6 ms·

Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?

bink 4y ago
Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".
- qeternity 4y ago
  They clearly did need/want them at some point. And then things change. “When the facts change, I change my mind. What do you do?”
- ProAm 4y ago
  > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping. Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending. There are tons of people at these companies that can be let go.
- onlyrealcuzzo 4y ago
  They wanted 11,000 extra heads when the market was rewarding growth. Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore. It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
  - dcolkitt 4y ago
    MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.
    - quickthrowman 4y ago
      If the stock isn’t moving, perhaps the news is already priced in.
      - bmitc 4y ago
        So either insider trading or a lot of people guessing they’d do a big layoff at some point? Microsoft stock has been incredibly volatile though in the past year.
    - onlyrealcuzzo 4y ago
      Hard to say if the market was expecting layoffs.
    - Closi 4y ago
      > MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them. It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap. Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).
- convolvatron 4y ago
  no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.
  - PreachSoup 4y ago
    > many companies have adopted a policy of just generally not firing anyone for performance reasons Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism. I would assume many other companies do the same
- tensor 4y ago
  Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue. If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost. There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
  - KerrAvon 4y ago
    There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.
    - s1artibartfast 4y ago
      I think it is less pessimism and more realism. The fed clearly indicated that it will raise rates until the market cools
      - qwytw 4y ago
        As far as the Fed is concerned inflation, unemployment & GDP growth are all definitely higher priorities than the stock market.
        s1artibartfast 4y ago
        I agree. I didn't mean to imply I was taking about stocks. If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.
    - simonh 4y ago
      The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment. In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
- opportune 4y ago
  For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring. The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it. For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing. Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
- smeagull 4y ago
  A company that can't figure out what do with employees is just as much a warning sign. It's a bad signal that Microsoft can't think of any development worth doing.
  - pjmlp 4y ago
    As customer of their tooling I can think of lots of stuff, but yeah management apparently not.
- deleted 4y ago
  [deleted]
- jonas21 4y ago
  > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
- throwaway4aday 4y ago
  There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.
- jayd16 4y ago
  "Management should plan ahead." *Microsoft lays off 11k in lead up to recession "No, not like that." I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important. We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
- stocknoob 4y ago
  You're thinking at a corporate efficiency level, which is why shareholders want layoffs. To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.
SilverBirch 4y ago
The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.
- Apocryphon 4y ago
  The buck stops with them because they keep on raking in the dollars, unlike the people they fire.
simplotek 4y ago
> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want? I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market. However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community. It's deplorable how a company can toy with someone's life like that just because some exec feels like it.
- applejacks 4y ago
  Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).
  - burkaman 4y ago
    I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.
  - ClumsyPilot 4y ago
    Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too. We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news. Noone has even heard of shumpeterian theory.

bink 4y ago

Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".

qeternity 4y ago
They clearly did need/want them at some point. And then things change. “When the facts change, I change my mind. What do you do?”
ProAm 4y ago
> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping. Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending. There are tons of people at these companies that can be let go.
onlyrealcuzzo 4y ago
They wanted 11,000 extra heads when the market was rewarding growth. Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore. It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
- dcolkitt 4y ago
  MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.
  - quickthrowman 4y ago
    If the stock isn’t moving, perhaps the news is already priced in.
    - bmitc 4y ago
      So either insider trading or a lot of people guessing they’d do a big layoff at some point? Microsoft stock has been incredibly volatile though in the past year.
  - onlyrealcuzzo 4y ago
    Hard to say if the market was expecting layoffs.
  - Closi 4y ago
    > MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them. It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap. Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).
convolvatron 4y ago
no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.
- PreachSoup 4y ago
  > many companies have adopted a policy of just generally not firing anyone for performance reasons Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism. I would assume many other companies do the same
tensor 4y ago
Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue. If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost. There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
- KerrAvon 4y ago
  There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.
  - s1artibartfast 4y ago
    I think it is less pessimism and more realism. The fed clearly indicated that it will raise rates until the market cools
    - qwytw 4y ago
      As far as the Fed is concerned inflation, unemployment & GDP growth are all definitely higher priorities than the stock market.
      - s1artibartfast 4y ago
        I agree. I didn't mean to imply I was taking about stocks. If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.
  - simonh 4y ago
    The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment. In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
opportune 4y ago
For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring. The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it. For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing. Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
smeagull 4y ago
A company that can't figure out what do with employees is just as much a warning sign. It's a bad signal that Microsoft can't think of any development worth doing.
- pjmlp 4y ago
  As customer of their tooling I can think of lots of stuff, but yeah management apparently not.
deleted 4y ago
[deleted]
jonas21 4y ago
> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
throwaway4aday 4y ago
There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.
jayd16 4y ago
"Management should plan ahead." *Microsoft lays off 11k in lead up to recession "No, not like that." I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important. We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
stocknoob 4y ago
You're thinking at a corporate efficiency level, which is why shareholders want layoffs. To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.

SilverBirch 4y ago

The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.

Apocryphon 4y ago
The buck stops with them because they keep on raking in the dollars, unlike the people they fire.

simplotek 4y ago

> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want? I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market. However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community. It's deplorable how a company can toy with someone's life like that just because some exec feels like it.

applejacks 4y ago
Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).
- burkaman 4y ago
  I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.
- ClumsyPilot 4y ago
  Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too. We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news. Noone has even heard of shumpeterian theory.