4 ms·

I know a person who started joking about leaving if they gave him a pile of money and showed him the door. He was super valuable to the company and very senior.

I know a person who started joking about leaving if they gave him a pile of money and showed him the door. He was super valuable to the company and very senior. New CEO and VPs come in and start demanding cuts. A couple of months later, guess who was given a pile of money and shown the door?

mgkimsal 5y ago
Always strange that 'cuts' often involve spending more money. I guess the size of the pile is relevant, and I get that it's offset against potential future cost/commitment. Person X at $100k is given ... $40k to quit now, because it will save company perhaps $260k in the next 2 years. But.. that $40k is coming from somewhere now, no? Maybe some is coming from other folks cut immediately without the big pile of cash?
- JohnFen 5y ago
  This might be related to a business truth that I learned the hard way... It's generally cheaper to make a single larger payout than to engage in recurring smaller payouts.
- mywittyname 5y ago
  Cheaper in the long-run is an important consideration. Most large companies set aside money for layoffs in their financial filings under one-time expenses. They will usually explain what impact the layoffs will be expected to have on profitability.
- codingdave 5y ago
  That can be to make a company look good on paper when seeking some kind of investment round. "Sure, we have some big capital expenses this year, but our operating budget for the future is X% smaller" I frequently see short-term decisions to get funding triumph over long-term planning when private investors are involved. And it might even be the right choice - grow and get all the funds, then clean up tech debt in future years. It can be frustrating, but is a valid business play.
- ashtonkem 5y ago
  Generally speaking the payouts I’ve seen amount to about 3-4 months of salary, so the timeline to break even is fairy obvious (less the cost of benefits, which shortens the timeline). Ditto with layoffs. 2-3 months salary to get rid of employees you can’t afford at the moment is a short payoff compared to salaries, and worth it to salvage some reputation for future hiring.

mgkimsal 5y ago

Always strange that 'cuts' often involve spending more money. I guess the size of the pile is relevant, and I get that it's offset against potential future cost/commitment. Person X at $100k is given ... $40k to quit now, because it will save company perhaps $260k in the next 2 years. But.. that $40k is coming from somewhere now, no? Maybe some is coming from other folks cut immediately without the big pile of cash?

JohnFen 5y ago
This might be related to a business truth that I learned the hard way... It's generally cheaper to make a single larger payout than to engage in recurring smaller payouts.
mywittyname 5y ago
Cheaper in the long-run is an important consideration. Most large companies set aside money for layoffs in their financial filings under one-time expenses. They will usually explain what impact the layoffs will be expected to have on profitability.
codingdave 5y ago
That can be to make a company look good on paper when seeking some kind of investment round. "Sure, we have some big capital expenses this year, but our operating budget for the future is X% smaller" I frequently see short-term decisions to get funding triumph over long-term planning when private investors are involved. And it might even be the right choice - grow and get all the funds, then clean up tech debt in future years. It can be frustrating, but is a valid business play.
ashtonkem 5y ago
Generally speaking the payouts I’ve seen amount to about 3-4 months of salary, so the timeline to break even is fairy obvious (less the cost of benefits, which shortens the timeline). Ditto with layoffs. 2-3 months salary to get rid of employees you can’t afford at the moment is a short payoff compared to salaries, and worth it to salvage some reputation for future hiring.