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Large companies over-hire to short-term inflate the share price, then lay-off the over-hire to also short-term inflate the share price. In essence, you take the
by Someone1234 4y ago
Large companies over-hire to short-term inflate the share price, then lay-off the over-hire to also short-term inflate the share price. In essence, you take the market sentiment and hire/fire in order to reinforce it.
e.g. "Outlook is good, we're in a hiring cycle because we want to take advantage of the positive market conditions." "Outlook is bad, we're in a layoff cycle because we want to protect ourselves." Shareholders love both since the company is being "efficient."
Only one who loses is the little employees (and, frankly, long term stability; but modern US businesses only have foresight to the end of the current FY and only memory of the last FY).
- michaelbrave 4y agoSounds similar to Hawthorne effect to me, where they sudied office workers on how they reacted to dimming or raising the lights and both caused upward productivity but it was because the workers realised they were being watched not because the lighting caused changes. Neither the hiring or the firing necissarily make the company more efficient but maybe being watched and knowing they are being watched does.
- skywhopper 4y agoThis assumes layoffs are actually done using some logical process. But everything I’ve heard about the folks who have gotten let go says otherwise. No one is being fairly rated. So no one will assume they are being “watched”.
- tester756 4y ago>Large companies over-hire to short-term inflate the share price src on that?
- hudsonjr 4y agoI don't know that they hire to inflate the share price. In good times, I have felt like that some R&D projects exist just to say "we have people working on it" for investor calls and such. In bad times, those things can get cut.
- Gustomaximus 4y agoI doubt this is true. While many variable I suspect it's more about phases. Company has a growth focus phase so the books are opened and people can hire away to get stuff done. There always more that can be done so they keep hiring, usually too many, til the company hits profit focus phase. Then they look to cut costs, of which staff are typically a large variable component, they slash numbers, again probably too much, and then continue til they return to growth focus and repeat.
- anoy8888 4y agoSome questions and facts to think about for you to correct your bias: 1. How long has Microsoft been around if you think they can only see end of current FY? 2. Has they grown larger and larger in terms of revenues and profits if they can only focus on short term ? 3. How much does Microsoft ‘little employees’ get paid ? 4. After ‘little employees’ got laid off, are they doing really bad after Microsoft?