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You’re assuming the layoffs are a reaction to poor strategy and/or decrease revenue potential, but that’s not always true. It could be that the market is shifti

by nickff 2y ago

You’re assuming the layoffs are a reaction to poor strategy and/or decrease revenue potential, but that’s not always true. It could be that the market is shifting away from that company for some external reason, or that those employees were truly redundant.

triceratops 2y ago
> It could be that the market is shifting away from that company for some external reason The CEO is the main strategy and vision guy at the company. They're supposed to be able to foresee market shifts. If they don't do that, why do they deserve to be paid so well? Because they negotiated so hard with their golf buddies on the board? It's a one-year pay cut, not the end of the world. > or that those employees were truly redundant. Maybe. In that case, the long term increase in stock price should make up for any short-term pay cuts, right? The CEO will benefit eventually too.
- aidanlister 2y ago
  I’m a CEO, I was not given a magic ring to predict the future when I took the role, I make the best decisions I can as a totally flawed human being. Businesses have natural expansion and contraction cycles. New products are built and iterated on with a hope of finding product market fit, but most of these endeavours fail. I am paid to make the hard decisions. Sometimes that hard decision is to scale down the workforce. Yes, it sucks, but a large majority of those impacted end up financially ahead (rehired quickly and one, two or three months ahead because of the redundancy payout). Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed?
  - happymellon 2y ago
    > Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The situation they were both in, if the CEO had just cut staff and taken a windfall bonus then there wouldn't be the cash to pivot. Because thats what we are talking about here. It would have taken a couple of years to pivot successfully, so they should be compensated a couple of years after the layoffs not firing workers and taking their salaries as a bonus before quiting.
  - triceratops 2y ago
    > What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The CEO would have made less money for a few years while the turnaround was in progress. If it succeeded, the stock would take off and they'd profit handsomely. I don't see the problem with these incentives. Let's remember again, the proposal from the article: "freeze CEO pay and stock options and prevent stock sales for a year following any layoffs that exceed 5% of the workforce" What you don't want is a CEO dumping the stock when it goes up after the layoff. That's a conflict of interest. And if the company needs to do layoffs to conserve cash, the CEO and rest of the leadership taking pay cuts will also help the shareholders.

by nickff 2y ago

triceratops 2y ago

> It could be that the market is shifting away from that company for some external reason The CEO is the main strategy and vision guy at the company. They're supposed to be able to foresee market shifts. If they don't do that, why do they deserve to be paid so well? Because they negotiated so hard with their golf buddies on the board? It's a one-year pay cut, not the end of the world. > or that those employees were truly redundant. Maybe. In that case, the long term increase in stock price should make up for any short-term pay cuts, right? The CEO will benefit eventually too.

aidanlister 2y ago
I’m a CEO, I was not given a magic ring to predict the future when I took the role, I make the best decisions I can as a totally flawed human being. Businesses have natural expansion and contraction cycles. New products are built and iterated on with a hope of finding product market fit, but most of these endeavours fail. I am paid to make the hard decisions. Sometimes that hard decision is to scale down the workforce. Yes, it sucks, but a large majority of those impacted end up financially ahead (rehired quickly and one, two or three months ahead because of the redundancy payout). Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed?
- happymellon 2y ago
  > Penalising a CEO for making hard decisions is a great recipe for stagnant companies. What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The situation they were both in, if the CEO had just cut staff and taken a windfall bonus then there wouldn't be the cash to pivot. Because thats what we are talking about here. It would have taken a couple of years to pivot successfully, so they should be compensated a couple of years after the layoffs not firing workers and taking their salaries as a bonus before quiting.
- triceratops 2y ago
  > What would have happened to Kodak or Blockbuster if they had a CEO with enough grit to cut the workforce and pivot the businesses before they collapsed? The CEO would have made less money for a few years while the turnaround was in progress. If it succeeded, the stock would take off and they'd profit handsomely. I don't see the problem with these incentives. Let's remember again, the proposal from the article: "freeze CEO pay and stock options and prevent stock sales for a year following any layoffs that exceed 5% of the workforce" What you don't want is a CEO dumping the stock when it goes up after the layoff. That's a conflict of interest. And if the company needs to do layoffs to conserve cash, the CEO and rest of the leadership taking pay cuts will also help the shareholders.