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How did so many companies assume the pandemic/lockdown bump was going to be permanent? It seems obvious that people stuck at home spent money on certain goods a

How did so many companies assume the pandemic/lockdown bump was going to be permanent? It seems obvious that people stuck at home spent money on certain goods and services but that at least some of that money was going to go back whence it came when the pandemic was over. From what I hear some companies didn't go bananas, keeping hiring during the pandemic steady or in some cases below normal for the prior 5 years. I suppose that looks prescient in hindsight. There are few things more damaging than over-hiring followed by layoffs. That usually means an end to the promotion/bonus/stock train having nothing to do with anyone's performance. What's morale like when that bomb drops? Must be good to be in leadership... you get to fail, cause chaos to the business, scare away a lot of your top performers, and still collect millions. A good gig if you can get it. Maybe some of these leaders "taking responsibility" will refuse their stock awards or return their bonuses?

izacus 4y ago
I'm not sure what you're asking here - those companies made bank, the execs got bonuses and they're still profitable. From the perspective of capitalism (which cares nothing about humans being fired), over hiring doesn't seem to be a bad choice at all.
- xenadu02 4y ago
  From a business ownership POV that's bad management and bad for the business. Shouldn't the owners optimize by getting rid of such management? FWIW I know the answer: management typically goes unchecked which is a huge problem. Managers vote themselves money and leave owners with the downside risk. Boards tend to be toothless rubber-stamps. Doesn't mean I have to like it (as an employee or a shareholder).
  - jnwatson 4y ago
    The biggest vulnerability in a corporation is that the interests of management and ownership (the shareholders) aren’t aligned. A common situation repeated over and over is that a manager has the opportunity to take huge risks for a big bonus, yet the worst that can happen is they lose their job. Case in point, it took a small team at AIG only 6 weeks of selling a financial product to bankrupt the 90-year-old company and contribute to the 2008 crash, ultimately leading to a Fed bailout.
  - wastedimage 4y ago
    I think they did? It was national news a few months ago. I went and found it - https://www.cnbc.com/2022/06/03/amazon-ceo-of-worldwide-consumer-dave-clark-resigns.html https://www.cnbc.com/2022/06/03/amazon-ceo-of-worldwide-cons...
    - mandeepj 4y ago
      It’s unrelated! He’s cashing out to start something else, maybe a startup
      - wastedimage 4y ago
        Isn't that just what you say though when a senior executive fucks up? I just assumed. No company is ever going to say they dumped some executive. They are going to happily depart ways every time.
        mandeepj 4y ago
        True! But, those who fuckup don’t leave with this much fanfare; they quietly fade away into vacuum. Also, 23 years is a long time. Stupidity doesn’t take that long to show cracks.
  - hnfong 4y ago
    Elon Musk did just that. On the other hand, if the shareholders are mostly institutional funds, then fund managers generally aren't in the business of doing activist stuff for their many dozens of investments...
scarface74 4y ago
In Jassy’s (the current CEO of Amazon) defense. He wasn’t the CEO of Amazon when the over hiring occurred. He was the CEO of AWS. From the reports, all of the layoffs are happening in Retail. Disclaimer: Jassy is my skip*10 manager.
- nonameiguess 4y ago
  The fact that you have a skip*10 manager seems to speak to some middle manager bloat. That's military levels of bureaucracy, though in the military's case, at least they have the excuse that they're overstaffing on purpose to keep slack around so they can maintain operational continuity in the event of a mass death event during combat.
  - scarface74 4y ago
    Amazon is the second largest employee in the US and a manager can only adequately manage so many people.
    - bart_spoon 4y ago
      It really depends on where they work at Amazon. The reason Amazon is the second largest employer is presumably because of the tens of thousands of warehouse/delivery employees. If they are working in a corporate setting, and there is still 10 levels of management between them and the CEO, I imagine it to be pretty bloated.
      - scarface74 4y ago
        If each manager should only manage 15-20 people (https://www.yourerc.com/blog/post/span-of-control-how-many-employees-should-your-supervisors-manage https://www.yourerc.com/blog/post/span-of-control-how-many-e...) Do the math. Amazon also has at least two major verticals - retail and AWS. Within AWS, Amazon has multiple departments and markets. Without giving too much away, let’s start with the obvious (and I’m just guessing, I am not looking at the internal tool to see the hierarchy right now) CEO of Amazon -> CEO of AWS -> Manager of my specific department worldwide -> manager of specific geographies -> manager of specific verticals within that market -> my manager. That’s 6. I’m sure I’m missing a few and I just completely made up that hierarchy. But it is a logical division. A typical McDonalds worked in a corporate owned store could probably go up 6 levels - worker - shift lead - store manager - regional manager - district manager - two more levels - CEO
s1k3 4y ago
Well it’s tricky right? Amazon had huge demand. If they didn’t hire during the pandemic then they can’t meet the demands of their customers. Performance degrades. Packages don’t deliver on time. They run out of stock. Is it preferable to provide shitty service to your customers or hire to meet those demands and then adjust to market realities later?
- capitalsigma 4y ago
  Packages don't deliver on time if they don't hire enough people to work on AWS? Hard to imagine that day to day performance of their core business is really related to headcount.
  - s1k3 4y ago
    The cuts are coming from Alexa and e-commerce, right? I didn’t see any ya out AWS… maybe I missed it tho.
mindslight 4y ago
It's the same reason Home Depot and Lowes carry essentially the same products at the same prices, even though there is an entire world of building materials and hardware they don't have. Despite the idea of competition, large companies generally move in lock step. If they do something different they might end up falling behind the pack, and maintaining their position is the most important thing to do. In this case, massive amounts of new money were pushed into the economy by lowering interest rates to zero and other stimulus, so the economic climate was one of more "growth" regardless of what fundamental analysis would say. This was the disconnect between Wall St and Main St widely that was recognized at the time. There was no way to know what the "new normal" would happen or what it would look like, so executives stayed with the pack. And what really was the downside for hiring employees, even if they were just going to be let go later? Basically just the overhead of onboarding and getting them up to speed. And given that they were likely employed for a year or two, this wasn't even that wasteful. Of course it sucks for the people whose lives are disrupted. But that's life in a paperclip maximizer driven by fickle centralized policy.
TheBigSalad 4y ago
"How did so many companies assume the pandemic/lockdown bump was going to be permanent" it mostly was. Amazon, for example, is seeing slowing growth but still record high revenue last quarter.
N19PEDL2 4y ago
Perhaps this is among the biggest differences between US and EU: in the first it is much easier to fire people and this may lead to massive hires when the conditions made it necessary, knowing that they can easily reduce the workforce when such conditions change; on the contrary, in EU it is more difficult to fire the employees, so companies tend to be more cautious to hire large amounts of new employees.
- ramblerman 4y ago
  And hence why contracting is so profitable in EU
  - fredestine 4y ago
    profitable? you get 50% tax in most western countries in europe. its nearly impossible to make more than a FAANG-level company with that taxation
    - ramblerman 4y ago
      True, perhaps I should have said "lucrative". Given how hard it is to hire/fire in Europe, the contracting market is especially healthy was the point. I would still consider it profitable compared to being a full time employee in Europe. Besides a higher rate, a contractor with his own company can benefit from all kinds of tax advantages a regular employee can't.
      - fredestine 4y ago
        I am not sure. At FAANG in europe you can make 200k. you need to make 400keuros (maybe 350k if you really good with tax and deducting costs) but you wont get any day off, sick day, any health insurance (even in europe it helps) , no 401k. tbh I am not sure it is better money wise. for sure you get the freedom tho but also the stress of finding new customers
- fredestine 4y ago
  it is very easy to fire in europe... and you have a trial period up to 6 month where you can fire your employe for any kind of reason. after that you can also fire easily your employee but youd need to give him a 3 month notice. but definitly economic downturn is a valid reason to fire someone. so actually for markets like software with plenty of jobs and employment the trial/notice period of 3 months are playing against the workers by creating a complex market that is not fluid at all. it however protects better workers that are in less fortunate industries which is good.

izacus 4y ago

I'm not sure what you're asking here - those companies made bank, the execs got bonuses and they're still profitable. From the perspective of capitalism (which cares nothing about humans being fired), over hiring doesn't seem to be a bad choice at all.

xenadu02 4y ago
From a business ownership POV that's bad management and bad for the business. Shouldn't the owners optimize by getting rid of such management? FWIW I know the answer: management typically goes unchecked which is a huge problem. Managers vote themselves money and leave owners with the downside risk. Boards tend to be toothless rubber-stamps. Doesn't mean I have to like it (as an employee or a shareholder).
- jnwatson 4y ago
  The biggest vulnerability in a corporation is that the interests of management and ownership (the shareholders) aren’t aligned. A common situation repeated over and over is that a manager has the opportunity to take huge risks for a big bonus, yet the worst that can happen is they lose their job. Case in point, it took a small team at AIG only 6 weeks of selling a financial product to bankrupt the 90-year-old company and contribute to the 2008 crash, ultimately leading to a Fed bailout.
- wastedimage 4y ago
  I think they did? It was national news a few months ago. I went and found it - https://www.cnbc.com/2022/06/03/amazon-ceo-of-worldwide-consumer-dave-clark-resigns.html https://www.cnbc.com/2022/06/03/amazon-ceo-of-worldwide-cons...
  - mandeepj 4y ago
    It’s unrelated! He’s cashing out to start something else, maybe a startup
    - wastedimage 4y ago
      Isn't that just what you say though when a senior executive fucks up? I just assumed. No company is ever going to say they dumped some executive. They are going to happily depart ways every time.
      - mandeepj 4y ago
        True! But, those who fuckup don’t leave with this much fanfare; they quietly fade away into vacuum. Also, 23 years is a long time. Stupidity doesn’t take that long to show cracks.
- hnfong 4y ago
  Elon Musk did just that. On the other hand, if the shareholders are mostly institutional funds, then fund managers generally aren't in the business of doing activist stuff for their many dozens of investments...

scarface74 4y ago

In Jassy’s (the current CEO of Amazon) defense. He wasn’t the CEO of Amazon when the over hiring occurred. He was the CEO of AWS. From the reports, all of the layoffs are happening in Retail. Disclaimer: Jassy is my skip*10 manager.

nonameiguess 4y ago
The fact that you have a skip*10 manager seems to speak to some middle manager bloat. That's military levels of bureaucracy, though in the military's case, at least they have the excuse that they're overstaffing on purpose to keep slack around so they can maintain operational continuity in the event of a mass death event during combat.
- scarface74 4y ago
  Amazon is the second largest employee in the US and a manager can only adequately manage so many people.
  - bart_spoon 4y ago
    It really depends on where they work at Amazon. The reason Amazon is the second largest employer is presumably because of the tens of thousands of warehouse/delivery employees. If they are working in a corporate setting, and there is still 10 levels of management between them and the CEO, I imagine it to be pretty bloated.
    - scarface74 4y ago
      If each manager should only manage 15-20 people (https://www.yourerc.com/blog/post/span-of-control-how-many-employees-should-your-supervisors-manage https://www.yourerc.com/blog/post/span-of-control-how-many-e...) Do the math. Amazon also has at least two major verticals - retail and AWS. Within AWS, Amazon has multiple departments and markets. Without giving too much away, let’s start with the obvious (and I’m just guessing, I am not looking at the internal tool to see the hierarchy right now) CEO of Amazon -> CEO of AWS -> Manager of my specific department worldwide -> manager of specific geographies -> manager of specific verticals within that market -> my manager. That’s 6. I’m sure I’m missing a few and I just completely made up that hierarchy. But it is a logical division. A typical McDonalds worked in a corporate owned store could probably go up 6 levels - worker - shift lead - store manager - regional manager - district manager - two more levels - CEO

s1k3 4y ago

Well it’s tricky right? Amazon had huge demand. If they didn’t hire during the pandemic then they can’t meet the demands of their customers. Performance degrades. Packages don’t deliver on time. They run out of stock. Is it preferable to provide shitty service to your customers or hire to meet those demands and then adjust to market realities later?

capitalsigma 4y ago
Packages don't deliver on time if they don't hire enough people to work on AWS? Hard to imagine that day to day performance of their core business is really related to headcount.
- s1k3 4y ago
  The cuts are coming from Alexa and e-commerce, right? I didn’t see any ya out AWS… maybe I missed it tho.

mindslight 4y ago

It's the same reason Home Depot and Lowes carry essentially the same products at the same prices, even though there is an entire world of building materials and hardware they don't have. Despite the idea of competition, large companies generally move in lock step. If they do something different they might end up falling behind the pack, and maintaining their position is the most important thing to do. In this case, massive amounts of new money were pushed into the economy by lowering interest rates to zero and other stimulus, so the economic climate was one of more "growth" regardless of what fundamental analysis would say. This was the disconnect between Wall St and Main St widely that was recognized at the time. There was no way to know what the "new normal" would happen or what it would look like, so executives stayed with the pack. And what really was the downside for hiring employees, even if they were just going to be let go later? Basically just the overhead of onboarding and getting them up to speed. And given that they were likely employed for a year or two, this wasn't even that wasteful. Of course it sucks for the people whose lives are disrupted. But that's life in a paperclip maximizer driven by fickle centralized policy.

TheBigSalad 4y ago

"How did so many companies assume the pandemic/lockdown bump was going to be permanent" it mostly was. Amazon, for example, is seeing slowing growth but still record high revenue last quarter.

N19PEDL2 4y ago

Perhaps this is among the biggest differences between US and EU: in the first it is much easier to fire people and this may lead to massive hires when the conditions made it necessary, knowing that they can easily reduce the workforce when such conditions change; on the contrary, in EU it is more difficult to fire the employees, so companies tend to be more cautious to hire large amounts of new employees.

ramblerman 4y ago
And hence why contracting is so profitable in EU
- fredestine 4y ago
  profitable? you get 50% tax in most western countries in europe. its nearly impossible to make more than a FAANG-level company with that taxation
  - ramblerman 4y ago
    True, perhaps I should have said "lucrative". Given how hard it is to hire/fire in Europe, the contracting market is especially healthy was the point. I would still consider it profitable compared to being a full time employee in Europe. Besides a higher rate, a contractor with his own company can benefit from all kinds of tax advantages a regular employee can't.
    - fredestine 4y ago
      I am not sure. At FAANG in europe you can make 200k. you need to make 400keuros (maybe 350k if you really good with tax and deducting costs) but you wont get any day off, sick day, any health insurance (even in europe it helps) , no 401k. tbh I am not sure it is better money wise. for sure you get the freedom tho but also the stress of finding new customers
fredestine 4y ago
it is very easy to fire in europe... and you have a trial period up to 6 month where you can fire your employe for any kind of reason. after that you can also fire easily your employee but youd need to give him a 3 month notice. but definitly economic downturn is a valid reason to fire someone. so actually for markets like software with plenty of jobs and employment the trial/notice period of 3 months are playing against the workers by creating a complex market that is not fluid at all. it however protects better workers that are in less fortunate industries which is good.