5 ms·

Are layoffs like a fashion statement, now? "Look, we're cool, too!" why is everyone doing this at the same time?

by naikrovek 4y ago

kevin_thibedeau 4y ago
C-levels are driven by fads.
- RA_Fisher 4y ago
  I think it’d be wise for more companies to employ an executive data scientist.
  - bogwog 4y ago
    That sounds like an interesting idea. Do you know of any companies that have an executive role like that?
    - RA_Fisher 4y ago
      I’ve been performing it informally for many years and more formally for the last year and a half as Zapier’s Principal Data Scientist. I really enjoy combining my advanced technology, business, economic and statistical skills with large scale business opportunities to produce innovation for people and earnings for the company. My goal is ensuring executives are making decisions using the best information possible. It’s highly collaborative to maximize the amount of pooled information (because executives are deep experts, too). Based on how it’s gone so far, I think it’s innovative and has a strong beneficial affect on the quality of decisions (and output as you’d expect). ie- applying more technology & skills improves output volume and quality.
  - kevin_thibedeau 4y ago
    They would never be listened to. Their purpose is to confirm whatever the execs want to believe in. Facts that don't agree must obviously be wrong.
    - RA_Fisher 4y ago
      It requires exceptional executives and an exceptional executive data scientist today, no doubt. Though, based on my experience it is possible given mutual due respect. Executives are domain experts, and I’m a business economist-statistician / econometrician. We work together to pool our understanding given our vantage points and differing abilities, skills and knowledge. By working together, and applying the right skills to important situations, it’s possible to avoid a lot of conformation bias it would be difficult to avoid otherwise (and the result is growth and smooth operation). ie- through analysis, it’s possible gain alignment & prevent all kinds of erroneous assumptions (resulting in increased growth).
ramphastidae 4y ago
In a way. Kind of like how burlap sacks and starvation were fashionable during the Depression era.
davidu 4y ago
The economy and stock market impacts similarly positioned companies all at the same time. And in this corner of the Internet, that seems like "everyone." There are other companies doing great -- Stryker (NYSE: SYK) is near their all-time high and has not done layoffs as far as I know.
koolba 4y ago
Besides the economic realities of companies selling shovels to out of work miners, companies always have people they want to layoff but generally want to avoid both the confrontation and publicity. Once the flood gates open up by your competitors or the sector as a whole starting layoffs, it makes sense to get your own house in order.
- pydry 4y ago
  Occams razor suggests that if the trend were kicked off by wildly profitable companies that have previously been fined for wage fixing then the cost of capital might not be the whole story.
gadflyinyoureye 4y ago
Partly. Another factor is that VC money is starting to dry up. Yet another is that many companies piled on employees during the PANDEMIC! They found that they didn't need that much staff. I don't know if Gitlab hired a bunch during the PANDEMIC! They might be back to pre PANDEMIC! numbers.
- izacus 4y ago
  They found out they didn't need EXACTLY the same percent of staff than all the other herd didn't need? :P Even if they're massively different megacorps with different financials? :D
dahfizz 4y ago
Everyone is subject to the same macro-economic trends. Massive growth and free money the past few years, now turned into rising interest rates and a bearish market.
napolux 4y ago
And same percentages! https://www.marketwatch.com/story/pagerduty-to-lay-off-7-of-staff-revenue-officer-to-exit-271674568511 https://www.marketwatch.com/story/pagerduty-to-lay-off-7-of-... https://www.calcalistech.com/ctechnews/article/hjyj6811as https://www.calcalistech.com/ctechnews/article/hjyj6811as https://www.theglobeandmail.com/business/article-hootsuite-replaces-ceo-announces-layoffs/ https://www.theglobeandmail.com/business/article-hootsuite-r... https://variety.com/2023/digital/news/vox-media-layoffs-130-employees-job-cuts-1235496467/ https://variety.com/2023/digital/news/vox-media-layoffs-130-... etc....
- shagie 4y ago
  There are only so many numbers between 1 and 10 where the cut from the layoff is deep enough to have an effect and not too much. Going above 10 says very different things.
- dathinab 4y ago
  7% is the amount of layoff larger companies can "in general" layoff without hurting operation too much. Hence why some huge companies lay of the bottom 7% of performers every year (and normally hire that amount too). So if the layoffs come not because of hard "we have x to much cost" reasons but of "we need to be more robust for potential dives in profit and increased cost" reasons and an arbitrary number must be chosen which isn't affecting operation too much but also makes a difference 7% is a common choice "because that worked well for some other large companies". Especially when the push comes from shareholders without much company insight 7% is likely. If your company is smaller you make decisions on a one by one basis (after having some target for rough performance where you cut). But the moment your company has 100+ or even 1000+ people that gets impractical so a % line is set for how many people need to be cut.
mfer 4y ago
There are many reasons companies do it: - They are on venture capital, not profitable, and the process around IPO, being purchased, or getting more rounds of funding has been complicated by the downturn. So, they need to change their rate of burn to last longer. - Companies are profitable and their leaders want to keep the profit margin for their owners (share holders). If income is down or doesn't grow to the level it had then they can lay off to reduce expenses which pushes up profit levels. This has become trendy in the past 40 years. - Income has been reduced and companies are breaking in less money. They may no longer be making a profit. To return to break even (or profit) they need to lay off. There are other reasons. These are some that come to mind.
digdigdag 4y ago
1. The federal interest rate is nearly at 5%. Any business operating depending on lines of credit are going to hurt (Source: https://www.federalreserve.gov/releases/h15/ https://www.federalreserve.gov/releases/h15/) 2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main https://www.bea.gov/data/consumer-spending/main). So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output. Also known as recession.
- grey-area 4y ago
  This is the correct answer. The Fed rate is the main driver for these layoffs. The fed is trying to cause a slowdown in the economy (including layoffs) in order to temper inflation.
  - SantalBlush 4y ago
    This isn't an explanation. The job market has been red hot over the past year, and the total of tech layoffs comprise a small fraction of overall job growth in the US. HN users think there is a recession because they are only focused on their particular industry, and refuse to look at what the actual economy is doing.
    - grey-area 4y ago
      Employment usually peaks just before a recession, along with denial of course. The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
      - SantalBlush 4y ago
        I've been reading these predictions on HN for almost a year now, and so far they've been false. If people keep repeating them, eventually we'll witness a recession and they'll be right, but that doesn't make their analyses correct, it just makes them a broken clock.
tyingq 4y ago
Some of it is that other companies doing it provides PR cover, where it's sort of implied that "It's not just us, look...we're posting similar reasoning".
fortran77 4y ago
See AGM's thread on Twitter: https://twitter.com/antoniogm/status/1593606745955348481 https://twitter.com/antoniogm/status/1593606745955348481 He got it exactly right.
- scient 4y ago
  Seems like an Elon bootlicker babbling more than anything.
Frost1x 4y ago
Ultimately the only thing really regulating these labor markets are competitive forces. If all the competitors are cutting their labor costs, you have reduced risk of your labor jumping ship, less mobility, etc. and have opportunity to cut costs as well. You have an opportunity to reduce costs and increase profit and revenue at the same time. It may also be the case that this is an actual correction trend in the market to overhiring. Whether or not that's the case or the target is more of the former is ambiguous to any outsiders so this will be the explanation given because it puts things in a more positive light than the strategic "we have a golden opportunity to cut labor costs so let's do it."
dathinab 4y ago
Because you always need to find some reason why you lay of which is satisfying for various parties (through not really the people fired, but investors both current and future, people with shares, companies you sell to, the public, etc.). And "currently everyone does so and the economy is bad" is a good excuse. And there are many reasons why a company might lay of people even if it's currently not strictly necessary: - you don't really need that many people (anymore), common for small companies which grew to fast - you want to restructure your company majorly and doing it will less people is easier - you prefer to go a bit slower, so that e.g. current investment money lasts longer - you want to be more robust to a potential economic dive, so you reduce money cost at the cost of going a bit slower and in turn can compensate hits in actual revenue better (at least for some time) - you have accumulated a bunch of people which are not bad enough to fire them because of performance but also you know you can get better people, so you use it as an excuse to let people go, go slower for a "not short but not too long" while and then rehire. Alternatively companies like Amazone do that every year fire bottom x% then rehire roughly the same amount. - you expect salaries to fall in the industry as a whole by quite a bit - financial distress (e.g. interest rates and/or profit) Lastly group dynamics to affect Investors, CEOs, Board Members, HR people etc. too, so it might be a "everyone does so so we better do so, too" situation (potentially forced onto the company by the board of shareholders).
FollowingTheDao 4y ago
> why is everyone doing this at the same time? Are you serious? Maybe you all should take a basic economics course. We are in a recession. Businesses know this. It doe snot matter if the Fed says if we are in one or not. Layoffs do not happen if the future business outlook is positive.
Merad 4y ago
It's cargo cult corporate leadership. My company has less than 200 employees, so our layoffs weren't newsworthy, but the c-suite decide to cut 5% last week citing "trends in the industry." I can't speak for other departments but our engineering team definitely _is not_ bloated yet they still axed two positions from teams working on the highest priority projects in the company. Absurd.
- deleted 4y ago
  [deleted]

Are layoffs like a fashion statement, now? "Look, we're cool, too!" why is everyone doing this at the same time?

kevin_thibedeau 4y ago

C-levels are driven by fads.

RA_Fisher 4y ago
I think it’d be wise for more companies to employ an executive data scientist.
- bogwog 4y ago
  That sounds like an interesting idea. Do you know of any companies that have an executive role like that?
  - RA_Fisher 4y ago
    I’ve been performing it informally for many years and more formally for the last year and a half as Zapier’s Principal Data Scientist. I really enjoy combining my advanced technology, business, economic and statistical skills with large scale business opportunities to produce innovation for people and earnings for the company. My goal is ensuring executives are making decisions using the best information possible. It’s highly collaborative to maximize the amount of pooled information (because executives are deep experts, too). Based on how it’s gone so far, I think it’s innovative and has a strong beneficial affect on the quality of decisions (and output as you’d expect). ie- applying more technology & skills improves output volume and quality.
- kevin_thibedeau 4y ago
  They would never be listened to. Their purpose is to confirm whatever the execs want to believe in. Facts that don't agree must obviously be wrong.
  - RA_Fisher 4y ago
    It requires exceptional executives and an exceptional executive data scientist today, no doubt. Though, based on my experience it is possible given mutual due respect. Executives are domain experts, and I’m a business economist-statistician / econometrician. We work together to pool our understanding given our vantage points and differing abilities, skills and knowledge. By working together, and applying the right skills to important situations, it’s possible to avoid a lot of conformation bias it would be difficult to avoid otherwise (and the result is growth and smooth operation). ie- through analysis, it’s possible gain alignment & prevent all kinds of erroneous assumptions (resulting in increased growth).

ramphastidae 4y ago

In a way. Kind of like how burlap sacks and starvation were fashionable during the Depression era.

davidu 4y ago

The economy and stock market impacts similarly positioned companies all at the same time. And in this corner of the Internet, that seems like "everyone." There are other companies doing great -- Stryker (NYSE: SYK) is near their all-time high and has not done layoffs as far as I know.

koolba 4y ago

Besides the economic realities of companies selling shovels to out of work miners, companies always have people they want to layoff but generally want to avoid both the confrontation and publicity. Once the flood gates open up by your competitors or the sector as a whole starting layoffs, it makes sense to get your own house in order.

pydry 4y ago
Occams razor suggests that if the trend were kicked off by wildly profitable companies that have previously been fined for wage fixing then the cost of capital might not be the whole story.

gadflyinyoureye 4y ago

Partly. Another factor is that VC money is starting to dry up. Yet another is that many companies piled on employees during the PANDEMIC! They found that they didn't need that much staff. I don't know if Gitlab hired a bunch during the PANDEMIC! They might be back to pre PANDEMIC! numbers.

izacus 4y ago
They found out they didn't need EXACTLY the same percent of staff than all the other herd didn't need? :P Even if they're massively different megacorps with different financials? :D

dahfizz 4y ago

Everyone is subject to the same macro-economic trends. Massive growth and free money the past few years, now turned into rising interest rates and a bearish market.

napolux 4y ago

And same percentages! https://www.marketwatch.com/story/pagerduty-to-lay-off-7-of-staff-revenue-officer-to-exit-271674568511 https://www.marketwatch.com/story/pagerduty-to-lay-off-7-of-... https://www.calcalistech.com/ctechnews/article/hjyj6811as https://www.calcalistech.com/ctechnews/article/hjyj6811as https://www.theglobeandmail.com/business/article-hootsuite-replaces-ceo-announces-layoffs/ https://www.theglobeandmail.com/business/article-hootsuite-r... https://variety.com/2023/digital/news/vox-media-layoffs-130-employees-job-cuts-1235496467/ https://variety.com/2023/digital/news/vox-media-layoffs-130-... etc....

shagie 4y ago
There are only so many numbers between 1 and 10 where the cut from the layoff is deep enough to have an effect and not too much. Going above 10 says very different things.
dathinab 4y ago
7% is the amount of layoff larger companies can "in general" layoff without hurting operation too much. Hence why some huge companies lay of the bottom 7% of performers every year (and normally hire that amount too). So if the layoffs come not because of hard "we have x to much cost" reasons but of "we need to be more robust for potential dives in profit and increased cost" reasons and an arbitrary number must be chosen which isn't affecting operation too much but also makes a difference 7% is a common choice "because that worked well for some other large companies". Especially when the push comes from shareholders without much company insight 7% is likely. If your company is smaller you make decisions on a one by one basis (after having some target for rough performance where you cut). But the moment your company has 100+ or even 1000+ people that gets impractical so a % line is set for how many people need to be cut.

mfer 4y ago

There are many reasons companies do it: - They are on venture capital, not profitable, and the process around IPO, being purchased, or getting more rounds of funding has been complicated by the downturn. So, they need to change their rate of burn to last longer. - Companies are profitable and their leaders want to keep the profit margin for their owners (share holders). If income is down or doesn't grow to the level it had then they can lay off to reduce expenses which pushes up profit levels. This has become trendy in the past 40 years. - Income has been reduced and companies are breaking in less money. They may no longer be making a profit. To return to break even (or profit) they need to lay off. There are other reasons. These are some that come to mind.

digdigdag 4y ago

1. The federal interest rate is nearly at 5%. Any business operating depending on lines of credit are going to hurt (Source: https://www.federalreserve.gov/releases/h15/ https://www.federalreserve.gov/releases/h15/) 2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main https://www.bea.gov/data/consumer-spending/main). So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output. Also known as recession.

grey-area 4y ago
This is the correct answer. The Fed rate is the main driver for these layoffs. The fed is trying to cause a slowdown in the economy (including layoffs) in order to temper inflation.
- SantalBlush 4y ago
  This isn't an explanation. The job market has been red hot over the past year, and the total of tech layoffs comprise a small fraction of overall job growth in the US. HN users think there is a recession because they are only focused on their particular industry, and refuse to look at what the actual economy is doing.
  - grey-area 4y ago
    Employment usually peaks just before a recession, along with denial of course. The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
    - SantalBlush 4y ago
      I've been reading these predictions on HN for almost a year now, and so far they've been false. If people keep repeating them, eventually we'll witness a recession and they'll be right, but that doesn't make their analyses correct, it just makes them a broken clock.

tyingq 4y ago

Some of it is that other companies doing it provides PR cover, where it's sort of implied that "It's not just us, look...we're posting similar reasoning".

fortran77 4y ago

See AGM's thread on Twitter: https://twitter.com/antoniogm/status/1593606745955348481 https://twitter.com/antoniogm/status/1593606745955348481 He got it exactly right.

scient 4y ago
Seems like an Elon bootlicker babbling more than anything.

Frost1x 4y ago

Ultimately the only thing really regulating these labor markets are competitive forces. If all the competitors are cutting their labor costs, you have reduced risk of your labor jumping ship, less mobility, etc. and have opportunity to cut costs as well. You have an opportunity to reduce costs and increase profit and revenue at the same time. It may also be the case that this is an actual correction trend in the market to overhiring. Whether or not that's the case or the target is more of the former is ambiguous to any outsiders so this will be the explanation given because it puts things in a more positive light than the strategic "we have a golden opportunity to cut labor costs so let's do it."

dathinab 4y ago

Because you always need to find some reason why you lay of which is satisfying for various parties (through not really the people fired, but investors both current and future, people with shares, companies you sell to, the public, etc.). And "currently everyone does so and the economy is bad" is a good excuse. And there are many reasons why a company might lay of people even if it's currently not strictly necessary: - you don't really need that many people (anymore), common for small companies which grew to fast - you want to restructure your company majorly and doing it will less people is easier - you prefer to go a bit slower, so that e.g. current investment money lasts longer - you want to be more robust to a potential economic dive, so you reduce money cost at the cost of going a bit slower and in turn can compensate hits in actual revenue better (at least for some time) - you have accumulated a bunch of people which are not bad enough to fire them because of performance but also you know you can get better people, so you use it as an excuse to let people go, go slower for a "not short but not too long" while and then rehire. Alternatively companies like Amazone do that every year fire bottom x% then rehire roughly the same amount. - you expect salaries to fall in the industry as a whole by quite a bit - financial distress (e.g. interest rates and/or profit) Lastly group dynamics to affect Investors, CEOs, Board Members, HR people etc. too, so it might be a "everyone does so so we better do so, too" situation (potentially forced onto the company by the board of shareholders).

FollowingTheDao 4y ago

> why is everyone doing this at the same time? Are you serious? Maybe you all should take a basic economics course. We are in a recession. Businesses know this. It doe snot matter if the Fed says if we are in one or not. Layoffs do not happen if the future business outlook is positive.

Merad 4y ago

It's cargo cult corporate leadership. My company has less than 200 employees, so our layoffs weren't newsworthy, but the c-suite decide to cut 5% last week citing "trends in the industry." I can't speak for other departments but our engineering team definitely _is not_ bloated yet they still axed two positions from teams working on the highest priority projects in the company. Absurd.

deleted 4y ago
[deleted]