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> I'm a Stanford professor who's studied organizational behavior for decades. And I've actually been inside an organization or two. It's cost-cutting. Companie

• benj111 4y ago
  i dont think your interpretations are mutually exclusive are / were we in the downturn? when in a downturn should a company start downsizing? i dont think all these HR departments saw some objective point pass and base the layoffs on that. theyre watching what everyone else is doing.
• ChiMan 4y ago
  Any CEO who instituted or countenanced such ridiculous amounts of unnecessary hiring needs to be the first one fired. You need punishment in capitalism. You need incentives, and you need punishment. Because where you have incentives with no punishment, somebody just has a free option—-in this case paid for by damaging employees’ careers and health, as well as investors’ capital. This insanity must end. And it will only end when you start doling out punishment to the guilty parties: The CEOs. No more CEOs “taking responsibility.” They need to be fired.
  • joyfylbanana 4y ago
    From board perspective it is difficult, because it is difficult to find CEO to do the layoffs and start strategy work again. It is just easier to keep the previous CEO if he is willing to do the dirty work.
    • ChiMan 4y ago
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  • mguerville 4y ago
    It’s all about the markets, if company A hires a lot and the market thinks it’s a sign of growth it rewards it with demand for its shares, then company B looks at A and sees a hiring wave as the only material event that could have triggered A’s shares outperforming its own and decides… fuck it let’s signal to the market that we do are growing. Then the market psychology changes and some CEO is the first to think that maybe this time the market would reward the opposite action, aka a layoff. It works… so the next one over goes and the rest of the dominos fall in the name of competing for institutional dollars within a zero-ish sum game
    • ChiMan 4y ago
      Apple didn’t go on a hiring binge. It didn’t hurt them.
      • Jensson 4y ago
        Apple is a hardware company. Did other hardware companies go on a hiring spree? Otherwise it is unrelated.
    • CrimpCity 4y ago
      I think it’s more competitive than that. Company B isn’t just looking at company A’s “success”. Company B’s levels of attrition are increasing because its employees are going to company A. So company B has no other option than to open the hiring floodgates or else they can’t meet bare bones maintance tasks let alone growth. Not your comment but most of the comments on this thread are whacky. It’s like people completely forgot how hot the software market was during the pandemic. Anecdotal but I had 2 friends trying to break into the software game at the same time. That didn't happen during the pre 2019 boom so who knows what that means lol
  • P_I_Staker 4y ago
    I want to see some heads on spikes!
• 5350-uiop-1130 4y ago
  if companies cannot hire sensibly why would i think that they're capable of firing sensibly.
• rhaway84773 4y ago
  Your explanation fails to answer why these same companies were hiring people at highly inflated salaries only a year ago, whereas the academic type explanation fully covers that scenario as well.
  • surfmike 4y ago
    The argument was they saw positive returns for hiring additional people. Revenue grew as they added people. Did they go too far? Maybe. But being timid would have prevented them from growing as much as they did.
    • dragontamer 4y ago
      Programmers don't create revenue when they are hired. There is a significant training period where programmers learn the local culture and quirks and tools. It takes a while before they can become effective. Once programmers are effective, it can take months or years or longer before a project they work on gets any significant revenue. --------- Consider all the money Facebook sank into the Metaverse, with nothing to show for it yet. Or consider the typical video game, that takes maybe 3+ years to go from programming into revenue. The 1 to 2 year hiring period from 2020 to 2022? I bet that most of these programmers did not create any revenue by the firing times of Q4 2022. It's just not how this industry works.
      • darkwater 4y ago
        > The 1 to 2 year hiring period from 2020 to 2022? I bet that most of these programmers did not create any revenue by the firing times of Q4 2022 That's why we fire them! /s
    • ChuckNorris89 4y ago
      >The argument was they saw positive returns for hiring additional people. False. They saw positive returns because the market was rocketing up o matter what, which is why they over hired. That, and to signal to investors that "they're healthy and growing".
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• ndr 4y ago
  It might very well be _also_ cost cutting. The interesting part is why are they all in sync, and fairly similar in size. Did they really all make the same mistake in the past? Was the groupthink/copycat happening during the over-hire phase?
  • vgatherps 4y ago
    I personally know of a company that is currently in a "well Google did it" hiring freeze. Having said that, the layoffs are not happening in a vacuum, there's been significant economic issues over the past year and cash isn't basically free anymore. Some companies may have made moonshot efforts hoping to be at the front of <now essential industry> with the pandemic but things largely went back to normal. But it's likely not just one factor. I'd believe that: 1. Some companies are bloated and can (maybe should) downsize, or over-invested in projects that didn't pan out. 2. Some companies care more about costs now than they did a year ago (for reasons good or bad) 3. Some companies are more willing to conduct large layoffs since other large ones are doing it and it looks better 4. Some companies are facing pressure from investors to cut costs and do layoffs because "other bigs ones did it" All can be true for some sets of companies - there isn't going to be "just one reason" why all a company decides to do layoffs.
    • dougSF70 4y ago
      There is an advertising recession underway. Ad budgets are down and sectors that were heavy spenders have disappeared (crypto for example)...this is having a knock on effect with Media companies (meta, google, amazon)...the downturn was quick and is exaggerated by the stock market turning bearish. As a result there is less forgiveness for companies to be publicly traded and not make a profit. I think the "google did it" is a post rationalization for past layoffs rather than a driver of layoffs. Cutting costs is the fastest, and mostguaranteed, way to profitability. For private firms there is more scrutiny of prerevenue start ups trying to raise, the message from these firms is "we need to get on a path to profitability" . In my opinion, if you are working in a company where your CEO has just said those words, you should start interviewing. Best advice i ever received was its easier to spend money than make money, and the past 10 years has allowed people to start businesses that don't, and may never, make a profit.
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• joyfylbanana 4y ago
  The excessive hiring before the market downturn was also copycat behaviour, not about about having good investment ideas. Now everyone has realized that they were in a mass-psychosis, and start having mass-sensibility instead.
• musha68k 4y ago
  Depends on the company of course. In any case and at this rate it’s also power play though. Worker demands had become too much “out of line” and that creates tension. Look at Elon Musk, he is not acting very rational on the productivity / performance front. I bet that’s not even the goal there, he is a provocateur sales man. And very good at that. He also has a fragile ego and likes leverage. Very human and makes sense I guess. Here you have a Harvard professor on another tangent: “Doesn’t it seem silly that, in a moment of crisis during the pandemic, we all figured out how to keep working productively without all these conversations and debates, seemingly because we were just rolling up our sleeves collectively and getting work done?” Ethan Bernstein, an organizational behavior professor at Harvard Business School, asked in the Harvard Gazette last fall. “And now that we have the choice, it’s the choice that makes this hard.” https://news.harvard.edu/gazette/story/2022/08/back-to-office-stay-remote-go-hybrid/ https://news.harvard.edu/gazette/story/2022/08/back-to-offic...
• elzbardico 4y ago
  Funnily enough, cost-cutting rarely reaches the executive class.
• rco8786 4y ago
  I don't think these things are mutually exclusive. Companies have been bloated for...ever, and even more than usual in recent years. That they're all choosing now-ish to cut some costs is copycatting.
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• lapcat 4y ago
  > And I've actually been inside an organization or two. Unless you're inside the mind of the CEO, it's not clear how this is relevant. And if the CEOs are acting irrationally, it's not clear that even being inside their minds would help, because the irrational tend to lack the self-awareness to see their own irrationality. The professor doesn't claim to be inside their minds either. The point is that, empirically, layoffs very often fail to bring about any economic improvements to the company, and may indeed hurt the company in the long run. It's a matter of penny-wise but pound-foolish.
  • version_five 4y ago
    FWIW the GP sounds like he's taking a CEO view Companies are ludicrously bloated because caring about it is too much effort for the value; during a downturn, they care a bit more This is bang on. There are lots of competing priorities and prioritizing some kind of streamlining rarely rises to the top. Time and cognitive power is usually better spend elsewhere, which is why CEOs can often "intentionally" let the org grow some fat without worrying about it
    • ChuckNorris89 4y ago
      Not only that, but streamlining and trimming the bloat/fat during good times signals to investors that there must something wrong with the org (just look at Intel) which will cause the stock price to go down, so CEOs never do it during good times to signal that the org is "healthy and growing" even though everyone in the trenches knows there's tones of bloat piling up. The last bull run fueled by negative rates lasted far longer than it should, which lead to growth for the sake of growth without efficiency in mind, which lead bloat and inefficiencies to accumulate far more than normal, which nobody dared to address because "line goes up". Now that the line went down, CEOs feel pressured to remove all the ballast they accumulated, which causes the line to go back up.
      • dieselgate 4y ago
        Great use of ballast!
• apercu 4y ago
  But there is a lot of copy-catting going on. Have you called a bank or any other large institution in the last 3 years? "We're experiencing larger call volumes than normal". The fact that this is pervasive and constant makes it a lie. It means that many organizations have seen that everyone else is doing it (cutting support staff, or not increasing head count). I would say that is both copy cat and cost cutting behaviour. Very few non-FAANG organizations have a lot of fat to trim post-2009. In fact, reduced head counting and overloading already over-stretched employees has been going on since the mid-90's in most industries.
• whywhywhywhy 4y ago
  > I'm a Stanford professor who's studied organizational behavior for decades Insane how people locked up in institutions that resemble absolutely nothing like a workplace feel they can even comment on a workplace. Hubris of academics is insane, living in a dreamworld.
  • SecretDreams 4y ago
    Well, the issue is there's never been a university that had to "cut costs" since they've all got strong endowments or a base of students to rob slightly more year after year. I wonder if this professor also thinks there's no bloat at the institutional level.. despite some schools having almost* single digit ratios of admin to students.
    • bigbillheck 4y ago
      > Well, the issue is there's never been a university that had to "cut costs" The evidence from recorded history disagrees.
  • Eumenes 4y ago
    These types are certainly employed in large companies, and attempt to make use of their Organizational Behavior degrees .. generally the first to be laid off
• theknocker 4y ago
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• SurlyBoggins 4y ago
  I agree to an extent - Musk was only able to say the emperor had no clothes because he owns the company. No public company wants to be the first (or the last) to make a move, so even at public companies that don’t NEED layoffs - especially indiscriminate ones that decimate a talent pipeline - will initiate downsizing. It’s all to appease the street - they expect blood, mgmt gives them blood, share prices goes up, mgmt hits bonus targets. Long term impacts don’t matter because they won’t be there to endure the pain - pass that off to another poor sucker and hope you have a chair when the music stops. Pubco 101.
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