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Laying off workers is often the right thing to do for the health of the business. Companies are not make-work schemes, designed to employ as many people as poss

Laying off workers is often the right thing to do for the health of the business. Companies are not make-work schemes, designed to employ as many people as possible, and shouldn't be. They're there to provide value for customers, as defined by customers demonstrating that they value the thing the company provides more than the money they give up to get that thing, and constrained by the fact that the business itself has to be profitable to be sustainable and keep providing that value. That sustainability includes the capital needed from investors to keep the business producing and innovating. There's competition for that capital (and there should be!), so if returns are higher elsewhere, that broadly means the alternate use of capital is providing value to customers more efficiently. If someone at the company identifies a set of inefficiencies in producing value for customers, and remedying that involves laying off a bunch of people, but ends in providing that value more successfully, that person has been responsible for a lot of value creation.

JaimeThompson 4y ago
The executives who are responsible for all the excess hiring should also be removed for their failures as well so they can be held responsible for their mistakes.
- Matticus_Rex 4y ago
  Maybe, and that sometimes happens... when it was definitely a mistake. But it often wasn't; the company has to make the best decisions given the information it has, AND things change. You don't fire people every time they make a mistake -- you fire them when you don't think their judgment is adding value. And while it might seem like that should be different when the mistakes are more impactful, it just means companies need to hire as well as they can (which often involves high compensation) to make the best bets on that judgment. Judgment isn't about having been right -- it's about making the best decisions given the information you have at the time, and that means that some good decisions turn out not to work out in practice. Companies have to try things out to innovate and find new, better ways of creating as much value for customers as possible. You might hire 50 people to develop a new product line or offering, because it seems like it's going to work. If it then almost works, but the margins aren't good enough and it looks like there's untapped market, you might hire 100 more to scale it up because it looks like it will work at greater scale. But ultimately, if you end up not being able to make it work, you have to shut it down. Maybe some of those people fit elsewhere in the company, but usually that's very few. So layoffs are needed there, and it doesn't mean someone needs to be fired. In many cases of layoffs, the employees were profitable... until they became unprofitable because circumstances changed. That's often the case at big companies. You find success with a product, but then consumer tastes change, or someone innovates better than you do (or gets luckier). You can't just keep that unprofitable product going to keep people employed -- someone has to make the hard call to hard pivot or exit that market. It doesn't mean the people who set that product line up made a mistake and need to be fired.
newsclues 4y ago
Layoffs make sense, but not simultaneously giving executives bonuses.
- Matticus_Rex 4y ago
  Why not? Bonuses should be about creating value, and value can be created at the same time as some positions need to be eliminated.

JaimeThompson 4y ago

The executives who are responsible for all the excess hiring should also be removed for their failures as well so they can be held responsible for their mistakes.

Matticus_Rex 4y ago
Maybe, and that sometimes happens... when it was definitely a mistake. But it often wasn't; the company has to make the best decisions given the information it has, AND things change. You don't fire people every time they make a mistake -- you fire them when you don't think their judgment is adding value. And while it might seem like that should be different when the mistakes are more impactful, it just means companies need to hire as well as they can (which often involves high compensation) to make the best bets on that judgment. Judgment isn't about having been right -- it's about making the best decisions given the information you have at the time, and that means that some good decisions turn out not to work out in practice. Companies have to try things out to innovate and find new, better ways of creating as much value for customers as possible. You might hire 50 people to develop a new product line or offering, because it seems like it's going to work. If it then almost works, but the margins aren't good enough and it looks like there's untapped market, you might hire 100 more to scale it up because it looks like it will work at greater scale. But ultimately, if you end up not being able to make it work, you have to shut it down. Maybe some of those people fit elsewhere in the company, but usually that's very few. So layoffs are needed there, and it doesn't mean someone needs to be fired. In many cases of layoffs, the employees were profitable... until they became unprofitable because circumstances changed. That's often the case at big companies. You find success with a product, but then consumer tastes change, or someone innovates better than you do (or gets luckier). You can't just keep that unprofitable product going to keep people employed -- someone has to make the hard call to hard pivot or exit that market. It doesn't mean the people who set that product line up made a mistake and need to be fired.

newsclues 4y ago

Layoffs make sense, but not simultaneously giving executives bonuses.

Matticus_Rex 4y ago
Why not? Bonuses should be about creating value, and value can be created at the same time as some positions need to be eliminated.