ago
  Most people in this industry are contractual employees so that's usually not a legal option. If their pay was any less, it'd be approaching minimum wage laws. But if not, it's a bad option because instead of the algorithm "filter out the least passionate ones so we can increase expectations of the remaining" as in (2), it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry.
  - coldtea 8y ago
    >it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry. Actually, wouldn't it be the inverse? Those who have other options would go, and the less cushioned / wealthy ones would agree to stay and take the hit...
    - vortico 8y ago
      No, I think I stated it correctly. Those with more savings/assets would stay and be able to withdraw from their savings while their pay isn't enough. Those who need every penny for the next utility bill would be forced to leave.
      - coldtea 8y ago
        Well, how about considering the inverse: Those with more savings/assets would be able to live off of them while looking for another job if the pay isn't enough. Those who need every penny for the next utility bill (but still make it, even if barely, with the reduced pay) will stay with the company, as they can't risk getting off employment for any length of time. All 4 options could be at play. Which is why people barely making, still keeping at jobs despite horrible pay cuts. It's because they don't have any safety net to go look elsewhere.
mrweasel 8y ago
>The article doesn't spend 1 second explaining the answer promised Actually it does, it's one of the first things in the article: >Whenever a task is automated, the employee who performed it is trained for another one worth equivalent pay. The issue is that this only covers one small way an employee could be made redundant. You could apply the idea of retraining to other companies and other layoff scenarios, but it doesn't help if your entire industry is falling part or the company simply isn't viable.
- vortico 8y ago
  For Zildjian, it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool that the original employee could have just learned in the first place. It's not a company secret that CNBC managed to pry from the Zildjian CEO, it's just common sense. This is why I say that the article's reason is hardly a reason for Zildjian's no-layoff practices, because this sort of common sense is applied in many companies where layoffs are still present. The most significant reason (among other contributing factors) is the "increasing workload during recessions" practice that I described.
  - toyg 8y ago
    > it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool If this was so self-evident, though, everyone would do it. In practice, a lot of companies don't even try to "teach new tricks to an old dog", preferring to go through the layoff/hiring churn instead. That's probably got more to do with the traditional link between pay and seniority, than to anything really related to skills: a relatively small disruption in productivity is handsomely offset by a big net cut in salary expenses, as the younger employee will likely command a much lower wage.
    - vortico 8y ago
      Can you give an example of a situation where a company has laid off, hired, and trained, when re-training would have been equal or less effort?
davegardner 8y ago
The other option to cope with an extended period of lower revenue is to make sure you have enough cash in the bank to ride it out.
- vortico 8y ago
  Right, that's the "don't let it happen" option. But the options I listed are for when it does anyway.
- MrMember 8y ago
  Victorinox, maker of Swiss army knives, does this and claims to have never laid off an employee.
coldtea 8y ago
>There are two options a company will do to cope with this situation. 1) Lay off X% of their workforce, shielding their existing employees from the financial "downs". 2) Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits. Or, you know, keep some money around to pad for financial downs during financial ups. If those are periodic and not final (eg. not that the company / industry is doomed) that's an option as well. Companies pay lip service to "investing" in their people all the time. This would be an actual investment in your people -- taken from your margins...
- dragonwriter 8y ago
  > Or, you know, keep some money around to pad for financial downs during financial ups. For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure. It's better to have to fire some people in pruning a line or reducing scale at the next negative market shift than to have to fire everyone when the firm fails. I mean, sure, if shareholders are extracting value from the firm via dividends, you could in principle reduce those to provide the reserve fund—but most firms have shareholders realizing value by stock appreciation driven by perceived future scale, not current dividends.
  - Finnucane 8y ago
    >For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure. And then getting bought up by some competitor who _did_ keep some cash on hand.
    - privateprofile 8y ago
      Exactly. I've seen this happen some 8 years ago, when the financial "crisis" hit, as the (larger) company that I worked for managed to not only stay afloat, but actually acquire at a very steep discount some of the smaller and more "efficient" competitors that went under as soon as reality diverged from their market assumptions.
busterarm 8y ago
I know this article was written 5 years ago and all, but I wouldn't exactly call that industry stable now. If you've been going to NAMM the last several years like I have, you'll notice some big changes like certain huge vendors (mainly the ones that don't get the majority of their business from school districts) not even showing up with booths the last few years. Gibson did this right before declaring bankruptcy, in fact. The industry is in a fair bit of turmoil because of all of the red on Guitar Center's books right now.
e40 8y ago
3) Reduce expenses via means other than layoffs. Companies often have ways to do this. If not, there is the tried and true management takes a 10% pay cut. In my 30+ year company, I've done it a couple of times.
ryandrake 8y ago
Why would the same number of people need a bigger workload during downturns? Wouldn’t there be fewer sales and products built during a downturn?
- vortico 8y ago
  A downturn doesn't always mean lower demand. But if there was lower demand, employees can work harder to bring those up by offering new products or cheaper products.
woodandsteel 8y ago
Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits. If you do that with a product like cymbals, the quality crashes and so does the companies reputation.

daliusd 8y ago

3) Lay off 0%, everyone agrees on decreesed salary temporary. Or that's not an option?

Cthulhu_ 8y ago
There's only so far you can go down - plus, modern day companies like Amazon and McD's are already competing to pay as little as possible to their employees.
vortico 8y ago
Most people in this industry are contractual employees so that's usually not a legal option. If their pay was any less, it'd be approaching minimum wage laws. But if not, it's a bad option because instead of the algorithm "filter out the least passionate ones so we can increase expectations of the remaining" as in (2), it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry.
- coldtea 8y ago
  >it's "filter out the employees who can't take the financial hit so... we can keep the wealthier ones who don't need their pay as much?" Doesn't make sense in this industry. Actually, wouldn't it be the inverse? Those who have other options would go, and the less cushioned / wealthy ones would agree to stay and take the hit...
  - vortico 8y ago
    No, I think I stated it correctly. Those with more savings/assets would stay and be able to withdraw from their savings while their pay isn't enough. Those who need every penny for the next utility bill would be forced to leave.
    - coldtea 8y ago
      Well, how about considering the inverse: Those with more savings/assets would be able to live off of them while looking for another job if the pay isn't enough. Those who need every penny for the next utility bill (but still make it, even if barely, with the reduced pay) will stay with the company, as they can't risk getting off employment for any length of time. All 4 options could be at play. Which is why people barely making, still keeping at jobs despite horrible pay cuts. It's because they don't have any safety net to go look elsewhere.

mrweasel 8y ago

>The article doesn't spend 1 second explaining the answer promised Actually it does, it's one of the first things in the article: >Whenever a task is automated, the employee who performed it is trained for another one worth equivalent pay. The issue is that this only covers one small way an employee could be made redundant. You could apply the idea of retraining to other companies and other layoff scenarios, but it doesn't help if your entire industry is falling part or the company simply isn't viable.

vortico 8y ago
For Zildjian, it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool that the original employee could have just learned in the first place. It's not a company secret that CNBC managed to pry from the Zildjian CEO, it's just common sense. This is why I say that the article's reason is hardly a reason for Zildjian's no-layoff practices, because this sort of common sense is applied in many companies where layoffs are still present. The most significant reason (among other contributing factors) is the "increasing workload during recessions" practice that I described.
- toyg 8y ago
  > it's a no-brainer to re-train an existing employee to use a new pressing tool than to lay them off, hire another employee, and then train them to use the new tool If this was so self-evident, though, everyone would do it. In practice, a lot of companies don't even try to "teach new tricks to an old dog", preferring to go through the layoff/hiring churn instead. That's probably got more to do with the traditional link between pay and seniority, than to anything really related to skills: a relatively small disruption in productivity is handsomely offset by a big net cut in salary expenses, as the younger employee will likely command a much lower wage.
  - vortico 8y ago
    Can you give an example of a situation where a company has laid off, hired, and trained, when re-training would have been equal or less effort?

davegardner 8y ago

The other option to cope with an extended period of lower revenue is to make sure you have enough cash in the bank to ride it out.

vortico 8y ago
Right, that's the "don't let it happen" option. But the options I listed are for when it does anyway.
MrMember 8y ago
Victorinox, maker of Swiss army knives, does this and claims to have never laid off an employee.

coldtea 8y ago

>There are two options a company will do to cope with this situation. 1) Lay off X% of their workforce, shielding their existing employees from the financial "downs". 2) Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits. Or, you know, keep some money around to pad for financial downs during financial ups. If those are periodic and not final (eg. not that the company / industry is doomed) that's an option as well. Companies pay lip service to "investing" in their people all the time. This would be an actual investment in your people -- taken from your margins...

dragonwriter 8y ago
> Or, you know, keep some money around to pad for financial downs during financial ups. For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure. It's better to have to fire some people in pruning a line or reducing scale at the next negative market shift than to have to fire everyone when the firm fails. I mean, sure, if shareholders are extracting value from the firm via dividends, you could in principle reduce those to provide the reserve fund—but most firms have shareholders realizing value by stock appreciation driven by perceived future scale, not current dividends.
- Finnucane 8y ago
  >For most companies that isn't attractive because that means forgoing opportunities to compete/diversify (depending on situation) when the market best supports them, which means greater chance of firm failure. And then getting bought up by some competitor who _did_ keep some cash on hand.
  - privateprofile 8y ago
    Exactly. I've seen this happen some 8 years ago, when the financial "crisis" hit, as the (larger) company that I worked for managed to not only stay afloat, but actually acquire at a very steep discount some of the smaller and more "efficient" competitors that went under as soon as reality diverged from their market assumptions.

busterarm 8y ago

I know this article was written 5 years ago and all, but I wouldn't exactly call that industry stable now. If you've been going to NAMM the last several years like I have, you'll notice some big changes like certain huge vendors (mainly the ones that don't get the majority of their business from school districts) not even showing up with booths the last few years. Gibson did this right before declaring bankruptcy, in fact. The industry is in a fair bit of turmoil because of all of the red on Guitar Center's books right now.

e40 8y ago

3) Reduce expenses via means other than layoffs. Companies often have ways to do this. If not, there is the tried and true management takes a 10% pay cut. In my 30+ year company, I've done it a couple of times.

ryandrake 8y ago

Why would the same number of people need a bigger workload during downturns? Wouldn’t there be fewer sales and products built during a downturn?

vortico 8y ago
A downturn doesn't always mean lower demand. But if there was lower demand, employees can work harder to bring those up by offering new products or cheaper products.

woodandsteel 8y ago

Lay off 0%, increase the workload of everyone to account for the financial losses, and see who quits. If you do that with a product like cymbals, the quality crashes and so does the companies reputation.