5 ms·

Don't forget the next bit, "by the third year, these differences became statistically nonsignificant". So the layoffs... worked?

lapcat 4y ago
> So the layoffs... worked? How does that follow? The conclusion would be that both the companies and workers suffered unnecessarily for 2 years, with no long-term benefit afterward to the layoffs. In other words, you should just ride out the downtimes instead of panicking.
- dtdimond 4y ago
  Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs After 3 years, what group would you expect to perform better financially? And if we told you it was a tie, you might ask: what did group 2 to improve their situation? Layoffs? Ok, sounds like they worked.
  - lapcat 4y ago
    > Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs None of the big tech companies are in a "dire" financial situation. Indeed, some of them have just announced modest revenue increases this week. Yet they still conducted big layoffs. Did they "need" to do it? (Note in contrast that Apple announced a significant revenue decrease yet didn't panic and do layoffs.)
    - geph2021 4y ago
      Did they "need" to do it? Yes, that's the question. GP's point is that the financial situation of the companies is a confounding factor, and unfortunately the analysis does not address this. The conclusion, "Layoffs don't work", does not seem to be supported by the data/analysis that was presented.
    - notinfuriated 4y ago
      Depends on your definition of "dire." Perhaps some companies have Finance departments that believe they're in a dire situation when they have less than six months runway if all revenue stopped. I don't know what they factor in to the decision other than they believe their costs are too high given the current economic conditions. It's kind of like me having plenty of money, right now, to afford Netflix but cancelling it anyway because I feel $14/mo or whatever the price is still too much for the value it delivers in the current year, and generally worried that I might need that $14 in a year (multiplied out across a bunch of other services or habits I engage in). I'd rather save my money now, as I've decided the situation is dire or could easily become dire. Am I actually cruel and obligated to keep my Netflix subscription (gotta make sure Netflix employees make a living) because I am not, at this moment, in what others perceive to be a "dire" situation?
      - lapcat 4y ago
        > because I feel $14/mo or whatever the price is still too much for the value it delivers in the current year, and generally worried that I might need that $14 in a year What if you're wrong, though, and indeed what if many people are wrong in the same way, cancelling Netflix and passing up the opportunity of enjoyment to save a little money, but in the long run it makes no difference, and only hurts them in the short-term by depriving them of the enjoyment? That's the point of the article, that layoffs are empirically self-defeating. It's not about a mythical "obligation" to employ someone. The cruelty comes from laying off people unnecessarily, when there's no benefit.
      - Aeolun 4y ago
        I think it’s more that cancelling your existing Netflix contract for a few months because it’s too expensive right now, knowing that you’ll likely want it again 6 month in the future, and knowing Netflix will likely increase the price to $21/month for new contracts, seems a little bit shortsighted.
    - simonh 4y ago
      > Apple announced a significant revenue decrease yet didn't panic and do layoffs. But then they also didn’t massively increase their headcount over the previous 3 years. Steady as she goes, as always.
    - deafpolygon 4y ago
      > Apple announced a significant revenue decrease yet didn't panic and do layoffs. I would say that Apple is in the unique position of being particularly volatile since they rarely post losses. If they posted a decrease AND did layoffs, I'm sure some of their brightest would jump ship, and stocks would tumble further. Plus they didn't really do a strong round of hire during the past few years.
  - dbingham 4y ago
    The assumption that the companies doing layoffs "need" to do layoffs isn't necessarily well founded. Really we should be comparing companies in comparable financial situations - with one group doing layoffs and the other not. For public companies, we could probably reasonably set up this comparison, but for private companies we don't have the data.
  - deleted 4y ago
    [deleted]
  - tablespoon 4y ago
    > Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs Companies do layoffs all the time, even when their financial situation isn't dire.
  - Aeolun 4y ago
    I don’t think there is nearly enough information there to conclude that. In any case they’d still have lost two years of growth when their competitors were.
- goodoldneon 4y ago
  Maybe there's selection bias, where the companies who downsized were doing worse than the companies who didn't. So if both sets of companies ended up the same, and one set was initially doing worse than the other, then that'd mean layoffs worked
- bena 4y ago
  Companies typically don't layoff because they want to have a laugh. Companies layoff when they're in some sort of trouble. If you don't have the cash to support the staff, you can't will that into existence. So it follows that companies that laid people off struggled for a bit. Because they were already struggling. It's not an instant cure, or even a guaranteed one. It's a measure to spend less so you can ride out the downtimes. Another way of stating it is that "People who were sick with the flu seemed to tire more easily in the days that followed compared to people who weren't sick at all". It's to be expected.
  - tablespoon 4y ago
    > Companies layoff when they're in some sort of trouble. If you don't have the cash to support the staff, you can't will that into existence. No, companies layoff when they want to spend less money paying people. Being "in some sort of trouble" is only one of many reasons why they may choose that course.
    - foobiekr 4y ago
      You’re missing a number of critical factors. One of them is that companies have largely abdicated performance management and managing out underperformers, and layoffs are a primary means to get this done. Another issue is that larger companies have incentives problem when headcount justifies manager-track promotions. Layoffs are a way to force them to address dead weight headcount. You should think harder about what might drive layoffs.
      - cheese_van 4y ago
        Yes, I experienced this. About every year and a half, my company instructed each office to layoff a certain number. Low performers were targeted. If an office didn't have low performers, good performers were let go, and only the very best were retained. It cruelly encouraged and enforced exceptional output. It was heartbreaking, actually. But the pay was very good and we accepted it. In that context I was told, "Tutor this guy (a fair worker, but not exceptional). We're going to let him go if he can't step it up." We worked together and I saved his job - it remains a very proud moment for me. The company was a leader in its field, and its merciless practice of retaining only the very best performers contributed to its success. Capitalism at its Darwinian worst, perhaps. Or its best, depending on your perspective.
- mrjin 4y ago
  But you forgot to mention one vital thing: layoffs make the financial sheets look much better at given spot, and the C*Oes might even get a bonus for it. Giving in most of the cases, the executives are just employees, they cannot care less if the company and/or employees doing the actual work hurt in the next couple of years as by which time they might have either secured a new job from another company by delivering the layoffs "successfully" or walked out with a decent paycheck.
- Gibbon1 4y ago
  It's pretty obvious to me at this point that most of the time layoffs are driven by exceptions of financial annalists. A point of order none of those guys have ever been involved in running firms. And the certainly don't care about anything beyond how long a median 'investor' holds stock.
raincom 4y ago
Layoffs are indifferent to outcomes by the third year.

lapcat 4y ago

> So the layoffs... worked? How does that follow? The conclusion would be that both the companies and workers suffered unnecessarily for 2 years, with no long-term benefit afterward to the layoffs. In other words, you should just ride out the downtimes instead of panicking.

dtdimond 4y ago
Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs After 3 years, what group would you expect to perform better financially? And if we told you it was a tie, you might ask: what did group 2 to improve their situation? Layoffs? Ok, sounds like they worked.
- lapcat 4y ago
  > Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs None of the big tech companies are in a "dire" financial situation. Indeed, some of them have just announced modest revenue increases this week. Yet they still conducted big layoffs. Did they "need" to do it? (Note in contrast that Apple announced a significant revenue decrease yet didn't panic and do layoffs.)
  - geph2021 4y ago
    Did they "need" to do it? Yes, that's the question. GP's point is that the financial situation of the companies is a confounding factor, and unfortunately the analysis does not address this. The conclusion, "Layoffs don't work", does not seem to be supported by the data/analysis that was presented.
  - notinfuriated 4y ago
    Depends on your definition of "dire." Perhaps some companies have Finance departments that believe they're in a dire situation when they have less than six months runway if all revenue stopped. I don't know what they factor in to the decision other than they believe their costs are too high given the current economic conditions. It's kind of like me having plenty of money, right now, to afford Netflix but cancelling it anyway because I feel $14/mo or whatever the price is still too much for the value it delivers in the current year, and generally worried that I might need that $14 in a year (multiplied out across a bunch of other services or habits I engage in). I'd rather save my money now, as I've decided the situation is dire or could easily become dire. Am I actually cruel and obligated to keep my Netflix subscription (gotta make sure Netflix employees make a living) because I am not, at this moment, in what others perceive to be a "dire" situation?
    - lapcat 4y ago
      > because I feel $14/mo or whatever the price is still too much for the value it delivers in the current year, and generally worried that I might need that $14 in a year What if you're wrong, though, and indeed what if many people are wrong in the same way, cancelling Netflix and passing up the opportunity of enjoyment to save a little money, but in the long run it makes no difference, and only hurts them in the short-term by depriving them of the enjoyment? That's the point of the article, that layoffs are empirically self-defeating. It's not about a mythical "obligation" to employ someone. The cruelty comes from laying off people unnecessarily, when there's no benefit.
    - Aeolun 4y ago
      I think it’s more that cancelling your existing Netflix contract for a few months because it’s too expensive right now, knowing that you’ll likely want it again 6 month in the future, and knowing Netflix will likely increase the price to $21/month for new contracts, seems a little bit shortsighted.
  - simonh 4y ago
    > Apple announced a significant revenue decrease yet didn't panic and do layoffs. But then they also didn’t massively increase their headcount over the previous 3 years. Steady as she goes, as always.
  - deafpolygon 4y ago
    > Apple announced a significant revenue decrease yet didn't panic and do layoffs. I would say that Apple is in the unique position of being particularly volatile since they rarely post losses. If they posted a decrease AND did layoffs, I'm sure some of their brightest would jump ship, and stocks would tumble further. Plus they didn't really do a strong round of hire during the past few years.
- dbingham 4y ago
  The assumption that the companies doing layoffs "need" to do layoffs isn't necessarily well founded. Really we should be comparing companies in comparable financial situations - with one group doing layoffs and the other not. For public companies, we could probably reasonably set up this comparison, but for private companies we don't have the data.
- deleted 4y ago
  [deleted]
- tablespoon 4y ago
  > Group 1: companies in a good enough financial situation to not need layoffs Group 2: companies in a dire financial situation requiring layoffs Companies do layoffs all the time, even when their financial situation isn't dire.
- Aeolun 4y ago
  I don’t think there is nearly enough information there to conclude that. In any case they’d still have lost two years of growth when their competitors were.
goodoldneon 4y ago
Maybe there's selection bias, where the companies who downsized were doing worse than the companies who didn't. So if both sets of companies ended up the same, and one set was initially doing worse than the other, then that'd mean layoffs worked
bena 4y ago
Companies typically don't layoff because they want to have a laugh. Companies layoff when they're in some sort of trouble. If you don't have the cash to support the staff, you can't will that into existence. So it follows that companies that laid people off struggled for a bit. Because they were already struggling. It's not an instant cure, or even a guaranteed one. It's a measure to spend less so you can ride out the downtimes. Another way of stating it is that "People who were sick with the flu seemed to tire more easily in the days that followed compared to people who weren't sick at all". It's to be expected.
- tablespoon 4y ago
  > Companies layoff when they're in some sort of trouble. If you don't have the cash to support the staff, you can't will that into existence. No, companies layoff when they want to spend less money paying people. Being "in some sort of trouble" is only one of many reasons why they may choose that course.
  - foobiekr 4y ago
    You’re missing a number of critical factors. One of them is that companies have largely abdicated performance management and managing out underperformers, and layoffs are a primary means to get this done. Another issue is that larger companies have incentives problem when headcount justifies manager-track promotions. Layoffs are a way to force them to address dead weight headcount. You should think harder about what might drive layoffs.
    - cheese_van 4y ago
      Yes, I experienced this. About every year and a half, my company instructed each office to layoff a certain number. Low performers were targeted. If an office didn't have low performers, good performers were let go, and only the very best were retained. It cruelly encouraged and enforced exceptional output. It was heartbreaking, actually. But the pay was very good and we accepted it. In that context I was told, "Tutor this guy (a fair worker, but not exceptional). We're going to let him go if he can't step it up." We worked together and I saved his job - it remains a very proud moment for me. The company was a leader in its field, and its merciless practice of retaining only the very best performers contributed to its success. Capitalism at its Darwinian worst, perhaps. Or its best, depending on your perspective.
mrjin 4y ago
But you forgot to mention one vital thing: layoffs make the financial sheets look much better at given spot, and the C*Oes might even get a bonus for it. Giving in most of the cases, the executives are just employees, they cannot care less if the company and/or employees doing the actual work hurt in the next couple of years as by which time they might have either secured a new job from another company by delivering the layoffs "successfully" or walked out with a decent paycheck.
Gibbon1 4y ago
It's pretty obvious to me at this point that most of the time layoffs are driven by exceptions of financial annalists. A point of order none of those guys have ever been involved in running firms. And the certainly don't care about anything beyond how long a median 'investor' holds stock.

raincom 4y ago

Layoffs are indifferent to outcomes by the third year.