5 ms·

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 mist

by 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.
  - oxfordmale 4y ago
    As the research by this professor shows, layoffs are not a guaranteed way to profitability. Unless a company is in a dire financial situation (Twitter), layoffs do not pay off long term. Lay-offs are expensive and tend to result in lower staff morale and, in addition to that, lower productivity. It generally increases staff turnover, especially if pay raises are also delayed. Good staff leaves typically first, as they have no problem finding another job. That leaves you with an overworked and demotivated staff base when the economic downturn turns into an upturn. Even if you manage to rehire staff quickly to deal with the upturn, you still need to train them before they start adding value.
    - dougSF70 4y ago
      Could you argue that excess hiring is also not a path to guaranteed profitability because it leads to layoffs.
TeMPOraL 4y ago
> The interesting part is why are they all in sync, and fairly similar in size. So many potential reasons, including: - "If we're to do it, let's do it now, while we're still in the wake of Twitter and other big companies, and thus shielded from bad press". - Some company's management was considering a layoff for quite a while, but worried it might be too damaging or too difficult. Seeing other similar companies doing their own layoffs without much effort or negative impact would relieve the management's fears, and lead them to staging their own layoff. Now imagine there were a lot of companies that independently overhired, then started thinking about "cutting the fat", and all got - again, independently - blocked by the same set of worries. This threshold is a sync point. Everyone may arrive at it on their own, but they cross it simultaneously.
MrBuddyCasino 4y ago
You can think of most managers as being actors. Their main job is to project the correct image in order to legitimate their role and fend off internal competition. Is becomes more true the higher you go in the hierarchy.
- subpixel 4y ago
  This is eerily, scarily true and what’s more it works. I loathe Zuckerberg but his insistence that managers contribute or leave is exactly what my org needs. Unfortunately this is the sort of change that’s basically impossible when so many people’s power is vested in it not happening.
  - bosie 4y ago
    I get the idea but how is “contribute” measured for managers?
    - subpixel 4y ago
      Easy - they get paid have some additional responsibilities on top of a standard job. It would be better to have several of these than a single manager who only has meetings all day and is disconnected from the actual work of producing value.
      - bosie 4y ago
        Not sure I follow, a manager can have a huge impact (one way or another) on the final product and hence can produce great value. My question was how to measure that, your reply did not answer that?
- pjc50 4y ago
  Specifically, managers produce "managerness" which is consumed by others in the organisation. This goes all the way up to the C-Suite which need to project "CEOness" in the theatre of VC presentations and investor calls. Sometimes you find overt borrowing of theatrical techniques, like Elizabeth Holmes getting voice training.
Spooky23 4y ago
These giants have so much money part of their hiring plans were to deny candidates to others. It’s nuts. The the point upstream about Musk is real. Companies like Google established that you need to hire 10x rockstars or whatever, and pay ludicrous salaries. The growth curve is going to slow, and the money people aren’t gonna want to pay the wacky salaries for people.
qwertyuiop_ 4y ago
Yes WEF
sokoloff 4y ago
They’re similar in size in large parts because it doesn’t make sense to go through all the pain of a layoff for a <= 3% layoff and it feels extremely risky to do a >= 10% layoff all at once (absent an existential threat). The end result is a lot of layoffs in the middle of that range.
nordsieck 4y ago
> The interesting part is why are they all in sync, and fairly similar in size. As to the in sync part, the most plausible explanation is the economy. Inflation from the Russian-Ukranian war plus Covid stimulus drove the Fed to boost the interest rate. The similar size bit is more difficult, but if a lot of that is support staff like recruiting, then that may make more sense, if those staffing levels were based on the number of engineering headcount in the first place.
- shubb 4y ago
  One explanation would be that a rising risk free rate makes money now more valuable than higher future cash flows, so leadership who are stock incentivised in order to align thier interests with shareholders sacrifice future growth for higher margins. R&D, marketing, even good customer service all allow you to grow next year but firing them allows you to return more money now.
1vuio0pswjnm7 4y ago
"It might very well be _also_ cost cutting." As I read the title, that is what it says. It does not say, e.g., "The widespread layoffs are because of copycat behaviour not cost cutting". It says "The widespread layoffs are more because of copycat behaviour than cost-cutting". To me the interesting part is that with all the coordinated layoffs, so far the public1 generally sees no "decline in service", assuming these companies claim to be providing services to the public.2 That implies these were, as Graeber would put it, bullshit jobs. "Tech" companies are not known for original thinking. Knee-jerk, copycat behaviour can be seen in everything they do. 1. By "public" I mean the ad targets, aka "users", not the advertisers. 2. Twitter being a notable exception.
- humanrebar 4y ago
  > That implies these were, as Graeber would put it, bullshit jobs. ...on the scale of a few months, maybe. There are a lot of activities that are essential to the long term health of the organization that can be abandoned for a little while: developing future innovative product lines, keeping infrastructure well maintained, having a full QA process compared to cutting corners, customer service tools and roles, etc.
  - screwturner68 4y ago
    I'd venture to say 25% of the jobs in large companies are bullshit. Bullshit jobs floating on a sea of pointless meetings is a pretty good description of a lot of corporate America.
    - humanrebar 4y ago
      Yeah, but do we trust the axe wielders to know the difference between value-free jobs and, say, maintenance of healthy information security?
      - screwturner68 4y ago
        no, and that's the real issue.

by ndr 4y ago

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.
- oxfordmale 4y ago
  As the research by this professor shows, layoffs are not a guaranteed way to profitability. Unless a company is in a dire financial situation (Twitter), layoffs do not pay off long term. Lay-offs are expensive and tend to result in lower staff morale and, in addition to that, lower productivity. It generally increases staff turnover, especially if pay raises are also delayed. Good staff leaves typically first, as they have no problem finding another job. That leaves you with an overworked and demotivated staff base when the economic downturn turns into an upturn. Even if you manage to rehire staff quickly to deal with the upturn, you still need to train them before they start adding value.
  - dougSF70 4y ago
    Could you argue that excess hiring is also not a path to guaranteed profitability because it leads to layoffs.

TeMPOraL 4y ago

> The interesting part is why are they all in sync, and fairly similar in size. So many potential reasons, including: - "If we're to do it, let's do it now, while we're still in the wake of Twitter and other big companies, and thus shielded from bad press". - Some company's management was considering a layoff for quite a while, but worried it might be too damaging or too difficult. Seeing other similar companies doing their own layoffs without much effort or negative impact would relieve the management's fears, and lead them to staging their own layoff. Now imagine there were a lot of companies that independently overhired, then started thinking about "cutting the fat", and all got - again, independently - blocked by the same set of worries. This threshold is a sync point. Everyone may arrive at it on their own, but they cross it simultaneously.

MrBuddyCasino 4y ago

You can think of most managers as being actors. Their main job is to project the correct image in order to legitimate their role and fend off internal competition. Is becomes more true the higher you go in the hierarchy.

subpixel 4y ago
This is eerily, scarily true and what’s more it works. I loathe Zuckerberg but his insistence that managers contribute or leave is exactly what my org needs. Unfortunately this is the sort of change that’s basically impossible when so many people’s power is vested in it not happening.
- bosie 4y ago
  I get the idea but how is “contribute” measured for managers?
  - subpixel 4y ago
    Easy - they get paid have some additional responsibilities on top of a standard job. It would be better to have several of these than a single manager who only has meetings all day and is disconnected from the actual work of producing value.
    - bosie 4y ago
      Not sure I follow, a manager can have a huge impact (one way or another) on the final product and hence can produce great value. My question was how to measure that, your reply did not answer that?
pjc50 4y ago
Specifically, managers produce "managerness" which is consumed by others in the organisation. This goes all the way up to the C-Suite which need to project "CEOness" in the theatre of VC presentations and investor calls. Sometimes you find overt borrowing of theatrical techniques, like Elizabeth Holmes getting voice training.

Spooky23 4y ago

These giants have so much money part of their hiring plans were to deny candidates to others. It’s nuts. The the point upstream about Musk is real. Companies like Google established that you need to hire 10x rockstars or whatever, and pay ludicrous salaries. The growth curve is going to slow, and the money people aren’t gonna want to pay the wacky salaries for people.

qwertyuiop_ 4y ago

Yes WEF

sokoloff 4y ago

They’re similar in size in large parts because it doesn’t make sense to go through all the pain of a layoff for a <= 3% layoff and it feels extremely risky to do a >= 10% layoff all at once (absent an existential threat). The end result is a lot of layoffs in the middle of that range.

nordsieck 4y ago

> The interesting part is why are they all in sync, and fairly similar in size. As to the in sync part, the most plausible explanation is the economy. Inflation from the Russian-Ukranian war plus Covid stimulus drove the Fed to boost the interest rate. The similar size bit is more difficult, but if a lot of that is support staff like recruiting, then that may make more sense, if those staffing levels were based on the number of engineering headcount in the first place.

shubb 4y ago
One explanation would be that a rising risk free rate makes money now more valuable than higher future cash flows, so leadership who are stock incentivised in order to align thier interests with shareholders sacrifice future growth for higher margins. R&D, marketing, even good customer service all allow you to grow next year but firing them allows you to return more money now.

1vuio0pswjnm7 4y ago

"It might very well be _also_ cost cutting." As I read the title, that is what it says. It does not say, e.g., "The widespread layoffs are because of copycat behaviour not cost cutting". It says "The widespread layoffs are more because of copycat behaviour than cost-cutting". To me the interesting part is that with all the coordinated layoffs, so far the public1 generally sees no "decline in service", assuming these companies claim to be providing services to the public.2 That implies these were, as Graeber would put it, bullshit jobs. "Tech" companies are not known for original thinking. Knee-jerk, copycat behaviour can be seen in everything they do. 1. By "public" I mean the ad targets, aka "users", not the advertisers. 2. Twitter being a notable exception.

humanrebar 4y ago
> That implies these were, as Graeber would put it, bullshit jobs. ...on the scale of a few months, maybe. There are a lot of activities that are essential to the long term health of the organization that can be abandoned for a little while: developing future innovative product lines, keeping infrastructure well maintained, having a full QA process compared to cutting corners, customer service tools and roles, etc.
- screwturner68 4y ago
  I'd venture to say 25% of the jobs in large companies are bullshit. Bullshit jobs floating on a sea of pointless meetings is a pretty good description of a lot of corporate America.
  - humanrebar 4y ago
    Yeah, but do we trust the axe wielders to know the difference between value-free jobs and, say, maintenance of healthy information security?
    - screwturner68 4y ago
      no, and that's the real issue.