4 ms·

I guess I really don't get the sentiment here. Layoffs are inherently bad and not just reflective of the market changing focus from growth to profits? Why is

by jayd16 4y ago

I guess I really don't get the sentiment here. Layoffs are inherently bad and not just reflective of the market changing focus from growth to profits? Why is it clear that layoffs should have repercussions? What does it mean when almost every big company's management made the same mistake? I'm all for worker protections and good severance and unemployment benefits and its not great to be laid off but these takes just don't resonate with me.

baryphonic 4y ago
Because most mgmt seems to have no skin in the game. When they make bad decisions, the underlings often pay for it. This is especially true when they write corpo-speak blog posts "taking responsibility," which includes laying off 10% of the workforce. A CEO cutting his own pay seems like a much better first step. It signals accountability.
- amf12 4y ago
  > Because most mgmt seems to have no skin in the game This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). > A CEO cutting his own pay seems like a much better first step. It signals accountability. This, I agree with.
  - simplotek 4y ago
    > This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). Tim Cook is still getting paid millions. His pay cut was voluntary. Workers getting fired are getting zero salary and are not leaving because they want to. I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
  - baryphonic 4y ago
    You make a fair point I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0] I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures [0] https://www.wealthmanagement.com/equities/why-management-needs-have-skin-game https://www.wealthmanagement.com/equities/why-management-nee...
  - bmitc 4y ago
    So an executive worth billions of dollars and making tens of millions a year with no risk of being laid off has the same skin in the game as the employees making in the lower to mid six figures who get laid off? The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.
kag0 4y ago
Losing your job is a big deal to the average person, but a salary cut is immaterial to a big tech executive. An executive salary cut would save hundreds of jobs. People are laid off because the company is trying to spend less. There are multiple people in the same role and the headcount can be decreased to decrease spend on overall salary without decreasing the salary of individuals. But just because there is only one person in each executive role does not mean that money can't be saved on executive salaries.
- jayd16 4y ago
  This is a misdirection. CEO salaries can be set to zero for all I care. I just think the idea that reducing headcount is not a legitimate strategy seems naive to me.
  - simplotek 4y ago
    > I just think the idea that reducing headcount is not a legitimate strategy seems naive to me. This reads like a disingenuous attempt at a strawman. It's immaterial if firing people is a legitimate strategy or not. The whole point is that executives get little to no repercussion for dictating layoffs, regardless of the company's health. They wake up one day, can decide to fire 10k people, order HR to prune the loose ends to meet the target, tell the assistant to write a heart-felt "I take full responsibility" email, and get back to browse the web or sip lattes or go for a nice walk like nothing happened. In the end they can even get a raise out of it. Meanwhile, 10k workers are screwed. The incentives are all wrong.
Volundr 4y ago
I'd argue if a company has failed to plan a smooth transition from growth to profit, that's a failure of that companies leadership.
- jayd16 4y ago
  It seems hard to compete with a smooth strategy if every competitor can react faster than you? I also don't understand what a smooth strategy does in real terms. Layoffs should have been in smaller increments, started sooner, and lasted longer?
bmitc 4y ago
Layoffs are bad for a myriad of reasons. They are purely an accounting action, but they ignore that the line items represent people. Layoffs say that we will sacrifice our employees when the company has poorly planned, because our people are only positive assets when we're trying to hire. Management and especially executives are the least affected by layoffs, yet it was their decision making that led to the layoffs in the first place. In fact, these people stand to gain from layoffs because they have heavy equity compensation and shareholders seem to froth at the mouth for layoffs. This idea that companies move from growth to profit and back and forth seems naïve at best. Yet, companies do indeed do this. So the executives who rode the past three years of insane stock growth, making a ton from equity and investments and hiring like madmen, now get to turn around and say "we're sorry, good luck paying your mortgage". The incentives are all wrong, as the very people who control the decisions that lead up to layoffs are both immune from the layoffs and tacitly benefit from them. Everyone and their dog knew this market clawback was coming, and it's been here for over a year already. You're telling me these supposedly brilliant executives couldn't have planned better? Lately, and I've seen it happen, after layoffs, the companies immediately start hiring again for the exact same positions they just laid off. Over time, they hire a large portion of the positions back. So, what was the point? The point was to appease stockholders in the short term.
akmarinov 4y ago
If you go out there and say "it's all my fault and I take full responsibility", but there's no consequences out of that for you, then your words are meaningless.

by jayd16 4y ago

baryphonic 4y ago

Because most mgmt seems to have no skin in the game. When they make bad decisions, the underlings often pay for it. This is especially true when they write corpo-speak blog posts "taking responsibility," which includes laying off 10% of the workforce. A CEO cutting his own pay seems like a much better first step. It signals accountability.

amf12 4y ago
> Because most mgmt seems to have no skin in the game This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). > A CEO cutting his own pay seems like a much better first step. It signals accountability. This, I agree with.
- simplotek 4y ago
  > This is not true. Most executives' compensation is tied to equity. For example, Tim Cook's base pay + bonus is 9M, but he has 40M in equity comp (performance + time based). Tim Cook is still getting paid millions. His pay cut was voluntary. Workers getting fired are getting zero salary and are not leaving because they want to. I'm sure Tim Cook isn't stressing about how to make rent or pay the mortgage, unlike people getting laid off.
- baryphonic 4y ago
  You make a fair point I seem to remember when studying economics that someone analyzed management behavior and found senior executives were typically decent at their jobs and more or less had incentives to make decent decisions. Middle management was completely risk averse, had no skin in the game and made decisions only insofar as they wouldn't be fired. I wish I could find a link, but I read it years ago, though this more informal discussion cites similar work (they use family-owned businesses as a proxy for middle managers who do have skin in the game)[0] I do think that a CEO showing accountability sets a standard for the rest of mgmt and the organization, which is perhaps more accurate; though I'd hope that organizations find ways to hold middle management accountable for failures [0] https://www.wealthmanagement.com/equities/why-management-needs-have-skin-game https://www.wealthmanagement.com/equities/why-management-nee...
- bmitc 4y ago
  So an executive worth billions of dollars and making tens of millions a year with no risk of being laid off has the same skin in the game as the employees making in the lower to mid six figures who get laid off? The skin in the game being referred to is losing their job, not losing some fractional percentage of their net worth.

kag0 4y ago

Losing your job is a big deal to the average person, but a salary cut is immaterial to a big tech executive. An executive salary cut would save hundreds of jobs. People are laid off because the company is trying to spend less. There are multiple people in the same role and the headcount can be decreased to decrease spend on overall salary without decreasing the salary of individuals. But just because there is only one person in each executive role does not mean that money can't be saved on executive salaries.

jayd16 4y ago
This is a misdirection. CEO salaries can be set to zero for all I care. I just think the idea that reducing headcount is not a legitimate strategy seems naive to me.
- simplotek 4y ago
  > I just think the idea that reducing headcount is not a legitimate strategy seems naive to me. This reads like a disingenuous attempt at a strawman. It's immaterial if firing people is a legitimate strategy or not. The whole point is that executives get little to no repercussion for dictating layoffs, regardless of the company's health. They wake up one day, can decide to fire 10k people, order HR to prune the loose ends to meet the target, tell the assistant to write a heart-felt "I take full responsibility" email, and get back to browse the web or sip lattes or go for a nice walk like nothing happened. In the end they can even get a raise out of it. Meanwhile, 10k workers are screwed. The incentives are all wrong.

Volundr 4y ago

I'd argue if a company has failed to plan a smooth transition from growth to profit, that's a failure of that companies leadership.

jayd16 4y ago
It seems hard to compete with a smooth strategy if every competitor can react faster than you? I also don't understand what a smooth strategy does in real terms. Layoffs should have been in smaller increments, started sooner, and lasted longer?

bmitc 4y ago

Layoffs are bad for a myriad of reasons. They are purely an accounting action, but they ignore that the line items represent people. Layoffs say that we will sacrifice our employees when the company has poorly planned, because our people are only positive assets when we're trying to hire. Management and especially executives are the least affected by layoffs, yet it was their decision making that led to the layoffs in the first place. In fact, these people stand to gain from layoffs because they have heavy equity compensation and shareholders seem to froth at the mouth for layoffs. This idea that companies move from growth to profit and back and forth seems naïve at best. Yet, companies do indeed do this. So the executives who rode the past three years of insane stock growth, making a ton from equity and investments and hiring like madmen, now get to turn around and say "we're sorry, good luck paying your mortgage". The incentives are all wrong, as the very people who control the decisions that lead up to layoffs are both immune from the layoffs and tacitly benefit from them. Everyone and their dog knew this market clawback was coming, and it's been here for over a year already. You're telling me these supposedly brilliant executives couldn't have planned better? Lately, and I've seen it happen, after layoffs, the companies immediately start hiring again for the exact same positions they just laid off. Over time, they hire a large portion of the positions back. So, what was the point? The point was to appease stockholders in the short term.

akmarinov 4y ago

If you go out there and say "it's all my fault and I take full responsibility", but there's no consequences out of that for you, then your words are meaningless.