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> The findings of two decades of profitability studies are equivocal: The majority of firms that conduct layoffs do not see improved profitability, whether meas

> The findings of two decades of profitability studies are equivocal: The majority of firms that conduct layoffs do not see improved profitability, whether measured by return on assets, return on equity, or return on sales. Layoffs are especially hard on the performance of companies with a high reliance on R&D, low capital intensity, and high growth. Market response to layoffs was also less positive than might be expected, with three-day share prices of firms conducting layoffs generally neutral. ... Layoffs undertaken only for the purpose of reducing costs tended to lead to drops in share price. https://hbr.org/2022/12/what-companies-still-get-wrong-about-layoffs https://hbr.org/2022/12/what-companies-still-get-wrong-about... We need to circulate this information as wide and far as possible. Perhaps at least some well meaning CEOs will grow a backbone to at least challenge the board.

newbie2020 4y ago
This sets off my BS detector. If true, there is a bigger underlying problem
InTheArena 4y ago
The problem with this article is that it targets companies that are stable revenue-wise and have low capital intensity. Neither of these statements are true about startup companies unless the startup is managed very conservatively. That essentially rules out any VC-related startup. VC's basically are a huge force-multiplier during up markets and black holes in recessionary periods due to the growth expectations (and the willingness to blank-check funding until the revenue goals are met).
- maerF0x0 4y ago
  > Layoffs are especially hard on the performance of companies with a high reliance on R&D, low capital intensity, and high growth. Start ups are 2 out of 3. The thesis is that with layoffs the outcome is worse than without. So we can make all kinds of rhetorical debates, but the data seems to suggest for some causal reason companies that do layoff do worse off in the subsequent years.
  - InTheArena 4y ago
    Startups don't survive to later years in limited runways circumstances unless they decrease their spend. There is a survivorship bias point of view - but the critical point is that startups are not low capital intensity.
    - maerF0x0 4y ago
      > There is a survivorship bias point of view I'm uncertain if the data has a survivorship bias or not (did not review the actual academic papers). Your and I's conjecture needn't assume it. None the less we're not talking about seed/Series A companies here. We're talking about late stage and large publics w/ 100s Millions to Billions of cash.

newbie2020 4y ago

This sets off my BS detector. If true, there is a bigger underlying problem

InTheArena 4y ago

The problem with this article is that it targets companies that are stable revenue-wise and have low capital intensity. Neither of these statements are true about startup companies unless the startup is managed very conservatively. That essentially rules out any VC-related startup. VC's basically are a huge force-multiplier during up markets and black holes in recessionary periods due to the growth expectations (and the willingness to blank-check funding until the revenue goals are met).

maerF0x0 4y ago
> Layoffs are especially hard on the performance of companies with a high reliance on R&D, low capital intensity, and high growth. Start ups are 2 out of 3. The thesis is that with layoffs the outcome is worse than without. So we can make all kinds of rhetorical debates, but the data seems to suggest for some causal reason companies that do layoff do worse off in the subsequent years.
- InTheArena 4y ago
  Startups don't survive to later years in limited runways circumstances unless they decrease their spend. There is a survivorship bias point of view - but the critical point is that startups are not low capital intensity.
  - maerF0x0 4y ago
    > There is a survivorship bias point of view I'm uncertain if the data has a survivorship bias or not (did not review the actual academic papers). Your and I's conjecture needn't assume it. None the less we're not talking about seed/Series A companies here. We're talking about late stage and large publics w/ 100s Millions to Billions of cash.