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This is coming from a "Stanford scholar", yikes. What explains why so many companies are laying large numbers of their workforce off? The answer is simple: cop

by avgDev 4y ago

This is coming from a "Stanford scholar", yikes. What explains why so many companies are laying large numbers of their workforce off? The answer is simple: copycat behavior, according to Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business Since the answer is so simple I stopped reading the article. Obviously companies should not care about the their stock dropping massively in the last year, rates going up and consumer spending reducing. The layoffs is just copycat behavior. /s Man, this guy must have predicted 50 of the last 2 recessions. Edit: This is such a bad take I would expect to read it on r/investing in a most downvoted comment. A "scholar" should know rarely things are black and white. There isn't a simple to answer to literally anything in macroeconomics, or just in life in general really.

kodyo 4y ago
[flagged]
- lib-dev 4y ago
  Is "retarded" back?
  - anp 4y ago
    No, still crappy to use.
sam0x17 4y ago
Regarding the copy-cat behavior, the types of personalities that tend to be OK with working for FANG (external locus of control individuals who are likely to conform) aren't going to put themselves out there and do what they think is best for the company when they can just copy what [other FANG] is doing. They view these situations as "omg, amazon is doing X, how can I justify to my boss not also doing X"
- ghaff 4y ago
  On the one hand, it's easy to be critical of herd behavior. On the other hand, when all (or most of) the other presumably smart people are heading in a different direction than you are, you should probably seriously consider the possibility that you're the one that may be wrong.
  - Apocryphon 4y ago
    On the other hand, if you ran a company and didn’t overhire in the past few years to the extent of necessitating layoffs, you would have been going against the herd and been right, supposedly.
  - fzeroracer 4y ago
    And what if all of those presumably smart people are literally running off a cliff? Like we saw just this with companies investing in obviously deadend technology like NFTs or the metaverse. When I see these layoffs I see the exact same thing as the above. CEOs pretending that they know what they're doing, then other CEOs also imitating that, followed by driving off a cliff.
prions 4y ago
The author also cites this paper as support:https://www.jstor.org/stable/2580324?origin=crossref#metadata_info_tab_contents https://www.jstor.org/stable/2580324?origin=crossref#metadat... Instead of bashing the author and his credentials, maybe you should engage with the argument hes making instead?
- tsimionescu 4y ago
  Note that this is business and economy academia, not real science. It's usually scientism at its peak: mathy explanations that use complex equations to describe poorly modeled phenomena and arrive at the previously decided on conclusion that the authors wanted to show. There's few other domains quite as smoke-and-mirrors as this (social sciences probably being the other, though they tend to at least steer clear of the complex math).
  - Clamchop 4y ago
    This is an ignorant take on social sciences and their use of math and statistics, so I assume you're also ignorant about the field of economics?
- avgDev 4y ago
  I have been following the market. Some of the most popular tech stocks have dropped back to pre-covid levels. During covid my inbox was blowing up from Meta, Amazon, Microsoft recruiters. This behavior clearly correlates with the stock evaluation. Literally everyone I know in tech was able to make good moves or get raises. Uncool companies had a hard time competing with SV giants. I can cite the hiring frenzy, the stock evaluation, HUNDREDS of articles that disagree with his "SIMPLE" answer.
roncesvalles 4y ago
Really? I thought it was fairly obvious from the beginning that this is hysteric copycat behavior. To me the smoking gun was how suddenly in a brief period of time, every tech company CEO was making absolutely certain predictions about economic headwinds in 2023, up to 6 months before the end of 2022. Nothing qualifies them (or anybody for that matter) to assert that. It doesn't even make sense to do layoffs today when you expect trouble 6-12 months later. That and the panic from tech stock prices being decimated after 10+ years of growth. The layoffs felt like Boards and CEOs were smashing the controls until the numbers went back up again.
- onlyrealcuzzo 4y ago
  > It doesn't even make sense to do layoffs today when you expect trouble 6-12 months later. I hope you realize this is subjective, and the CEOs and boards obviously feel differently...
- avgDev 4y ago
  When you expect trouble in 6 months, you prepare TODAY, not in 6 months. The FED has spoken. The market has spoken. The inflation is high. It is a risky environment, layoffs are extremely reasonable after the hiring frenzy we experienced.
  - TremendousJudge 4y ago
    I don't understand, are you saying that the layoffs are caused by the recent hiring frenzy or by the hypothetical trouble of 6 months from now?
    - avgDev 4y ago
      I am saying the article is awful. The layoffs are not caused by a "SIMPLE" single cause. There are several factors that caused the current layoffs.
  - roncesvalles 4y ago
    When macroeconomic constants are moving, stock price movements are determined by voodoo magic not company performance.
throwawaysleep 4y ago
Then why are so many of them back to hiring after massive layoffs jsut a few months ago?
- avgDev 4y ago
  The answer is simple: copy cat behavior. /s
  - Apocryphon 4y ago
    What’s your non-sarcastic explanation?
    - avgDev 4y ago
      Ok, I will bite who is back to hiring? Because I don't see the hiring we saw during early covid and before the interest hikes.
      - Apocryphon 4y ago
        I can't speak to what the OP is referring to, though I have seen some rumors that Meta is supposedly hiring again, and on LinkedIn I continue to see openings at Stripe, Robinhood, and Zillow despite their high-profile layoffs. I do remember in early 2020 tech companies doing layoffs, only to be hiring again several months later. Patreon stands out in my mind.
        confidantlake 4y ago
        I don't think having a opening on Linkedin necessarily means they are hiring. It also works as a form of advertising. I saw several job postings for generic software engineers from multiple companies while they were doing layoffs.
        93po 4y ago
        Meta definitely has open and active job openings. It seems like a lot of companies are perpetually hiring. However the unspoken part is that they're only hiring people who they can underpay and only if they're a perfect match for a hard to hire position.
rat9988 4y ago
It seems you disagree with the author and all you got to say is that it's a stupid take. Maybe you want to give some evidence, as counterclaim to the author's " Layoffs are ... are not particularly evidence-based.". From my opinion, it seems it is you who are simplifying the current state of research, while the author seems a bit more knowledgeable. He at least has cited some reference for his point of view.
- avgDev 4y ago
  The author said, it's a simple copycat behavior. I presented several factors which can be easily confirmed. There are hundreds of articles confirming what I have said.
  - Apocryphon 4y ago
    You said: > Obviously companies should not care about the their stock dropping massively in the last year, rates going up and consumer spending reducing. The layoffs is just copycat behavior. I agree that the article seems overly dismissive about the macro changes, but I think your argument (like so many other comments dismissing the article itself in this thread) is orthogonal to its point, which is arguing against the concept of layoffs itself. If you actually read the article, its whole point is challenging that layoffs should be the hammer that companies reach for in the toolbox whenever recessions (or at the present, rumors of recession) loom. The social contagion theory in the article applies both to whether there's a reason to do layoffs at all (which you and many others disagree with, that's fine) and whether layoffs are the appropriate response (which I'm not seeing many responses to, other than the discussion of doing company-wide compensation cuts as an alternative to layoffs). If you actually read the article, it's mostly arguing against using layoffs even if there might be something to respond to: > Academic studies have shown that time and time again, workplace reductions don’t do much for paring costs. Severance packages cost money, layoffs increase unemployment insurance rates, and cuts reduce workplace morale and productivity as remaining employees are left wondering, “Could I be fired too?” > Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue. Layoffs are basically a bad decision. And so on. The article definitely cites more than one source for that, even some of it is anecdotal, such as Southwest not doing layoffs after 9/11, or the words of this CEO or not. But the point is that your criticism misses the point of the article.

by avgDev 4y ago

kodyo 4y ago

[flagged]

lib-dev 4y ago
Is "retarded" back?
- anp 4y ago
  No, still crappy to use.

sam0x17 4y ago

Regarding the copy-cat behavior, the types of personalities that tend to be OK with working for FANG (external locus of control individuals who are likely to conform) aren't going to put themselves out there and do what they think is best for the company when they can just copy what [other FANG] is doing. They view these situations as "omg, amazon is doing X, how can I justify to my boss not also doing X"

ghaff 4y ago
On the one hand, it's easy to be critical of herd behavior. On the other hand, when all (or most of) the other presumably smart people are heading in a different direction than you are, you should probably seriously consider the possibility that you're the one that may be wrong.
- Apocryphon 4y ago
  On the other hand, if you ran a company and didn’t overhire in the past few years to the extent of necessitating layoffs, you would have been going against the herd and been right, supposedly.
- fzeroracer 4y ago
  And what if all of those presumably smart people are literally running off a cliff? Like we saw just this with companies investing in obviously deadend technology like NFTs or the metaverse. When I see these layoffs I see the exact same thing as the above. CEOs pretending that they know what they're doing, then other CEOs also imitating that, followed by driving off a cliff.

prions 4y ago

The author also cites this paper as support:https://www.jstor.org/stable/2580324?origin=crossref#metadata_info_tab_contents https://www.jstor.org/stable/2580324?origin=crossref#metadat... Instead of bashing the author and his credentials, maybe you should engage with the argument hes making instead?

tsimionescu 4y ago
Note that this is business and economy academia, not real science. It's usually scientism at its peak: mathy explanations that use complex equations to describe poorly modeled phenomena and arrive at the previously decided on conclusion that the authors wanted to show. There's few other domains quite as smoke-and-mirrors as this (social sciences probably being the other, though they tend to at least steer clear of the complex math).
- Clamchop 4y ago
  This is an ignorant take on social sciences and their use of math and statistics, so I assume you're also ignorant about the field of economics?
avgDev 4y ago
I have been following the market. Some of the most popular tech stocks have dropped back to pre-covid levels. During covid my inbox was blowing up from Meta, Amazon, Microsoft recruiters. This behavior clearly correlates with the stock evaluation. Literally everyone I know in tech was able to make good moves or get raises. Uncool companies had a hard time competing with SV giants. I can cite the hiring frenzy, the stock evaluation, HUNDREDS of articles that disagree with his "SIMPLE" answer.

roncesvalles 4y ago

Really? I thought it was fairly obvious from the beginning that this is hysteric copycat behavior. To me the smoking gun was how suddenly in a brief period of time, every tech company CEO was making absolutely certain predictions about economic headwinds in 2023, up to 6 months before the end of 2022. Nothing qualifies them (or anybody for that matter) to assert that. It doesn't even make sense to do layoffs today when you expect trouble 6-12 months later. That and the panic from tech stock prices being decimated after 10+ years of growth. The layoffs felt like Boards and CEOs were smashing the controls until the numbers went back up again.

onlyrealcuzzo 4y ago
> It doesn't even make sense to do layoffs today when you expect trouble 6-12 months later. I hope you realize this is subjective, and the CEOs and boards obviously feel differently...
avgDev 4y ago
When you expect trouble in 6 months, you prepare TODAY, not in 6 months. The FED has spoken. The market has spoken. The inflation is high. It is a risky environment, layoffs are extremely reasonable after the hiring frenzy we experienced.
- TremendousJudge 4y ago
  I don't understand, are you saying that the layoffs are caused by the recent hiring frenzy or by the hypothetical trouble of 6 months from now?
  - avgDev 4y ago
    I am saying the article is awful. The layoffs are not caused by a "SIMPLE" single cause. There are several factors that caused the current layoffs.
- roncesvalles 4y ago
  When macroeconomic constants are moving, stock price movements are determined by voodoo magic not company performance.

throwawaysleep 4y ago

Then why are so many of them back to hiring after massive layoffs jsut a few months ago?

avgDev 4y ago
The answer is simple: copy cat behavior. /s
- Apocryphon 4y ago
  What’s your non-sarcastic explanation?
  - avgDev 4y ago
    Ok, I will bite who is back to hiring? Because I don't see the hiring we saw during early covid and before the interest hikes.
    - Apocryphon 4y ago
      I can't speak to what the OP is referring to, though I have seen some rumors that Meta is supposedly hiring again, and on LinkedIn I continue to see openings at Stripe, Robinhood, and Zillow despite their high-profile layoffs. I do remember in early 2020 tech companies doing layoffs, only to be hiring again several months later. Patreon stands out in my mind.
      - confidantlake 4y ago
        I don't think having a opening on Linkedin necessarily means they are hiring. It also works as a form of advertising. I saw several job postings for generic software engineers from multiple companies while they were doing layoffs.
      - 93po 4y ago
        Meta definitely has open and active job openings. It seems like a lot of companies are perpetually hiring. However the unspoken part is that they're only hiring people who they can underpay and only if they're a perfect match for a hard to hire position.

rat9988 4y ago

It seems you disagree with the author and all you got to say is that it's a stupid take. Maybe you want to give some evidence, as counterclaim to the author's " Layoffs are ... are not particularly evidence-based.". From my opinion, it seems it is you who are simplifying the current state of research, while the author seems a bit more knowledgeable. He at least has cited some reference for his point of view.

avgDev 4y ago
The author said, it's a simple copycat behavior. I presented several factors which can be easily confirmed. There are hundreds of articles confirming what I have said.
- Apocryphon 4y ago
  You said: > Obviously companies should not care about the their stock dropping massively in the last year, rates going up and consumer spending reducing. The layoffs is just copycat behavior. I agree that the article seems overly dismissive about the macro changes, but I think your argument (like so many other comments dismissing the article itself in this thread) is orthogonal to its point, which is arguing against the concept of layoffs itself. If you actually read the article, its whole point is challenging that layoffs should be the hammer that companies reach for in the toolbox whenever recessions (or at the present, rumors of recession) loom. The social contagion theory in the article applies both to whether there's a reason to do layoffs at all (which you and many others disagree with, that's fine) and whether layoffs are the appropriate response (which I'm not seeing many responses to, other than the discussion of doing company-wide compensation cuts as an alternative to layoffs). If you actually read the article, it's mostly arguing against using layoffs even if there might be something to respond to: > Academic studies have shown that time and time again, workplace reductions don’t do much for paring costs. Severance packages cost money, layoffs increase unemployment insurance rates, and cuts reduce workplace morale and productivity as remaining employees are left wondering, “Could I be fired too?” > Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue. Layoffs are basically a bad decision. And so on. The article definitely cites more than one source for that, even some of it is anecdotal, such as Southwest not doing layoffs after 9/11, or the words of this CEO or not. But the point is that your criticism misses the point of the article.