20 ms·

“Copycat” layoffs won’t help tech companies or their employees

240 points by t23 4y ago

treis 4y ago
This just seems wrong to me. Productivity at the FAANGs was low pre-covid and tanked further when they tried to grow rapidly during COVID. Thanos snapping a significant portion of your workforce is probably the best way to get some level of productivity back. Ideally, you would carefully evaluate everything and trim the fat. But that's probably not possible and if it were it'd play out over a year or two which is worse than ripping off the band-aid. So you make the cuts and expect/hope that people will get reallocated to the most important things and productivity will go up.
- wpietri 4y ago
  I understand you feel that way. And clearly, that's the dominant narrative about layoffs. What makes you value those feelings enough to reject out of hand a professor who has been studying it for decades?
  - treis 4y ago
    Because you can't study an unprecedented situation for decades Because rules derived over the last decades or whatever don't necessarily apply to an unprecedented situation Because pretty much all the CEOs and employees say that productivity is in the toilet Because I don't see 20% or whatever more useful products/features coming out of any of these companies
    - wpietri 4y ago
      So because of a situation you claim is unprecedented, you are advocating for doing the same old sweeping layoffs CEOs have done for decades? Personally, I think the situation is an entirely precedented change in growth expectations that comes around a tightening of monetary policy and a possible recession. But assuming that you're right, on what basis are you claiming that the standard playbook will get new and better results this time?
      - treis 4y ago
        >So because of a situation you claim is unprecedented I claim? Do you remember any other global pandemics that reshaped the tech industry?
        wpietri 4y ago
        Again, you are failing to address most of a point. That's not a good sign, and I ask you to address it fully, but in the meantime I'll address yours. Your claim is that this is driven by the pandemic. I think that's pretty suspect. China excepted, pandemic restrictions ended quite a while ago. I think this is much better explained by the usual shifts in the overall economic cycle, especially the Fed's recent increases in interest rates as they seek to quench inflation, plus the matching stock downturn. An easy check on this: Google's announcement of layoffs doesn't even mention the pandemic. Another one is that layoffs are happening across the industry, not just in companies that were especially boosted by the pandemic. But even if it were purely driven by pandemic growth and then the retreat of growth, changes in growth expectations are not unprecedented. Unless you have numbers that show different, I expect the changes in growth rates are not unusual at all compared with other major economic phenomena.
    - notfromhere 4y ago
      CEOs are going to say that productivity is down to justify layoffs or to kill remote work (something they have been against before, during, and after the pandemic). "pretty much everyone says" is not an actual defense.
- darth_avocado 4y ago
  > Productivity tanked further when they tried to grow rapidly during COVID Anecdotally, the productivity went up during covid because the boundaries of WLB were shattered. But after 2 years, I think a lot of people are feeling burnt out. The companies may feel like they are just trimming the fat, but fat has an essential function in the body. With less people, no doubt, the people who are left will initially work harder, but they will soon succumb to burn out and have a loss of productivity. Working harder after already working hard for two years can do that to you. The company’s best performers at low productivity will do more harm to the companies than having their low/average performers have low productivity.
  - mk81 4y ago
    [dead]
- blinkingled 4y ago
  How do you define productivity in this context? Musk style LOC? How many features you shipped? Let's pick one of the more sensible ones - features you shipped. Who defines those features - is top level management responsible for the product vision, overall strategy that then middle management turns into features? For companies like MAANG that are already hugely successful and have hit a wall so to speak, they don't need low level productivity before they need top level strategy and vision. Apple is a good example of their management priorities being clear - they seem to know what works and where to go next quarter and their middle management also seems capable enough to turn that into products/features and make their Engineers' lives simpler so they can be productive delivering on it. For every 10k+ layoff assuming that it's the lackey low level guys the aren't productive that needed to be laid off is not only inaccurate (lots of greatly productive Googlers have been let go for example) but also unfairly cuts a whole lot of slack for the greater financial burden on the company folks up top that are in charge of strategy and vision. After all they are also the same people that hired the people who are laid of - directly or indirectly.
  - treis 4y ago
    Are you arguing that productivity, however defined, isn't down at these companies?
    - wpietri 4y ago
      I think you have missed most of blinkingled's point, and I encourage you to address it fully.
      - treis 4y ago
        There's no point in debating the meaning of productivity unless someone claims it's neutral or up. If they're willing to make that claim then it might be worth that debate. Otherwise, it's a pointless side track.
        wpietri 4y ago
        I disagree that it it is pointless. But clearly asking you to address it is, so I'll tap out here.
- theGnuMe 4y ago
  Maybe do some research or read the literature?
pookeh 4y ago
I always wondered if high profile CEOs and shareholders know something substantial of the upcoming future that us leaf nodes are just clueless about. Is it just copy cat or deep info for privileged clubs?
- candiddevmike 4y ago
  The plebes want more share of the pie, the fed and elites want more unemployment. Is this a consequence of raising rates, or is it in pursuit of more unemployment?
- auggierose 4y ago
  > Everybody else is doing it, why aren’t we? Pretty much just that. This is how big companies decide most things, not only layoffs.
  - notfromhere 4y ago
    CEOs are just managers, not philosophers. People thinking they're all knowing demigods is just marketing to try and justify those extremely high salaries. They're no different than your average person.
- darth_avocado 4y ago
  After having an opportunity to talk 1:1 with two of the most revered personalities/founders/ceos in tech, I’ve come to the conclusion that they are as much full of s** as the rest of us. Probably even more. I know the sample size of 2 is not scientific, but it was enough for me to not have any illusions about the nature of things.
  - novok 4y ago
    Are they really going to tell you the "privileged" stuff 1:1 if they don't know you well, or the stupid stuff that they tell the public? At that level, trusting people you don't know is even more risky.
    - 4y ago
wpietri 4y ago
I love this point: "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing." I really wish for a less supine tech press. I've not seen any of these titans of industry being held accountable for the apparent major mistakes of overhiring. And I'm not even talking actual consequences here; these people will surely get bonuses for this. I'd just like to see some hard questions being asked and answered.
- MiscIdeaMaker99 4y ago
  I would love to see the capitalists held accountable for the way they treat their workers, but I believe their decisions are primarily dictated by profits, regardless of what they say. Hard questions can surely be asked, but once you weed through all of the empty narrative, you pretty much end up with the reason: extracting profits.
  - s1artibartfast 4y ago
    It is hard to find anyone who honestly suggests it is otherwise. It was never about the workers. Layoffs are because companies think the workers cost more than they make. Everything else is just bickering over why they think this.
  - wpietri 4y ago
    Even there, I think there can be usefully hard questions. Because I suspect what the CEOs are focused on is not the long-term profits that come from building healthy companies, but the short-term profits that come from juicing the numbers in ways that look good to the market on a day-to-day basis.
- broast 4y ago
  Do we have any evidence that the over-hiring was a mistake? Could companies not have seen the free money and decided to beef up their staff for short term gains in their roadmap, with the knowledge and intention that they will likely be cutting later while getting to keep all that intellectual output? I don't see why we put this past them.
di456 4y ago
This misses the main driver. Valuations are no longer based on growth. The entire market has shifted to profitability over growth. Companies with a stronger balance sheet coming out of the recession will be better positioned for the long term. Seems that companies that gained their valuations through growth weren't sustainable in the long run. And at a macro level, economic policy has largely deferred recessions since the 2008 housing bubble pop. That's not sustainable either. At some point a correction is going to happen. The "social contagion" is companies betting that a correction is coming. Some made that bet early, and some are just now hopping on the train. It's about survival for many companies. I bet we'll see fire sales, and acquisitions ramping up for the financially stronger companies.
- btown 4y ago
  The market shifting to profitability over growth was the motive, absolutely. But Elon's decimation of Twitter was the means and opportunity. And I think that copycatting those means of executing layoffs - 7am email notifications for 20-year employees, minimal consultation with lower-level management about who should be retained - will have significant ramifications on the morale of the remaining workforce. Perhaps some of it was unavoidable to avoid media leaks. But a lot of how all this was executed reflects a massive lack of empathy.
  - oxfordmale 4y ago
    The layoffs without consultation with the lower levels will indeed leave a bitter taste. It gives the impression that hard work isn't awarded if the top management level has no visibility over your work. This will result in departments spending much more time selling their work, rather than actually doing the work. In the end, this is counterproductive for a company.
    - hinkley 4y ago
      If you’ve never been in a layoff where you lost someone you trust as much as you trust yourself, it’s a terrible experience that may come to define your time at the company. If they can lay “Dave” off they can lay any of us off. What if I’m next? Or god what if you’re next? I do not want your job and they’ll make me do it if you’re gone. I have to be very careful in meetings now, save 95% of my political capital for self preservation, not team benefit. Not company benefit. You might have a few people who double down and say if this isn’t working we have to try something radically different. But Cassandra is often in the first round of layoffs. Nobody wants to listen to people second guess them so you’re out first. After that, no more ideological fights get won from that point forward. The entire team is in free fall, just trying to do enough to look good and hoping the market corrects before the wheels come off.
petilon 4y ago
Not all of it is "copycat". During the pandemic consumer spending moved online. People purchased hardware to work from home, ordered more from Amazon and other online stores as opposed to physical stores, used online services such as Zoom and Microsoft Teams more. Tech companies responded to the increased demand by increasing the pace of hiring. Were they wrong to do so? Possibly, because they should have expected that not all of the increased demand would stick around once the pandemic is over. As it happened, the demand ebbed when the pandemic was over, so they are stuck with excess manpower, which now has to be reduced. This doesn't explain all layoffs, however. Some of it is just opportunistic - now is a good time to do layoffs without looking weak.
- nkozyra 4y ago
  > During the pandemic consumer spending moved online. I keep hearing this repeated as canon but is this quantified somehow? Did we really see a spike long enough for hiring sprees? And did it last until ... when? A few months ago? It seems intuitive but I'd really love to see numbers.
  - __derek__ 4y ago
    Yes, there was pull-forward growth in e-commerce. Using this from Benedict Evans in 2021 because it has numbers and a good graph:[1] > The traditional way to think about ecommerce penetration is to look at share of total retail sales, and then deduct things like car repair, gasoline and restaurants - to get to ‘addressable retail’. On that basis, US ecommerce was at 16% penetration at the end of 2019 and increased to 20% or so in 2020, adding 12-18 months of growth in a year. [1]: https://www.ben-evans.com/benedictevans/2021/5/29/boxes-trucks-and-bikes https://www.ben-evans.com/benedictevans/2021/5/29/boxes-truc...
  - staticautomatic 4y ago
    I recently spent a couple years interviewing hundreds of global F100 executives and all of them said exactly the same stuff about both B2B and B2C demand moving online during the pandemic.
  - pm90 4y ago
monero-xmr 4y ago
If 100k people are let go that’s 100k licenses lost across ~25 different vendors. Layoffs are happening because growth is flatlining or reversing. Tech is very insular as startups are created to solve problems in other tech companies, so if the flywheel of tech companies buying from each other stops, the entire thing can reverse quickly. Also seed rounds were oversubscribed with no diligence, product, and money raised on little more than names and vague ideas. Series A was possible pre-revenue. Series B on 100 to 250x revenue. The whole thing was unsustainable. Finally a huge number of tech employees were “barnacles” or those somehow making 6 figure salaries while providing little or negative value. Now that the music has stopped those people are being cut. I’m talking about agile / scrum people, DEI, ethicists, bloated HR, and all manner of not-revenue generating employees. Push has come to shove and they are jettisoned first.
- theGnuMe 4y ago
  >growth is flatlining or reversing. Do you have a link to a chart or research that shows this?
- phendrenad2 4y ago
  This is true. Every SaaS startup I've worked for, in the early days all of the "paying customers" are other startups (usually nepotistically funded by the same VC firm). That's why a startup company can emerge from stealth mode with 10 unicorn logos on their homepage.
sovnwnt 4y ago
> instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. This doesn't seem like a good strategy for tech. Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions.
- sausagefeet 4y ago
  > Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions. Will it? Are your top performers only there because of the pay? And how do you even determine who your top performers are? I see this sort of logic frequently and I don't even know how to measure it, much less believe it.
  - sovnwnt 4y ago
    > Are your top performers only there because of the pay In an ideal work environment, probably less so than other employees. But I think anyone who has their salary reduced is going to reevaluate their position, and those with more valuable skills are more likely to leave. The question is, what is more likely to cause a serious reevaluation, salary reductions or layoffs? I think for most tech companies, a single round of layoffs is preferable, as the people who you want to remain are more likely to feel they aren't and won't be affected and not reevaluate their position. The reductions approach could work for smaller or startup companies with a flatter structure, where employees are more invested in the company's goals and successes, either through culture or shares.
    - lordnacho 4y ago
      It's a strange balance. Either you get a pay cut with a job that might cut again, or your colleagues get laid off with the potential that it's you next time. Either way you'll probably be thinking about interviewing, with a bit less urgency if you get to keep your job.
    - 4y ago
novok 4y ago
This really depends on the percentage of the workforce your laying off. A small %2-%6 one is really getting rid of people you don't want, but it's too much of a pain in the ass to do the entire PIP & political process to do so, or they're toxic / unproductive but well positioned that firing them is hard. A streamlined 'just pick people' layoff process helps with all of those issues. The bottom %5 percentile people that get dropped in a %5 lay off were already near the chopping block. While larger %10-%50 layoffs are really economically motivated. The thing is although, you can't do %5 layoffs when your doing well, or the economy is doing well, so you use such times as now as an opportunity to do so. You'll know the layoffs are more economically motivated when there are multiple waves or they become larger in percentage of employees. Like why did the google layoff %6? I definitely think it was a trim the fat operation, and the opportunity to get rid of some well positioned, unproductive long term rest-and-vesters, which is why a bunch of very long tenure people got laid off at google now.
- siggen 4y ago
  Let’s see what shakes out of the town-hall meeting next week.
- bdavisx 4y ago
  Lower level management at Google was definitely not consulted on these layoffs. It had to be upper level only or it would have leaked more. Like really upper level. So there's no way the people @ that level know who's coasting and who isn't. I'm sure there were a lot of high performers cut along w/ some "fat".
  - novok 4y ago
    That is what the perf review system is for, and one reason why as a lower level manager, your careful about who gets the good ratings vs. not.
- Blackthorn 4y ago
  This is not to call you out in particular, but I see this exact sort of "just world fallacy" interpretation of layoffs all over this site and it's really fucking weird. No wonder there's such a stigma around workers who were laid off, with this attitude rampant.
jt2190 4y ago
This interview was posted days ago under a different title: Previous Discussion: https://news.ycombinator.com/item?id=34339698 https://news.ycombinator.com/item?id=34339698 “ Why are there so many tech layoffs, and why should we be worried? Stanford scholar explains” https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/ https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
trentnix 4y ago
> Behavior spreads through a network as companies almost mindlessly copy what others are doing. When a few firms fire staff, others will probably follow suit. I generally agree. Copycat layoffs are the result of “we have to do something” thinking, with little thought put into whether or not what’s being done is actually beneficial. Politicians are subject to these types of actions, as well. If you do the same thing everyone else did and it doesn’t work, you don’t get blamed. You, like everyone else, was a victim of “circumstances”. But if you do something different and it doesn’t work, it’s your ass. That said, these circumstances could provide cover for companies who need to shed poor performers or performers who’s cost-benefit is no longer positive to the company. But that requires more planning and forethought than I think any of the major players are applying.
ericb 4y ago
The real winners will be the next tier down in the hiring hierarchy. They are starved for talent. While not as high-paying, or glamorous, they've had jobs sitting open for a while. When developers are needed for growth initiatives that can drive a stock multiple off more than just current earnings, the cycle will begin again.
- Der_Einzige 4y ago
  Next tier down is your Intel's, your IBMs, and others who pay below market rate but are huge blue chips. They are also in trouble.
  - bagacrap 4y ago
    I don't think IBM would be my next choice after getting laid off from Meta. There are plenty of tech jobs available at healthy companies outside of the "tech industry".
tarr11 4y ago
The professor recommends across the board pay cuts as an alternative to layoffs. > One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. Curious if there is research here on how this impacts the company? Seems like it would also increase stress and encourage top performers to seek new opportunities. He also recommends hiring during a recession: > He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating. I suppose this works when it works, and then fails completely when it doesn’t. In essence, this increases the risk profile on the company which seems problematic too. Would be curious if there are studies that show the outcomes of these strategies. Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.
- zht 4y ago
  You would need more than 10 percent pay cut to offset 10 percent in personnel spend. Health insurance/benefits is a significant source of spending
  - vineyardmike 4y ago
    This probably is less true in tech where the salaries are higher.
    - farmdawgnation 4y ago
      "Less true" is a bit of a bold statement here. It's still _true_, but you're right in saying that the additional percentage you would need to affect the change might be different between different industries. It's also possible to optimize costs on the benefits themselves to avoid needing to do that, at times.
- onlyrealcuzzo 4y ago
revlolz 4y ago
Deleting the post, I no longer wish to discuss this.
- absrd 4y ago
  > it seems insensitive to tell 100k+ ppl Google or Amazon fired them because "well everyone is doing it!" Is that any more insensitive than CEOs and C-suites telling laid off workers they "take full responsibility" and "had to make a difficult decision" while facing no consequences themselves?
  - revlolz 4y ago
    How does this relate to my post?
- deleted 4y ago
  [deleted]
- lapcat 4y ago
  It's unclear how the fed rate directly affects high revenue high profit giants like Google, Microsoft, and Amazon.
  - revlolz 4y ago
    It's very clear and has been. Larger enterprises finance debts that carry interest rates. When rates go up, costs increase. It's the exact same thing in the mortgage industry. When you go to buy a home, how much you can afford is determined by your how much you earn, how much capital you have, and the interest rate to borrow what you don't have. We're going to ignore full cash purchases because companies do not operate on full cash basis. The point to my main post is that it's asinine to relate all these layoffs as "copycatting" one another. It would be like saying you only eat food because I do and you are copying me. Or it would be like saying each of us has 10 days worth of food to survive 30 days. I implemented rationing to stretch out to the 30 days. You implemented rationing adopting the same strategy, but to say you are a "copycat" would be ridiculous.
- 4y ago
300bps 4y ago
There are pretty well understood macroeconomic causes of the hiring binge as well as of the employee purge. The former was primarily caused by the fed throwing massive money at tech companies and the latter was caused by the fed stopping.
scrapcode 4y ago
It seems that many of these articles would apply just as well to the excessive hiring that was going on ~2 years ago. "Damned if you do, damned if you don't" type of situations.
- __derek__ 4y ago
  Yes. One un-damned company thus far is Apple:[1] > From its fiscal year-end in September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, the employee count at Amazon doubled, Microsoft’s rose 53%, Google parent Alphabet Inc.’s increased 57% and Facebook owner Meta’s ballooned 94%. [1]: https://www.wsj.com/articles/how-apple-has-so-far-avoided-layoffs-lean-hiring-no-free-lunches-11674274185 https://www.wsj.com/articles/how-apple-has-so-far-avoided-la...
gibsonf1 4y ago
I think this professor should study economics a bit. Its as if he thinks the world is what people think it is, rather than what the facts about the world tell us, and the economic facts at the moment are terrifying, and not because of what people are saying or doing about them.
kept3k 4y ago
No company likes laying off people. Makes me think, - is the author not believing the market right now? Because it is terrible. No company likes losing
xyzelement 4y ago
I profoundly disagree. You hired 7 dog walkers (one for every day of the week) to walk your dog Stinky during lunch. A year down the road you realized you don't need someone to walk Stinky every day, you want to do it yourself sometime. You can say you overhired. So you decide to keep 4 of the dog walkers and let 3 of them go. That's a 43% layoff, you heartless capitalist. Who do you cut? Well Bob is the Sunday guy and you definitely don't need a dog walker for Sunday, so Bob's on the list (role elimination). Alice makes $25 per walk while everyone else makes $20, she's gotta go (overpaid/cost reduction) and Carol, you actually think she's not that good with Stinky. You had to have her when you thought you needed 7 people, but she ain't one of the top 4 (performance based) So now you got 3 dog walkers instead of seven, you pay them on average less, their performance is on average better and they are focused on days you really need them. Yeah you don't have the same coverage but turns out you are fine without it. Stinky is happier too. You may even use your saved money ($65 per week) to hire someone you need more, like a cleaning lady. Obviously you can fuck up layoffs but if done well you and Stinky can come out ahead.
based_bobby 4y ago
If you want people to be accountable, you’ll have to start by taking responsibility and action into your own hands. If not you, then who?
dcj4 4y ago
I didn't read the article, the title is too obviously unintelligent. Obviously other tech companies have to not only copy one, but all of musk's management principles to be successful.
moomoo11 4y ago
So take a pay cut and deal with rising costs, but the company will still lose money and my stocks lose value. So ultimately we all end up losing?
ipaddr 4y ago
instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. This causes stress to 100% of people which makes the best or on the edge of their income lifestyle to quit.
- nkozyra 4y ago
  The stress is felt in either scenario though.
kibwen 4y ago
Of all these layoffs, how many have been executive positions? Or was the irrational exuberance of the last few years miraculously only limited to the lower ranks?
jmyeet 4y ago
It makes me physically ill to hear billionaire CEOs "take full responsibility" for the layoffs in an impersonal email while taking no pay cut themselves. Look at Meta as one of the worst offenders. Meta's layoffs will save what? $5 billion a year? Assuming those employees were actually producing some value, the true savings will be less (since you also have to factor in severance costs). Now consider that Meta has spent $36 billion [1] building the Metaverse with basically nothing to show for it. Now Meta has fully internalized the idea that it cannot exist without a monopoly of some kind. FB (and even IG) are dwindling. The Metaverse is the answer to that. That's literally all it is. But there's no business strategy here, no value proposition to consumers (on the contrary, this is something consumers clearly do not want) and no product-market fit. Yet the intention here is to spend over $100B on this unproven effort. For what return on investment? My point is that Meta could've achieved multiples of the "savings" from layoffs by simply scaling back or, better yet, scrapping entirely the Metaverse. Focus on the core business and acquisitions. So many of these layoffs are purely virte signaling for "investor confidence" and nothing more. A less charitable interpretation is that it's aimed and making the remaining staff work harder and for less money, fearing future layoffs. Meta in particular is rudderless and layoffs are a bandaid on that. [1]: https://www.businessinsider.com/meta-lost-30-billion-on-metaverse-rivals-spent-far-less-2022-10 https://www.businessinsider.com/meta-lost-30-billion-on-meta...
- ryandrake 4y ago
  > It makes me physically ill to hear billionaire CEOs "take full responsibility" for the layoffs in an impersonal email while taking no pay cut themselves. To be fair, Microsoft's executives partied with Sting[1] right before announcing their layoffs. They probably would have rather had Lady Gaga perform for them, but had to take some responsibility so they settled for Sting. It's hard times for everyone. 1: https://www.marketwatch.com/story/microsoft-hosted-sting-concert-in-davos-before-announcing-layoffs-11674119246?mod=search_headline https://www.marketwatch.com/story/microsoft-hosted-sting-con...
  - jmyeet 4y ago
    And we should focus on the true victims of the recession: landlords.
theGnuMe 4y ago
Human sacrifice is an irrational cultural ritual deeply embedded in our shared history. We must appease the Market God to receive its blessings.
snozolli 4y ago
It boggles my mind that the tech interview process has become insanely byzantine and drawn-out over my career, yet layoffs continue to happen. I've been on both sides of several layoff cycles. I've rarely seen any correlation with worker capabilities. I have, however, seen incompetent management cause employees to stall out and flounder.
college_physics 4y ago
Well, maybe banks also got into the "tech copycat game" given that, as per current FT headline: "Banks prepare for deepest job cuts since the financial crisis" [0] . Maybe banks finally managed to become real "fintechs" and achieved being valued as "tech" not as book liquidation value? /sarcasm We most likely see the same people at work, behind the same spreadsheets looking at the same variables (interest rates, current stock prices), the same control variable (labor costs) and having the same incentives (future stock price) and coming to the same conclusion: just get some people out the door. Business models, management quality, growth potential and other so-called "alpha" factors are meaningless when we are obviously at the late phase of a bubble where all the ugliness (from non-sensical bets to outright fraud) comes to the surface. [0] https://www.ft.com/content/4beafb70-ec1a-41d3-b18e-33a85bf2a062 https://www.ft.com/content/4beafb70-ec1a-41d3-b18e-33a85bf2a...
kris_wayton 4y ago
I can't help but wonder how many of these layoffs are really just "rank and yank" in disguise. Where the company will soon go back to backfilling pretty much the same spots from the open market. And, funny enough, if the pool is full of companies doing the same thing, well...it's essentially just trading your laid off workers for someone else's.
- hinkley 4y ago
  I think the stock market agrees. Stocks tick up after a first round of layoffs. It’s seen as fat trimming.
thenerdhead 4y ago
While I don't agree with this single reduction of the cause to just "imitation", I do really like his views on jobs in general. One quote I remember him saying is "You should never have to leave a job involuntarily". An interesting way to think about this is to read any CEO's book on leadership and compare it to the actions they have taken in the last few years to see if it represents authenticity or imitation. If imitation works, then you ought to do it. Which seems to be working for these companies especially looking at hiring trends over the last few years and the layoffs recently. Imitation is at the heart of human survival after all. It just sucks that in the world of knowledge work, the division of labor is still there. Many knowledge workers are capable of becoming specialists in relatively short periods of time. But rather the focus remains hiring new people who have the specialty today. That seems to me to be a big takeaway for these companies who lay off already loyal employees, culture fits, and show the curious persistence of learning.
la64710 4y ago
We need to have broad discussion and consensus to establish three things 1) How to pass the value created by AI and automation to all levels of the human society and nature 2) How to make sure there is equitable access to power of computing and AI and 3) Ensure governance of these forces to ensure benefits to all of society. Don’t worry they are not my words. They are Sam Layman’s but they make damn good sense to me. Unless of course we want to stay in this mode for ever.
super256 4y ago
> The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing. If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based. Or, well, maybe a price to earnings ratio of >60 at tech companies is not sustainable in the long term. Also, net margins across the whole sector have been decreasing lately. Comparisons from Q3 2021 vs Q3 2022: - Meta's went from 32% to 15% - Amazon's from 7% to 2% - Google's from 29% to 20% > Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it. Meta also loves having a profit margin of 40%. Why? Because big profit margins also mean higher paper value of executive's stocks. I believe that when advertising revenue and growth tumble, it's the easiest to fire people to maintain margins. > Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. When Zuckerberg announced on 9th Nov 2022 that he'd reduce Meta's work force by 13% the stock rallied by 22%. Same for Amazon (20% rally after announcement of layoffs). But I don't know! Stocks often rally when the business itself is good and you announce that the very good profit margin stays. I wouldn't expect this to work for companies who are still burning a lot of money, but it's probably a good method to drive up stock prices at companies which already make lots of money. > Moreover, layoffs don’t work to improve company performance, Pfeffer adds. 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?” Yes, I wouldn't expect productivity to increase after lay-offs either. But if productivity decreases less than the money you're saving within the next year or so, it's still a good deal for the company, I guess? The real question I have about this is where the average break-even point lies. How many months does it take until a lay-off in this environment becomes profitable? > When the economy turns back in the next 12, 14, or 18 months, they will go back to the market and compete with the same companies to hire talent Even he does not know when the economy turns back. > Layoffs kill people, literally. They kill people in a number of ways. Layoffs increase the odds of suicide by two and a half times. This is also true outside of the United States, even in countries with better social safety nets than the U.S., like New Zealand. > Layoffs increase mortality by 15-20% over the following 20 years. I believe this is unfortunately true, especially if you wholeheartedly did your job. However, I'd like to set the current lay-offs into context: Tech accounts for 50% or more of the lay-offs; tech only makes up <3% or so of US employment. The current unemployment rate (3.5%) in the US is on pre-covid levels as a 40-year low. The last time we had a rate this low was 1969. Meta had 45k employee pre-covid. In November 2022 they had 85k employees, so almost doubled during covid. In this context a reduction of 13% almost sounds like a rounding error. Which other sector had such excessive labour growth during covid?
NHQ 4y ago
The graphic and the pretense of mimetic causation, what a hilarious cope. No mention of who is getting axed: the .5x gratuity hires, the ball-pen projects for also-ran elitists. $2 Ugandans can do it now that wokeness is dead. This will lead to higher pay for real 10x types. Tech starts looking like a baseball team. You have your sluggers and your fielders.
zxcvbn4038 4y ago
In the US layoffs are a method of getting rid of people who are normally untouchable because they fall into the EEOC protected classifications. As long as the group laid off is statistically diverse you can let them go without getting into individual situations - Bob’s performance was acceptable but we had to let go of X people in every division for economic reasons. Whereas otherwise Bob might sue saying poor reviews or a dismissal was actually discrimination when Bob was just a lackluster employee who happened to fall under one of the EEOC categories. The last time I was involved in a layoff they gave everyone leaving a thirty-plus page document which broke down the group by every conceivable metric to prove that the layoff didn’t target any particular demographic more then others.
- e40 4y ago
  I would add to this that the people laid off are usually ones that are hard to quantify in terms of performance reviews, but that management doesn't want to keep. People that do just enough not to get fired, for example, or people who require much more management time, even if they are good performers, than others.
dilyevsky 4y ago
Imo these tech layoffs is one of the best examples of McNamara fallacy I’ve seen in a while - exchange easily measurable monetary gain for poorly measured loss of productivity/morale across the board
2devnull 4y ago
This is just bias pretending to be truth. Where was this “expert” in contagion when copycat hiring was taking place? Does macroeconomics have any impact on labor? What is the “dual mandate” of the fed? If you buy this nonesense you signal your views have no intellectual merit, and you’re best to simply ignore.
dasil003 4y ago
As much sympathy as I have for the human side of layoffs that are called out here, I feel the researcher is not being intellectually honest. This paragraph is the worst offender: > 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. First of all, if your strongest argument that layoffs do not cut costs is that sometimes companies hire them back as contractors, then I don't think you have a leg to stand on, because that's not really a layoff! In this case, "layoffs" is just a smokescreen to reclassify workers. Pointing out that layoffs don't solve ineffective strategy, loss of marketshare or too little revenue is a facile argument at best. Yes, trivially, getting rid of people does not solve your business strategy problems. But at the same time, there may be no solution. The world may simply be moving on from what your company has to offer. Bringing in the MBAs to try and force the issue can have a lot of ugly outcomes that go well beyond layoffs. At the end of the day, businesses ebb and flow, and they can only support a certain size of headcount based on the economic environment in which they operate. It would be nice if leadership had the clairvoyance to always avoid overhiring and give ironclad promises on perpetual employment, but such is not the world we live in. Coming with an absolutist position that layoffs are universally bad, backed by a bunch of flimsy strawman arguments, is not very helpful for people that actually have to make these decisions. Seems more like pandering to a generation that has never known a bear market.
AbrahamParangi 4y ago
Saying that layoffs are imitative behavior is no more useful than noticing that almost all behavior can be described as “imitative” If you hear people yelling fire and see people stampeding for the exit, does that mean there actually is a fire? No, certainly not, it could just be a panic. But does that mean that you should stay put and wait and see if everyone else is wrong?
- dieselgate 4y ago
  Indeed, isn’t this kind of the definition of a “market” though? The analogy of yelling fire is a good one for this context
- marcosdumay 4y ago
  You certainly should stay put long enough to see if there's a fire, where it is, and what is the best exit to use. People that don't do that have a much higher tendency to die on the accident.
scarface74 4y ago
> 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. I don’t really think that Amazon, Google or Microsoft are suffering from any of those issues. Facebook on the other hand… And many of the tech layoffs are coming from unprofitable companies that over hired.
joshe 4y ago
This, of course, is not how Stanford itself does it. 2020 https://stanforddaily.com/2020/07/29/stanford-to-lay-off-208-workers-and-furlough-30-more-in-light-of-covid-19-budgetary-challenges/ https://stanforddaily.com/2020/07/29/stanford-to-lay-off-208... 2009 https://www.nbcnews.com/id/wbna32660764 https://www.nbcnews.com/id/wbna32660764
bagacrap 4y ago
> Layoffs often do not cut costs I guess you can put "often" in front of any statement and be not wrong. But obviously letting go expensive workers is going to reduce costs. > Layoffs often do not increase stock prices They've pretty reliably bumped stock prices this past year, and by quite a lot. Not that I think this is what a CEO should be optimizing for, since short term price action is not that important, but since he brought it up... > Layoffs do not increase productivity They definitely increase productivity if they're targeted at the lowest performers --- unless you somehow think all employees are the same, which sounds like an MBA type of opinion to have > Companies sometimes lay off people that they have just recruited That doesn't seem to be the case with the recent tech layoffs (to the extent that I have knowledge). The folks I have seen laid off were not ones hired since 2020, rather those that have been around longer and should have been let go earlier. > Layoffs kill people * There's a long chain of events that lead to a layoff * There are many people who are laid off and don't kill themselves So how can you say that a layoff was THE cause that killed a person, rather than, say, a series of poor choices by politicians and public-sector economists, or the medical community failing to diagnose a chemical imbalance, etc etc. Is there an A/B test that shows that when a company doesn't do any layoffs and instead goes bankrupt and everyone loses their job that everyone stays happy and healthy? > how economic insecurity is bad for people Make recessions illegal! Stocks only go up! Literally nothing this professor says is convincing. Tech workers and all people should take steps to become financially literate, plan ahead for an unexpected termination, maintain a broadly diversified investment portfolio, and take responsibility for their own mental health.
poszlem 4y ago
"Layoffs kill people, literally. They kill people in a number of ways. Layoffs increase the odds of suicide by two and a half times. This is also true outside of the United States, even in countries with better social safety nets than the U.S., like New Zealand." --- A pedestrian is struck by a vehicle while crossing the road far away from a zebra crossing. Who is to blame? There is a certain portion of people who will answer this question by saying: "Everyone but the pedestrian". The driver of the vehicle is at fault for striking the pedestrian because he failed to react quickly enough. Or because he drove too fast. The council is responsible for the accident as they failed to provide a designated crossing area where the pedestrian intended to cross. The pedestrian was crossing the road to reach a coffee shop on the opposite side, thus it could be argued that the coffee shop owner's decision to open their establishment on the other side of the road, or away from a safe crossing point, may have contributed to the accident. The education system is at fault for not providing the pedestrian with sufficient knowledge on when it is safe to cross the road, which may have led to the accident. It could be argued that the accident is a result of societal values that prioritize vehicles over pedestrians, as it is evident in the lack of infrastructure that prioritizes the safety of those who walk. "Everyone but the pedestrian". I hate this kind of argumentation and this article is a great example of the kind of epistemiological overreach that social sciences are guilty of in the last years. Everything now is a hysterical overreaction. No. Layoffs don't kill people.
chkhd 4y ago
All these layoffs to me personally seem just an accelerated and highly opportunistic cull of people in the bottom of stack ranking. Of course they still do it, of course they will use this golden opportunity to improve what they think of as "health" of the organization. Yes, they probably overhired during the pandemic, but people laid off will not necessarily be the same ones.
elforce002 4y ago
Ok, this is the reality: From a business perspective - Businesses act on behalf of their shareholders. They want to give them tranquility and "peace of mind" - They (big corporations) want their "power" back, meaning, lower wages, return to office, etc. - They (big corp) are colluding with the Feds to mitigate inflation. Do we have to like this? Absolutely no. Do we have any choice? It depends. As a collective we have some sort of bargaining chip and we could try to win the war on WFH. We could also don't put our money on those same companies. Let them know they need customers/consumers and those come by strengthening the middle class. Starting a layoff wave will just get people to stop paying for non essential things (streaming, fast food, etc), creating even more layoffs and the cycle repeats until the economy crash. I'm all for responsible and sustainable capitalism. The "let the market sort itself out" premise is just plain stupid and dangerous since the ultimate goal of allowing that will be to bring feudalism back. Big corporations having all things and we just work to live.
phendrenad2 4y ago
These "copycat" layoffs are like a bigger version of those prank youtube videos where some people run through a crowded cafe feigning mortal terror, and everyone in the cafe starts to run along with them.
terminatornet 4y ago
> One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. anyone have any other examples like this where a company avoided layoffs with temporary pay cuts?
- detaro 4y ago
  Not quite the same, but for temporary problems there is a mechanism in Germany (and I think Austria and Switzerland too) where a company can cut working hours (and salary to match) and some of the difference gets paid by social security as kind-of "unemployment benefits". Was used quite a bit when COVID hit.
crakhamster01 4y ago
> "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing." I think this social contagion can describe a lot of the moves that have been made in the tech industry over the last few years. Some examples: * "Embracing remote work" - prior to 2020 the prospect of working hybrid, let alone fully remote, was extremely rare in tech. Mid-pandemic a couple of large tech companies announce that remote work is here to stay, and pro-WFH policies spread like wildfire. This is a positive example IMO, but still seems like big tech gave this trend the kick to get going. * The pandemic hiring spree - this one feels the dumbest IMO. As expected from being stuck at home, FAANG in general saw an increase in usage and therefore an increase in revenue. Either leadership made some willfully ignorant revenue projections, or maybe it was just a land grab, but a couple of the big players started aggressively hiring, and all of a sudden the market for tech employees was at an all time high. Less stable companies assumed the bigger players knew something they didn't, and a lot of them followed suit only to get burned by the current bear market we're in. And now the mass job cuts. So many tech pundits are heralding these waves of layoffs as FAANG forecasting darker days ahead. "If companies with troves of consumer data like Meta and Google are trimming the fat, they must know something we don't!" _Maybe_ big tech is right this time around, but it doesn't seem like they have the greatest track record. At what point are we going to stop assuming these companies are omnipotent, and realize the man behind the curtain is just some mid-level data analyst with a penchant for SQL queries.
readonthegoapp 4y ago
this was pretty funny - prof was just like...these execs and boards are lazy and stupid. :-D i think he's being too kind. but it seems there would have to be some real positives in disciplining your workforce through layoffs -- to not ask for raises or vacation, to not try to unionize, etc. but he seems pretty convinced.

240 points by t23 4y ago

This just seems wrong to me. Productivity at the FAANGs was low pre-covid and tanked further when they tried to grow rapidly during COVID. Thanos snapping a significant portion of your workforce is probably the best way to get some level of productivity back. Ideally, you would carefully evaluate everything and trim the fat. But that's probably not possible and if it were it'd play out over a year or two which is worse than ripping off the band-aid. So you make the cuts and expect/hope that people will get reallocated to the most important things and productivity will go up.

wpietri 4y ago
I understand you feel that way. And clearly, that's the dominant narrative about layoffs. What makes you value those feelings enough to reject out of hand a professor who has been studying it for decades?
- treis 4y ago
  Because you can't study an unprecedented situation for decades Because rules derived over the last decades or whatever don't necessarily apply to an unprecedented situation Because pretty much all the CEOs and employees say that productivity is in the toilet Because I don't see 20% or whatever more useful products/features coming out of any of these companies
  - wpietri 4y ago
    So because of a situation you claim is unprecedented, you are advocating for doing the same old sweeping layoffs CEOs have done for decades? Personally, I think the situation is an entirely precedented change in growth expectations that comes around a tightening of monetary policy and a possible recession. But assuming that you're right, on what basis are you claiming that the standard playbook will get new and better results this time?
    - treis 4y ago
      >So because of a situation you claim is unprecedented I claim? Do you remember any other global pandemics that reshaped the tech industry?
      - wpietri 4y ago
        Again, you are failing to address most of a point. That's not a good sign, and I ask you to address it fully, but in the meantime I'll address yours. Your claim is that this is driven by the pandemic. I think that's pretty suspect. China excepted, pandemic restrictions ended quite a while ago. I think this is much better explained by the usual shifts in the overall economic cycle, especially the Fed's recent increases in interest rates as they seek to quench inflation, plus the matching stock downturn. An easy check on this: Google's announcement of layoffs doesn't even mention the pandemic. Another one is that layoffs are happening across the industry, not just in companies that were especially boosted by the pandemic. But even if it were purely driven by pandemic growth and then the retreat of growth, changes in growth expectations are not unprecedented. Unless you have numbers that show different, I expect the changes in growth rates are not unusual at all compared with other major economic phenomena.
  - notfromhere 4y ago
    CEOs are going to say that productivity is down to justify layoffs or to kill remote work (something they have been against before, during, and after the pandemic). "pretty much everyone says" is not an actual defense.
darth_avocado 4y ago
> Productivity tanked further when they tried to grow rapidly during COVID Anecdotally, the productivity went up during covid because the boundaries of WLB were shattered. But after 2 years, I think a lot of people are feeling burnt out. The companies may feel like they are just trimming the fat, but fat has an essential function in the body. With less people, no doubt, the people who are left will initially work harder, but they will soon succumb to burn out and have a loss of productivity. Working harder after already working hard for two years can do that to you. The company’s best performers at low productivity will do more harm to the companies than having their low/average performers have low productivity.
- mk81 4y ago
  [dead]
blinkingled 4y ago
How do you define productivity in this context? Musk style LOC? How many features you shipped? Let's pick one of the more sensible ones - features you shipped. Who defines those features - is top level management responsible for the product vision, overall strategy that then middle management turns into features? For companies like MAANG that are already hugely successful and have hit a wall so to speak, they don't need low level productivity before they need top level strategy and vision. Apple is a good example of their management priorities being clear - they seem to know what works and where to go next quarter and their middle management also seems capable enough to turn that into products/features and make their Engineers' lives simpler so they can be productive delivering on it. For every 10k+ layoff assuming that it's the lackey low level guys the aren't productive that needed to be laid off is not only inaccurate (lots of greatly productive Googlers have been let go for example) but also unfairly cuts a whole lot of slack for the greater financial burden on the company folks up top that are in charge of strategy and vision. After all they are also the same people that hired the people who are laid of - directly or indirectly.
- treis 4y ago
  Are you arguing that productivity, however defined, isn't down at these companies?
  - wpietri 4y ago
    I think you have missed most of blinkingled's point, and I encourage you to address it fully.
    - treis 4y ago
      There's no point in debating the meaning of productivity unless someone claims it's neutral or up. If they're willing to make that claim then it might be worth that debate. Otherwise, it's a pointless side track.
      - wpietri 4y ago
        I disagree that it it is pointless. But clearly asking you to address it is, so I'll tap out here.
theGnuMe 4y ago
Maybe do some research or read the literature?

pookeh 4y ago

I always wondered if high profile CEOs and shareholders know something substantial of the upcoming future that us leaf nodes are just clueless about. Is it just copy cat or deep info for privileged clubs?

candiddevmike 4y ago
The plebes want more share of the pie, the fed and elites want more unemployment. Is this a consequence of raising rates, or is it in pursuit of more unemployment?
auggierose 4y ago
> Everybody else is doing it, why aren’t we? Pretty much just that. This is how big companies decide most things, not only layoffs.
- notfromhere 4y ago
  CEOs are just managers, not philosophers. People thinking they're all knowing demigods is just marketing to try and justify those extremely high salaries. They're no different than your average person.
darth_avocado 4y ago
After having an opportunity to talk 1:1 with two of the most revered personalities/founders/ceos in tech, I’ve come to the conclusion that they are as much full of s** as the rest of us. Probably even more. I know the sample size of 2 is not scientific, but it was enough for me to not have any illusions about the nature of things.
- novok 4y ago
  Are they really going to tell you the "privileged" stuff 1:1 if they don't know you well, or the stupid stuff that they tell the public? At that level, trusting people you don't know is even more risky.
  - 4y ago

wpietri 4y ago

I love this point: "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing." I really wish for a less supine tech press. I've not seen any of these titans of industry being held accountable for the apparent major mistakes of overhiring. And I'm not even talking actual consequences here; these people will surely get bonuses for this. I'd just like to see some hard questions being asked and answered.

MiscIdeaMaker99 4y ago
I would love to see the capitalists held accountable for the way they treat their workers, but I believe their decisions are primarily dictated by profits, regardless of what they say. Hard questions can surely be asked, but once you weed through all of the empty narrative, you pretty much end up with the reason: extracting profits.
- s1artibartfast 4y ago
  It is hard to find anyone who honestly suggests it is otherwise. It was never about the workers. Layoffs are because companies think the workers cost more than they make. Everything else is just bickering over why they think this.
- wpietri 4y ago
  Even there, I think there can be usefully hard questions. Because I suspect what the CEOs are focused on is not the long-term profits that come from building healthy companies, but the short-term profits that come from juicing the numbers in ways that look good to the market on a day-to-day basis.
broast 4y ago
Do we have any evidence that the over-hiring was a mistake? Could companies not have seen the free money and decided to beef up their staff for short term gains in their roadmap, with the knowledge and intention that they will likely be cutting later while getting to keep all that intellectual output? I don't see why we put this past them.

di456 4y ago

This misses the main driver. Valuations are no longer based on growth. The entire market has shifted to profitability over growth. Companies with a stronger balance sheet coming out of the recession will be better positioned for the long term. Seems that companies that gained their valuations through growth weren't sustainable in the long run. And at a macro level, economic policy has largely deferred recessions since the 2008 housing bubble pop. That's not sustainable either. At some point a correction is going to happen. The "social contagion" is companies betting that a correction is coming. Some made that bet early, and some are just now hopping on the train. It's about survival for many companies. I bet we'll see fire sales, and acquisitions ramping up for the financially stronger companies.

btown 4y ago
The market shifting to profitability over growth was the motive, absolutely. But Elon's decimation of Twitter was the means and opportunity. And I think that copycatting those means of executing layoffs - 7am email notifications for 20-year employees, minimal consultation with lower-level management about who should be retained - will have significant ramifications on the morale of the remaining workforce. Perhaps some of it was unavoidable to avoid media leaks. But a lot of how all this was executed reflects a massive lack of empathy.
- oxfordmale 4y ago
  The layoffs without consultation with the lower levels will indeed leave a bitter taste. It gives the impression that hard work isn't awarded if the top management level has no visibility over your work. This will result in departments spending much more time selling their work, rather than actually doing the work. In the end, this is counterproductive for a company.
  - hinkley 4y ago
    If you’ve never been in a layoff where you lost someone you trust as much as you trust yourself, it’s a terrible experience that may come to define your time at the company. If they can lay “Dave” off they can lay any of us off. What if I’m next? Or god what if you’re next? I do not want your job and they’ll make me do it if you’re gone. I have to be very careful in meetings now, save 95% of my political capital for self preservation, not team benefit. Not company benefit. You might have a few people who double down and say if this isn’t working we have to try something radically different. But Cassandra is often in the first round of layoffs. Nobody wants to listen to people second guess them so you’re out first. After that, no more ideological fights get won from that point forward. The entire team is in free fall, just trying to do enough to look good and hoping the market corrects before the wheels come off.

petilon 4y ago

Not all of it is "copycat". During the pandemic consumer spending moved online. People purchased hardware to work from home, ordered more from Amazon and other online stores as opposed to physical stores, used online services such as Zoom and Microsoft Teams more. Tech companies responded to the increased demand by increasing the pace of hiring. Were they wrong to do so? Possibly, because they should have expected that not all of the increased demand would stick around once the pandemic is over. As it happened, the demand ebbed when the pandemic was over, so they are stuck with excess manpower, which now has to be reduced. This doesn't explain all layoffs, however. Some of it is just opportunistic - now is a good time to do layoffs without looking weak.

nkozyra 4y ago
> During the pandemic consumer spending moved online. I keep hearing this repeated as canon but is this quantified somehow? Did we really see a spike long enough for hiring sprees? And did it last until ... when? A few months ago? It seems intuitive but I'd really love to see numbers.
- __derek__ 4y ago
  Yes, there was pull-forward growth in e-commerce. Using this from Benedict Evans in 2021 because it has numbers and a good graph:[1] > The traditional way to think about ecommerce penetration is to look at share of total retail sales, and then deduct things like car repair, gasoline and restaurants - to get to ‘addressable retail’. On that basis, US ecommerce was at 16% penetration at the end of 2019 and increased to 20% or so in 2020, adding 12-18 months of growth in a year. [1]: https://www.ben-evans.com/benedictevans/2021/5/29/boxes-trucks-and-bikes https://www.ben-evans.com/benedictevans/2021/5/29/boxes-truc...
- staticautomatic 4y ago
  I recently spent a couple years interviewing hundreds of global F100 executives and all of them said exactly the same stuff about both B2B and B2C demand moving online during the pandemic.
- pm90 4y ago

monero-xmr 4y ago

If 100k people are let go that’s 100k licenses lost across ~25 different vendors. Layoffs are happening because growth is flatlining or reversing. Tech is very insular as startups are created to solve problems in other tech companies, so if the flywheel of tech companies buying from each other stops, the entire thing can reverse quickly. Also seed rounds were oversubscribed with no diligence, product, and money raised on little more than names and vague ideas. Series A was possible pre-revenue. Series B on 100 to 250x revenue. The whole thing was unsustainable. Finally a huge number of tech employees were “barnacles” or those somehow making 6 figure salaries while providing little or negative value. Now that the music has stopped those people are being cut. I’m talking about agile / scrum people, DEI, ethicists, bloated HR, and all manner of not-revenue generating employees. Push has come to shove and they are jettisoned first.

theGnuMe 4y ago
>growth is flatlining or reversing. Do you have a link to a chart or research that shows this?
phendrenad2 4y ago
This is true. Every SaaS startup I've worked for, in the early days all of the "paying customers" are other startups (usually nepotistically funded by the same VC firm). That's why a startup company can emerge from stealth mode with 10 unicorn logos on their homepage.

sovnwnt 4y ago

> instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. This doesn't seem like a good strategy for tech. Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions.

sausagefeet 4y ago
> Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions. Will it? Are your top performers only there because of the pay? And how do you even determine who your top performers are? I see this sort of logic frequently and I don't even know how to measure it, much less believe it.
- sovnwnt 4y ago
  > Are your top performers only there because of the pay In an ideal work environment, probably less so than other employees. But I think anyone who has their salary reduced is going to reevaluate their position, and those with more valuable skills are more likely to leave. The question is, what is more likely to cause a serious reevaluation, salary reductions or layoffs? I think for most tech companies, a single round of layoffs is preferable, as the people who you want to remain are more likely to feel they aren't and won't be affected and not reevaluate their position. The reductions approach could work for smaller or startup companies with a flatter structure, where employees are more invested in the company's goals and successes, either through culture or shares.
  - lordnacho 4y ago
    It's a strange balance. Either you get a pay cut with a job that might cut again, or your colleagues get laid off with the potential that it's you next time. Either way you'll probably be thinking about interviewing, with a bit less urgency if you get to keep your job.
  - 4y ago

novok 4y ago

This really depends on the percentage of the workforce your laying off. A small %2-%6 one is really getting rid of people you don't want, but it's too much of a pain in the ass to do the entire PIP & political process to do so, or they're toxic / unproductive but well positioned that firing them is hard. A streamlined 'just pick people' layoff process helps with all of those issues. The bottom %5 percentile people that get dropped in a %5 lay off were already near the chopping block. While larger %10-%50 layoffs are really economically motivated. The thing is although, you can't do %5 layoffs when your doing well, or the economy is doing well, so you use such times as now as an opportunity to do so. You'll know the layoffs are more economically motivated when there are multiple waves or they become larger in percentage of employees. Like why did the google layoff %6? I definitely think it was a trim the fat operation, and the opportunity to get rid of some well positioned, unproductive long term rest-and-vesters, which is why a bunch of very long tenure people got laid off at google now.

siggen 4y ago
Let’s see what shakes out of the town-hall meeting next week.
bdavisx 4y ago
Lower level management at Google was definitely not consulted on these layoffs. It had to be upper level only or it would have leaked more. Like really upper level. So there's no way the people @ that level know who's coasting and who isn't. I'm sure there were a lot of high performers cut along w/ some "fat".
- novok 4y ago
  That is what the perf review system is for, and one reason why as a lower level manager, your careful about who gets the good ratings vs. not.
Blackthorn 4y ago
This is not to call you out in particular, but I see this exact sort of "just world fallacy" interpretation of layoffs all over this site and it's really fucking weird. No wonder there's such a stigma around workers who were laid off, with this attitude rampant.

jt2190 4y ago

This interview was posted days ago under a different title: Previous Discussion: https://news.ycombinator.com/item?id=34339698 https://news.ycombinator.com/item?id=34339698 “ Why are there so many tech layoffs, and why should we be worried? Stanford scholar explains” https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/ https://news.stanford.edu/2022/12/05/explains-recent-tech-la...

trentnix 4y ago

> Behavior spreads through a network as companies almost mindlessly copy what others are doing. When a few firms fire staff, others will probably follow suit. I generally agree. Copycat layoffs are the result of “we have to do something” thinking, with little thought put into whether or not what’s being done is actually beneficial. Politicians are subject to these types of actions, as well. If you do the same thing everyone else did and it doesn’t work, you don’t get blamed. You, like everyone else, was a victim of “circumstances”. But if you do something different and it doesn’t work, it’s your ass. That said, these circumstances could provide cover for companies who need to shed poor performers or performers who’s cost-benefit is no longer positive to the company. But that requires more planning and forethought than I think any of the major players are applying.

ericb 4y ago

The real winners will be the next tier down in the hiring hierarchy. They are starved for talent. While not as high-paying, or glamorous, they've had jobs sitting open for a while. When developers are needed for growth initiatives that can drive a stock multiple off more than just current earnings, the cycle will begin again.

Der_Einzige 4y ago
Next tier down is your Intel's, your IBMs, and others who pay below market rate but are huge blue chips. They are also in trouble.
- bagacrap 4y ago
  I don't think IBM would be my next choice after getting laid off from Meta. There are plenty of tech jobs available at healthy companies outside of the "tech industry".

tarr11 4y ago

The professor recommends across the board pay cuts as an alternative to layoffs. > One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. Curious if there is research here on how this impacts the company? Seems like it would also increase stress and encourage top performers to seek new opportunities. He also recommends hiring during a recession: > He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating. I suppose this works when it works, and then fails completely when it doesn’t. In essence, this increases the risk profile on the company which seems problematic too. Would be curious if there are studies that show the outcomes of these strategies. Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.

zht 4y ago
You would need more than 10 percent pay cut to offset 10 percent in personnel spend. Health insurance/benefits is a significant source of spending
- vineyardmike 4y ago
  This probably is less true in tech where the salaries are higher.
  - farmdawgnation 4y ago
    "Less true" is a bit of a bold statement here. It's still _true_, but you're right in saying that the additional percentage you would need to affect the change might be different between different industries. It's also possible to optimize costs on the benefits themselves to avoid needing to do that, at times.
onlyrealcuzzo 4y ago

revlolz 4y ago

Deleting the post, I no longer wish to discuss this.

absrd 4y ago
> it seems insensitive to tell 100k+ ppl Google or Amazon fired them because "well everyone is doing it!" Is that any more insensitive than CEOs and C-suites telling laid off workers they "take full responsibility" and "had to make a difficult decision" while facing no consequences themselves?
- revlolz 4y ago
  How does this relate to my post?
deleted 4y ago
[deleted]
lapcat 4y ago
It's unclear how the fed rate directly affects high revenue high profit giants like Google, Microsoft, and Amazon.
- revlolz 4y ago
  It's very clear and has been. Larger enterprises finance debts that carry interest rates. When rates go up, costs increase. It's the exact same thing in the mortgage industry. When you go to buy a home, how much you can afford is determined by your how much you earn, how much capital you have, and the interest rate to borrow what you don't have. We're going to ignore full cash purchases because companies do not operate on full cash basis. The point to my main post is that it's asinine to relate all these layoffs as "copycatting" one another. It would be like saying you only eat food because I do and you are copying me. Or it would be like saying each of us has 10 days worth of food to survive 30 days. I implemented rationing to stretch out to the 30 days. You implemented rationing adopting the same strategy, but to say you are a "copycat" would be ridiculous.
4y ago

300bps 4y ago

There are pretty well understood macroeconomic causes of the hiring binge as well as of the employee purge. The former was primarily caused by the fed throwing massive money at tech companies and the latter was caused by the fed stopping.

scrapcode 4y ago

It seems that many of these articles would apply just as well to the excessive hiring that was going on ~2 years ago. "Damned if you do, damned if you don't" type of situations.

__derek__ 4y ago
Yes. One un-damned company thus far is Apple:[1] > From its fiscal year-end in September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, the employee count at Amazon doubled, Microsoft’s rose 53%, Google parent Alphabet Inc.’s increased 57% and Facebook owner Meta’s ballooned 94%. [1]: https://www.wsj.com/articles/how-apple-has-so-far-avoided-layoffs-lean-hiring-no-free-lunches-11674274185 https://www.wsj.com/articles/how-apple-has-so-far-avoided-la...

gibsonf1 4y ago

I think this professor should study economics a bit. Its as if he thinks the world is what people think it is, rather than what the facts about the world tell us, and the economic facts at the moment are terrifying, and not because of what people are saying or doing about them.

kept3k 4y ago

No company likes laying off people. Makes me think, - is the author not believing the market right now? Because it is terrible. No company likes losing

xyzelement 4y ago

I profoundly disagree. You hired 7 dog walkers (one for every day of the week) to walk your dog Stinky during lunch. A year down the road you realized you don't need someone to walk Stinky every day, you want to do it yourself sometime. You can say you overhired. So you decide to keep 4 of the dog walkers and let 3 of them go. That's a 43% layoff, you heartless capitalist. Who do you cut? Well Bob is the Sunday guy and you definitely don't need a dog walker for Sunday, so Bob's on the list (role elimination). Alice makes $25 per walk while everyone else makes $20, she's gotta go (overpaid/cost reduction) and Carol, you actually think she's not that good with Stinky. You had to have her when you thought you needed 7 people, but she ain't one of the top 4 (performance based) So now you got 3 dog walkers instead of seven, you pay them on average less, their performance is on average better and they are focused on days you really need them. Yeah you don't have the same coverage but turns out you are fine without it. Stinky is happier too. You may even use your saved money ($65 per week) to hire someone you need more, like a cleaning lady. Obviously you can fuck up layoffs but if done well you and Stinky can come out ahead.

based_bobby 4y ago

If you want people to be accountable, you’ll have to start by taking responsibility and action into your own hands. If not you, then who?

dcj4 4y ago

I didn't read the article, the title is too obviously unintelligent. Obviously other tech companies have to not only copy one, but all of musk's management principles to be successful.

moomoo11 4y ago

So take a pay cut and deal with rising costs, but the company will still lose money and my stocks lose value. So ultimately we all end up losing?

ipaddr 4y ago

instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. This causes stress to 100% of people which makes the best or on the edge of their income lifestyle to quit.

nkozyra 4y ago
The stress is felt in either scenario though.

kibwen 4y ago

Of all these layoffs, how many have been executive positions? Or was the irrational exuberance of the last few years miraculously only limited to the lower ranks?

jmyeet 4y ago

It makes me physically ill to hear billionaire CEOs "take full responsibility" for the layoffs in an impersonal email while taking no pay cut themselves. Look at Meta as one of the worst offenders. Meta's layoffs will save what? $5 billion a year? Assuming those employees were actually producing some value, the true savings will be less (since you also have to factor in severance costs). Now consider that Meta has spent $36 billion [1] building the Metaverse with basically nothing to show for it. Now Meta has fully internalized the idea that it cannot exist without a monopoly of some kind. FB (and even IG) are dwindling. The Metaverse is the answer to that. That's literally all it is. But there's no business strategy here, no value proposition to consumers (on the contrary, this is something consumers clearly do not want) and no product-market fit. Yet the intention here is to spend over $100B on this unproven effort. For what return on investment? My point is that Meta could've achieved multiples of the "savings" from layoffs by simply scaling back or, better yet, scrapping entirely the Metaverse. Focus on the core business and acquisitions. So many of these layoffs are purely virte signaling for "investor confidence" and nothing more. A less charitable interpretation is that it's aimed and making the remaining staff work harder and for less money, fearing future layoffs. Meta in particular is rudderless and layoffs are a bandaid on that. [1]: https://www.businessinsider.com/meta-lost-30-billion-on-metaverse-rivals-spent-far-less-2022-10 https://www.businessinsider.com/meta-lost-30-billion-on-meta...

ryandrake 4y ago
> It makes me physically ill to hear billionaire CEOs "take full responsibility" for the layoffs in an impersonal email while taking no pay cut themselves. To be fair, Microsoft's executives partied with Sting[1] right before announcing their layoffs. They probably would have rather had Lady Gaga perform for them, but had to take some responsibility so they settled for Sting. It's hard times for everyone. 1: https://www.marketwatch.com/story/microsoft-hosted-sting-concert-in-davos-before-announcing-layoffs-11674119246?mod=search_headline https://www.marketwatch.com/story/microsoft-hosted-sting-con...
- jmyeet 4y ago
  And we should focus on the true victims of the recession: landlords.

theGnuMe 4y ago

Human sacrifice is an irrational cultural ritual deeply embedded in our shared history. We must appease the Market God to receive its blessings.

snozolli 4y ago

It boggles my mind that the tech interview process has become insanely byzantine and drawn-out over my career, yet layoffs continue to happen. I've been on both sides of several layoff cycles. I've rarely seen any correlation with worker capabilities. I have, however, seen incompetent management cause employees to stall out and flounder.

college_physics 4y ago

Well, maybe banks also got into the "tech copycat game" given that, as per current FT headline: "Banks prepare for deepest job cuts since the financial crisis" [0] . Maybe banks finally managed to become real "fintechs" and achieved being valued as "tech" not as book liquidation value? /sarcasm We most likely see the same people at work, behind the same spreadsheets looking at the same variables (interest rates, current stock prices), the same control variable (labor costs) and having the same incentives (future stock price) and coming to the same conclusion: just get some people out the door. Business models, management quality, growth potential and other so-called "alpha" factors are meaningless when we are obviously at the late phase of a bubble where all the ugliness (from non-sensical bets to outright fraud) comes to the surface. [0] https://www.ft.com/content/4beafb70-ec1a-41d3-b18e-33a85bf2a062 https://www.ft.com/content/4beafb70-ec1a-41d3-b18e-33a85bf2a...

kris_wayton 4y ago

I can't help but wonder how many of these layoffs are really just "rank and yank" in disguise. Where the company will soon go back to backfilling pretty much the same spots from the open market. And, funny enough, if the pool is full of companies doing the same thing, well...it's essentially just trading your laid off workers for someone else's.

hinkley 4y ago
I think the stock market agrees. Stocks tick up after a first round of layoffs. It’s seen as fat trimming.

thenerdhead 4y ago

While I don't agree with this single reduction of the cause to just "imitation", I do really like his views on jobs in general. One quote I remember him saying is "You should never have to leave a job involuntarily". An interesting way to think about this is to read any CEO's book on leadership and compare it to the actions they have taken in the last few years to see if it represents authenticity or imitation. If imitation works, then you ought to do it. Which seems to be working for these companies especially looking at hiring trends over the last few years and the layoffs recently. Imitation is at the heart of human survival after all. It just sucks that in the world of knowledge work, the division of labor is still there. Many knowledge workers are capable of becoming specialists in relatively short periods of time. But rather the focus remains hiring new people who have the specialty today. That seems to me to be a big takeaway for these companies who lay off already loyal employees, culture fits, and show the curious persistence of learning.

la64710 4y ago

We need to have broad discussion and consensus to establish three things 1) How to pass the value created by AI and automation to all levels of the human society and nature 2) How to make sure there is equitable access to power of computing and AI and 3) Ensure governance of these forces to ensure benefits to all of society. Don’t worry they are not my words. They are Sam Layman’s but they make damn good sense to me. Unless of course we want to stay in this mode for ever.

super256 4y ago

> The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing. If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based. Or, well, maybe a price to earnings ratio of >60 at tech companies is not sustainable in the long term. Also, net margins across the whole sector have been decreasing lately. Comparisons from Q3 2021 vs Q3 2022: - Meta's went from 32% to 15% - Amazon's from 7% to 2% - Google's from 29% to 20% > Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it. Meta also loves having a profit margin of 40%. Why? Because big profit margins also mean higher paper value of executive's stocks. I believe that when advertising revenue and growth tumble, it's the easiest to fire people to maintain margins. > Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. When Zuckerberg announced on 9th Nov 2022 that he'd reduce Meta's work force by 13% the stock rallied by 22%. Same for Amazon (20% rally after announcement of layoffs). But I don't know! Stocks often rally when the business itself is good and you announce that the very good profit margin stays. I wouldn't expect this to work for companies who are still burning a lot of money, but it's probably a good method to drive up stock prices at companies which already make lots of money. > Moreover, layoffs don’t work to improve company performance, Pfeffer adds. 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?” Yes, I wouldn't expect productivity to increase after lay-offs either. But if productivity decreases less than the money you're saving within the next year or so, it's still a good deal for the company, I guess? The real question I have about this is where the average break-even point lies. How many months does it take until a lay-off in this environment becomes profitable? > When the economy turns back in the next 12, 14, or 18 months, they will go back to the market and compete with the same companies to hire talent Even he does not know when the economy turns back. > Layoffs kill people, literally. They kill people in a number of ways. Layoffs increase the odds of suicide by two and a half times. This is also true outside of the United States, even in countries with better social safety nets than the U.S., like New Zealand. > Layoffs increase mortality by 15-20% over the following 20 years. I believe this is unfortunately true, especially if you wholeheartedly did your job. However, I'd like to set the current lay-offs into context: Tech accounts for 50% or more of the lay-offs; tech only makes up <3% or so of US employment. The current unemployment rate (3.5%) in the US is on pre-covid levels as a 40-year low. The last time we had a rate this low was 1969. Meta had 45k employee pre-covid. In November 2022 they had 85k employees, so almost doubled during covid. In this context a reduction of 13% almost sounds like a rounding error. Which other sector had such excessive labour growth during covid?

NHQ 4y ago

The graphic and the pretense of mimetic causation, what a hilarious cope. No mention of who is getting axed: the .5x gratuity hires, the ball-pen projects for also-ran elitists. $2 Ugandans can do it now that wokeness is dead. This will lead to higher pay for real 10x types. Tech starts looking like a baseball team. You have your sluggers and your fielders.

zxcvbn4038 4y ago

In the US layoffs are a method of getting rid of people who are normally untouchable because they fall into the EEOC protected classifications. As long as the group laid off is statistically diverse you can let them go without getting into individual situations - Bob’s performance was acceptable but we had to let go of X people in every division for economic reasons. Whereas otherwise Bob might sue saying poor reviews or a dismissal was actually discrimination when Bob was just a lackluster employee who happened to fall under one of the EEOC categories. The last time I was involved in a layoff they gave everyone leaving a thirty-plus page document which broke down the group by every conceivable metric to prove that the layoff didn’t target any particular demographic more then others.

e40 4y ago
I would add to this that the people laid off are usually ones that are hard to quantify in terms of performance reviews, but that management doesn't want to keep. People that do just enough not to get fired, for example, or people who require much more management time, even if they are good performers, than others.

dilyevsky 4y ago

Imo these tech layoffs is one of the best examples of McNamara fallacy I’ve seen in a while - exchange easily measurable monetary gain for poorly measured loss of productivity/morale across the board

2devnull 4y ago

This is just bias pretending to be truth. Where was this “expert” in contagion when copycat hiring was taking place? Does macroeconomics have any impact on labor? What is the “dual mandate” of the fed? If you buy this nonesense you signal your views have no intellectual merit, and you’re best to simply ignore.

dasil003 4y ago

As much sympathy as I have for the human side of layoffs that are called out here, I feel the researcher is not being intellectually honest. This paragraph is the worst offender: > 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. First of all, if your strongest argument that layoffs do not cut costs is that sometimes companies hire them back as contractors, then I don't think you have a leg to stand on, because that's not really a layoff! In this case, "layoffs" is just a smokescreen to reclassify workers. Pointing out that layoffs don't solve ineffective strategy, loss of marketshare or too little revenue is a facile argument at best. Yes, trivially, getting rid of people does not solve your business strategy problems. But at the same time, there may be no solution. The world may simply be moving on from what your company has to offer. Bringing in the MBAs to try and force the issue can have a lot of ugly outcomes that go well beyond layoffs. At the end of the day, businesses ebb and flow, and they can only support a certain size of headcount based on the economic environment in which they operate. It would be nice if leadership had the clairvoyance to always avoid overhiring and give ironclad promises on perpetual employment, but such is not the world we live in. Coming with an absolutist position that layoffs are universally bad, backed by a bunch of flimsy strawman arguments, is not very helpful for people that actually have to make these decisions. Seems more like pandering to a generation that has never known a bear market.

AbrahamParangi 4y ago

Saying that layoffs are imitative behavior is no more useful than noticing that almost all behavior can be described as “imitative” If you hear people yelling fire and see people stampeding for the exit, does that mean there actually is a fire? No, certainly not, it could just be a panic. But does that mean that you should stay put and wait and see if everyone else is wrong?

dieselgate 4y ago
Indeed, isn’t this kind of the definition of a “market” though? The analogy of yelling fire is a good one for this context
marcosdumay 4y ago
You certainly should stay put long enough to see if there's a fire, where it is, and what is the best exit to use. People that don't do that have a much higher tendency to die on the accident.

scarface74 4y ago

> 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. I don’t really think that Amazon, Google or Microsoft are suffering from any of those issues. Facebook on the other hand… And many of the tech layoffs are coming from unprofitable companies that over hired.

joshe 4y ago

This, of course, is not how Stanford itself does it. 2020 https://stanforddaily.com/2020/07/29/stanford-to-lay-off-208-workers-and-furlough-30-more-in-light-of-covid-19-budgetary-challenges/ https://stanforddaily.com/2020/07/29/stanford-to-lay-off-208... 2009 https://www.nbcnews.com/id/wbna32660764 https://www.nbcnews.com/id/wbna32660764

bagacrap 4y ago

> Layoffs often do not cut costs I guess you can put "often" in front of any statement and be not wrong. But obviously letting go expensive workers is going to reduce costs. > Layoffs often do not increase stock prices They've pretty reliably bumped stock prices this past year, and by quite a lot. Not that I think this is what a CEO should be optimizing for, since short term price action is not that important, but since he brought it up... > Layoffs do not increase productivity They definitely increase productivity if they're targeted at the lowest performers --- unless you somehow think all employees are the same, which sounds like an MBA type of opinion to have > Companies sometimes lay off people that they have just recruited That doesn't seem to be the case with the recent tech layoffs (to the extent that I have knowledge). The folks I have seen laid off were not ones hired since 2020, rather those that have been around longer and should have been let go earlier. > Layoffs kill people * There's a long chain of events that lead to a layoff * There are many people who are laid off and don't kill themselves So how can you say that a layoff was THE cause that killed a person, rather than, say, a series of poor choices by politicians and public-sector economists, or the medical community failing to diagnose a chemical imbalance, etc etc. Is there an A/B test that shows that when a company doesn't do any layoffs and instead goes bankrupt and everyone loses their job that everyone stays happy and healthy? > how economic insecurity is bad for people Make recessions illegal! Stocks only go up! Literally nothing this professor says is convincing. Tech workers and all people should take steps to become financially literate, plan ahead for an unexpected termination, maintain a broadly diversified investment portfolio, and take responsibility for their own mental health.

poszlem 4y ago

"Layoffs kill people, literally. They kill people in a number of ways. Layoffs increase the odds of suicide by two and a half times. This is also true outside of the United States, even in countries with better social safety nets than the U.S., like New Zealand." --- A pedestrian is struck by a vehicle while crossing the road far away from a zebra crossing. Who is to blame? There is a certain portion of people who will answer this question by saying: "Everyone but the pedestrian". The driver of the vehicle is at fault for striking the pedestrian because he failed to react quickly enough. Or because he drove too fast. The council is responsible for the accident as they failed to provide a designated crossing area where the pedestrian intended to cross. The pedestrian was crossing the road to reach a coffee shop on the opposite side, thus it could be argued that the coffee shop owner's decision to open their establishment on the other side of the road, or away from a safe crossing point, may have contributed to the accident. The education system is at fault for not providing the pedestrian with sufficient knowledge on when it is safe to cross the road, which may have led to the accident. It could be argued that the accident is a result of societal values that prioritize vehicles over pedestrians, as it is evident in the lack of infrastructure that prioritizes the safety of those who walk. "Everyone but the pedestrian". I hate this kind of argumentation and this article is a great example of the kind of epistemiological overreach that social sciences are guilty of in the last years. Everything now is a hysterical overreaction. No. Layoffs don't kill people.

chkhd 4y ago

All these layoffs to me personally seem just an accelerated and highly opportunistic cull of people in the bottom of stack ranking. Of course they still do it, of course they will use this golden opportunity to improve what they think of as "health" of the organization. Yes, they probably overhired during the pandemic, but people laid off will not necessarily be the same ones.

elforce002 4y ago

Ok, this is the reality: From a business perspective - Businesses act on behalf of their shareholders. They want to give them tranquility and "peace of mind" - They (big corporations) want their "power" back, meaning, lower wages, return to office, etc. - They (big corp) are colluding with the Feds to mitigate inflation. Do we have to like this? Absolutely no. Do we have any choice? It depends. As a collective we have some sort of bargaining chip and we could try to win the war on WFH. We could also don't put our money on those same companies. Let them know they need customers/consumers and those come by strengthening the middle class. Starting a layoff wave will just get people to stop paying for non essential things (streaming, fast food, etc), creating even more layoffs and the cycle repeats until the economy crash. I'm all for responsible and sustainable capitalism. The "let the market sort itself out" premise is just plain stupid and dangerous since the ultimate goal of allowing that will be to bring feudalism back. Big corporations having all things and we just work to live.

phendrenad2 4y ago

These "copycat" layoffs are like a bigger version of those prank youtube videos where some people run through a crowded cafe feigning mortal terror, and everyone in the cafe starts to run along with them.

terminatornet 4y ago

> One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. anyone have any other examples like this where a company avoided layoffs with temporary pay cuts?

detaro 4y ago
Not quite the same, but for temporary problems there is a mechanism in Germany (and I think Austria and Switzerland too) where a company can cut working hours (and salary to match) and some of the difference gets paid by social security as kind-of "unemployment benefits". Was used quite a bit when COVID hit.

crakhamster01 4y ago

> "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing." I think this social contagion can describe a lot of the moves that have been made in the tech industry over the last few years. Some examples: * "Embracing remote work" - prior to 2020 the prospect of working hybrid, let alone fully remote, was extremely rare in tech. Mid-pandemic a couple of large tech companies announce that remote work is here to stay, and pro-WFH policies spread like wildfire. This is a positive example IMO, but still seems like big tech gave this trend the kick to get going. * The pandemic hiring spree - this one feels the dumbest IMO. As expected from being stuck at home, FAANG in general saw an increase in usage and therefore an increase in revenue. Either leadership made some willfully ignorant revenue projections, or maybe it was just a land grab, but a couple of the big players started aggressively hiring, and all of a sudden the market for tech employees was at an all time high. Less stable companies assumed the bigger players knew something they didn't, and a lot of them followed suit only to get burned by the current bear market we're in. And now the mass job cuts. So many tech pundits are heralding these waves of layoffs as FAANG forecasting darker days ahead. "If companies with troves of consumer data like Meta and Google are trimming the fat, they must know something we don't!" _Maybe_ big tech is right this time around, but it doesn't seem like they have the greatest track record. At what point are we going to stop assuming these companies are omnipotent, and realize the man behind the curtain is just some mid-level data analyst with a penchant for SQL queries.

readonthegoapp 4y ago

this was pretty funny - prof was just like...these execs and boards are lazy and stupid. :-D i think he's being too kind. but it seems there would have to be some real positives in disciplining your workforce through layoffs -- to not ask for raises or vacation, to not try to unionize, etc. but he seems pretty convinced.