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Layoffs Don't Work

• throwiop 2y ago
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  • Kenji 2y ago
    [dead]
• RicoElectrico 2y ago
  The other question is why C-suite does even need to tell the respective division management to lay off employees if the actual goal is cost reduction. Shouldn't they impose a budget reduction target instead and trust them to allocate the savings between capex, opex and salary budget according to specific situation at hand?
  • wffurr 2y ago
    >> why C-suite does even need to tell the respective division management to lay off employees if the actual goal is cost reduction You answered your own question. For a lot of layoffs, cost reduction isn't the goal; it's disciplining the workforce who were increasingly assertive at work about direction and conditions.
    • dartos 2y ago
      It’s honestly probably not that evil.(generally. There are definitely evil orgs out there) It’s just the easiest way to make the stock price go up. Layoffs caused twitter to bump in price. Same with Microsoft when they laid off all those game devs. C-suite don’t care about profit or losses in tech, just the stock price. In the 2010s, hiring devs increased stock prices. In the 2020s mass firings do. It’s just money. Simple as.
      • slappyham 2y ago
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  • michaelt 2y ago
    The C suite wants to take the blame, so the people you deal with face to face can honestly say the decision was taken out of their hands.
  • matwood 2y ago
    > actual goal is cost reduction For many companies the largest cost is labor. Also in many companies, managers amass power by the number of people they manage. If the C-suite doesn't explicitly push for layoffs they will likely not happen, causing them to not reduce costs as quickly as they wanted.
    • jordanb 2y ago
      Nah I've been in meetings before where it was asked "if we can find these ten million in cloud costs and licenses, can we retain staff?" and the answer was "no, because those are different buckets." Regarding "managers try to amass staff," I've seen some of that for sure, but it's not universal and acting like it's some kind of iron rule of organizations is an op. Most managers are evaluated based on the impact their organization is having, not the size of it, unless the firm is incredibly poorly run. What does happen, and where these layoff edicts come from, is that the executives fear the management is more loyal to their directs than they are to leadership. They feel that if they want to inflict something on the workforce they have to "force" management's hand, because otherwise management will resist.
  • tetromino_ 2y ago
    But then you will still get short-sighted layoff decisions getting made, only by directors instead of C-suite.
• DebtDeflation 2y ago
  They used to be a once a decade "save the company during a recession" move. Now they seem to be a quarterly "manage earnings per share" move.
  • dustingetz 2y ago
    software development costs are out of control the whole industry is one big grift, there’s no accountability anywhere, 20% of the devs are doing 80% of the work, the business would instantly terminate the 80% for cause if they could only discern the difference, but they can’t, because the business side is also a big grift with the exact same problem all the way up to the founders recursively
    • only-one1701 2y ago
      Good lord I’m not sure I’ve ever heard it put so succinctly. Well done.
    • HappyJoy 2y ago
      And, of course, you can site a reference for those statistics. That aside, I don't agree with your overall sentiment.
    • VWWHFSfQ 2y ago
      So much of the software industry is just an outrageous combination of inexperience and "YOLO". Every problem can be solved by just giving AWS another $100,000 this month because we don't have time (and don't know how) to make even basically optimized software. So just burn the gas and electricity and give more money to the YAML merchants at Amazon.
      • georgemcbay 2y ago
        I still have PTSD from around 2012 when a company I worked for and loved very much (chumby) imploded financially and almost all of the employees including myself got vacuumed up in an acquihire-type deal into a streaming media company that was building a would-be netflix competitor. Us former chumby developers were working primarily on the front-end across a variety of embedded-system-like devices (writing code for early versions of 'Smart' TVs from the likes of Vizio, etc) while another team was creating the backend and whenever they would show us the infrastructure diagrams of what they were working on they would just place a "HADOOP Server" wherever they had no idea how they were going to solve some large difficult problem, it was effectively a stand-in for "magic happens here". Got to the point where there were a hilarious number of layers upon layers of little cylinder icons in the system design titled "HADOOP Server" all interlinked in non-decipherable directed graphs. I'm pretty sure every single one of us left the new company within 6 months, I lasted about a month and a half.
• fdsas 2y ago
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• brianbest101 2y ago
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• fdfdsafa 2y ago
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• roenxi 2y ago
  > Research has consistently shown he was right about layoffs: They’re damaging to companies... The research is probably misleading. The damage was done to companies when the over-hired people who couldn't add enough value to justify keeping them employed. The layoffs are just when the damage is recognised. It is like borrowing a huge amount of money, using 90% of it it to buy prawns and leaving them out to rot for a few days. The damage is now done, the borrowed money is lost. It won't be recognised for a while though. There is even enough left over to pay an interest payment or two to string everything along. But the damage is done. A lot of people treat economics as though damage didn't happen unless someone acknowledges it. That isn't how it works. Not acknowledging that something is value-destructive just means more value is destroyed by the time people are forced by market forces to confront the truth.
  • fzeroracer 2y ago
    'The research is wrong because I said so' isn't exactly a compelling argument, and certainly not a strong enough one when you've been in the modern workforce long enough to recognize how badly layoffs are conducted at just about every company. I've seen enough 10x engineers get laid off to know that the idea that companies have any idea as to who is actually productive or not is just false.
    • roenxi 2y ago
      1) But I included an actual argument and, furthermore, it assumed that the research is correct. > I've seen enough 10x engineers get laid off... 2) That is sensible for the company. They have no idea how to use a 10x engineer, as can be detected by the fact that they're having layoffs. They don't know how to create value in the market and they're being forced into a position where they have to squeeze what they can out of what assets they have. It isn't economically rational for them to employ 10x engineers in that sort of environment. The global and local optimum is to let those engineers go so they can do something valuable somewhere and keep some more 1x style engineers on the cheap. If a company is having layoffs, that is the invisible hand of the market writing on the wall "THIS MANAGEMENT TEAM DOESN"T KNOW HOW TO MAKE MONEY AT THE MOMENT, STOP GIVING THEM IMPORTANT RESOURCES". That includes 10x engineers.
• bell-cot 2y ago
  Layoff are like hammers: When needed, in the hands of someone skilled, they work perfectly well. But such situations are sadly rare, compared to frustrated idiots grabbing hammers to get their quick "Hulk Smash!" dopamine hits.
  • Joel_Mckay 2y ago
    When it is your money making payroll, than the perspectives rapidly shift. If your Labor doesn't tangibly produce quantifiable profit, than you must furlough staff to stay in business. Assigning fault in such situations is a fools errand, as everyone suffers losses in the end ($18k to $45k in lost training resources per person etc.) Best of luck, =3
    • consteval 2y ago
      In Tech, most layoffs seem completely unrelated to company performance, profit, or revenue.
      • Joel_Mckay 2y ago
        Tip: if a publicly traded firm hires in May, than expect layoffs at the end of the year. It is kind of a ritualistic sacrifice to investors. The trick is being profitable to have around, and knowing when to leave on your own terms for something better. =3
  • malfist 2y ago
    But surely the billionaires in their lavish lifestyles, they're the ones that really know how to run a frugal enterprise.
• csomar 2y ago
  The layoffs are not the issue. It is the decision makers who took the two decisions to both over-hire and then mass-fire shortly after. GM is a great example. The company was the largest and one of the most innovative car manufacturers in the world. It doesn't stand a chance against BYD today and it is not by a lack of money (though maybe with a C-suite change). So my opinion is, yes, the damage is done (or being done) but like GM, it'll probably take 10-15 years until we are in the visible territory. Maybe a bit shorter because this is tech.
  • steveBK123 2y ago
    GM is a great example, Intel as well, that its rarely the engineers fault. You can have great talent but if management is dead set on bad decisions over & over, theres nothing to be done. And the decision to overhire/overfire, set bad strategy, etc all resides in the C-Suite who rarely fire each other or themselves when it all goes wrong. It's only the employees that suffer for every mis-step.
    • kgwgk 2y ago
      > It's only the employees that suffer for every mis-step. They benefit for the overhiring mis-step.
      • steveBK123 2y ago
        Not necessarily. If you give up a good job to join a firm that has over-hired, its only obvious in retrospect that you took a bad risk.
        • _benj 2y ago
          This hits home. I wish there was a way to gauge “retrospect” before actually suffering from it. I’m now usually quite weary of “we’ve had to get yet another loan of 60 mil, after 6 years in business because we don’t know how to make a profitable business” also known as a series C or whatever.
• lukashoff 2y ago
  Because layoffs are not done to make company great but to make sure shareholders and execs preserve their wealth. It's never about company or people or technology - it's always about money, power and wealth.
  • deleted 2y ago
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• pclmulqdq 2y ago
  I remember hearing a take on layoffs that I think is pretty true: When you fire the bottom 10%, you lose another 10% who are from the top performers. The destruction of psychological safety for everyone at the company is irreparable, and you start to bleed your most productive talent, too.
  • sejje 2y ago
    Why do you lose 10% of your top performers?
    • jFriedensreich 2y ago
      because they see the company struggles and is not loyal, as top performers have plenty of options they will be more likely to take a better offer when it comes along. Top performers will not leave the same day but bleed out over a bit longer timeframe. The most popular example is woz hesitating so much to leave HP because HP was loyal to employees and woz was loyal to HP. Imagine the same situation when HP had just let go 10% of employees, he would not have thought about it twice.
    • Muromec 2y ago
      Because they have a good chance of hiring a better employer and will either do that or stop being your top ten percent
    • eschneider 2y ago
      Because people will often see people who they don't perceive as low performers getting lumped in with 'low performers' and laid off. At that point, you start looking for management that seem to know what they're doing.
      • sejje 2y ago
        But only top 10% start looking? This all sounds like a hand wavy hypothetical.
        • 2y ago
• andrenotgiant 2y ago
  > After the early-2000s dotcom bust, Bain researchers found that stock prices for S&P 500 companies that had no layoffs or laid off less than 3% of their workforce increased an average of 9% in the next year. Meanwhile, stock prices were flat in companies that laid off between 3%-10% of their workers, and prices plummeted 38% for companies that laid off more than 10%. Failing companies go through layoffs. Companies like Sun Microsystems, Kodak, Sears, Circuit City, Kmart all went through lots of layoffs. But everyone knows that's not what killed them.
  • marto1 2y ago
    > But everyone knows that's not what killed them. Another addition I'd like to add here is more often then not wrong people get booted while the "dead weight" tends to stick around and becomes even deader due to a motivation fall from the layoff. So maybe it doesn't kill, but for sure exacerbates an already bad situation.
    • fx1994 2y ago
      We are a small team in big company, and management that made wrong decisions is still somewhere there but not my direct management, still getting same paycheck, car, cards and benefits but new managers (that accepted to take over and got brand new car for 100k€, cards and bonuses, bells and whistles) started to layoff workers so we know this is the end for my team, and of course they will do whatever it takes to "save the product", but not fix the the real issue... lack of good developers to fix terrible bugs in our product.
      • acdha 2y ago
        That’s really the key part: if the managers who created the problem are still there, layoffs will just make it worse. There are cases where getting out of a dubious business line can lead to long-term benefit but I’ve seen that a handful of times compared to losing useful people while the bad managers failed upwards.
        • 2y ago
• ashoeafoot 2y ago
  I wish those departments tasked with busywork would be able to build skunkworks inside these dysfunctional molochs and be able to keep what they create. Fired into becoming a startup.. a man can dream.
  • DamonHD 2y ago
    I watched up close a multinational try to create a shunkworks and the ugly result was a lot more shunk than works...
• wiradikusuma 2y ago
  The article lists down why layoffs don't work, but companies keep doing it, so it must be working for them. I hate layoffs (from both perspectives), but the article sounds like whining "we shouldn't break up". The alternative of furlough only works if everyone else is doing it. If everyone else fires left right and center, the people being furloughed will still have low morale. I think it's better to avoid it in the first place, by not over hiring, as others have pointed out.
  • rsfern 2y ago
    I think you’re right that it’s better to avoid these issues in the first place, but your perspective on furloughs instead of layoffs seems a bit fatalistic. I think a company that did rolling furloughs (and importantly was transparent about the whole process) would probably maintain pretty good morale, especially if the rest of the industry is laying people off. But yeah singling people out for furlough would probably be a big morale hit
  • slappyham 2y ago
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• mattmaroon 2y ago
  "After the early-2000s dotcom bust, Bain researchers found that stock prices for S&P 500 companies that had no layoffs or laid off less than 3% of their workforce increased an average of 9% in the next year." Do non-science journalists just not know about correlation vs causation? Does it really not occur to them that maybe the companies that didn't do layoffs were healthier and that's why they overperformed? Wouldn't a 10 year old know that?
  • altcognito 2y ago
    How would you correct for it? As someone who works with ten year olds, they would ask you what causation and correlation is.
    • gruez 2y ago
      They might not know those words, but intuitively know that stuff like "ice cream trucks cause heat waves" make no sense.
    • mattmaroon 2y ago
      I was being hyperbolic about the ten year olds, but that's funny. Correcting for it: I don't know. It would be very hard. You could try to control for variables like profitability, etc., but there are so many and you don't know what you don't know. But the correct response to absence of valid data isn't drawing conclusions from obviously bad data. It just cracks me up that one paragraph later the author points out: "Mass layoffs are often symptoms of unsound business strategies and don’t do anything to cure the larger problem." and yet somehow didn't see that that sentence alone proves his previous one was pointless.
    • dehrmann 2y ago
      One big problem is layoffs cluster around events like the dot com bubble, the financial crisis, or covid, so there are weird things happening. You might be able to look at companies' quarterly profits to identify healthy companies that remained healthy, but still did layoffs.
      • 2y ago
• sleight42 2y ago
  The top comments read like HN of a decade or two ago when armchair exporting was rampant. Paraphrasing: "I, an engineer, am smarter than an economist therefore the article is wrong." Nothing of value to be found at the top of the comments.
  • gjsman-1000 2y ago
    No, we’re saying the majority of economists are more likely to be accurate than this particular economist.
  • slappyham 2y ago
    Combine that with temporarily-embarrassed billionaires and it's a recipe for disaster. Every last asshole here is hoping for a fat exit for some ReactJS garbage that probably just grinds up poor people into McDonald's hamburger meat; of course they don't give a shit about actual workers with actual lives, whom layoffs predominantly hurt. I've been laid off, eight months after a hiring blitz for the exact division I worked for. Now, I could've told them the acquisitions they did were stupid and that the products were never going to be profitable, but I don't live in Manhattan, so those decisions are above me. But that didn't stop them from juicing the stock price and ruining our lives anyway. Fuck these companies. They could do better, and they choose not to. And every last sycophant here is complicit.
• JadoJodo 2y ago
  Having lived in the Boise (Idaho) area, I saw this happen over and over with Micron and HP. I knew dozens of people who had worked for one or the other (and sometimes both) and were then let go in those companies frequent mass layoffs. One person I knew had been laid off → rehired by Micron 3x in the span of 10-years. I think the biggest issue is that it is far too often the _first_ tool that companies reach for, instead of the last. Oh, the market feels unstable? Better cut 5% "just to be safe". There's a national event that might impact our business? We're going to drop 10% of our employees before we know anything. While it certainly doesn't apply to every company, I wonder what it might look like for executive leadership to make a pledge that it always comes from the top first: The leadership team agrees that it will take a (public) $X financial cut for N months in the event of a layoff-level event/period to help guide the ship through the storm (with compensation on the other side). If it works, you have the loyalty/respect of your employees. If it doesn't, you do the layoffs anyway and those who remain know that you tried.
  • DanielHB 2y ago
    In Europe where most countries are notoriously hard to fire people they don't do layoffs like that "just to be safe", they instead just cut-back on hiring more people during though times. It has an impact of morale, but not nearly as bad I imagine. I wonder if that is one of the reasons why Europe companies tend to be smaller companies, while US tend to be bigger. Expansion is easier when you can fire at any time, smaller companies are more likely to succeed if they don't over-hire and keep talent around.
    • luckylion 2y ago
      I don't know whether it's a reason for size ("one market" isn't just about taxes, it's also about culture and language, and that's more different in the EU than the US), but it definitely makes companies more risk-averse towards expansion and disadvantages people with non-average backgrounds. The risk your CV suggests (e.g. mental health, unemployment, non-traditional career) gets multiplied if it's close to impossible to fire you.
      • 2y ago
• karparov 2y ago
  The article doesn't actually explain why. It claims that they don't work and supplies statistical evidence. But why don't they work? I've only really seen speculation...
  • slappyham 2y ago
    Have you ever been laid off?
    • karparov 2y ago
      Yes. And your point being ...?
  • MichaelMoser123 2y ago
    i think he is saying that its the stock market, that is stressing the value of short term gains. That's why stocks are rising upon news of layoffs.
• alphazard 2y ago
  There is a theory about large complex systems which seems to be true in biology and maybe applies here. Intentional downsizing during times of stress works when it preferentially targets defective or dysfunctional components of the larger system. The system improves because the worst parts were removed. Layoffs don't help companies unless they can reliably remove the worst parts. At most large public companies, the cancerous bureaucracy protects itself and the parts removed are closer to median performers, or even above-median performers. The system gets smaller and less efficient. Layoffs can be necessary to get the company to fit through a certain sized hole (in the form of cash flow constraints), but it won't be better at what it does on the other side of the hole, it will just continue to exist. Layoffs work when there is an accurate discriminating mechanism for who stays and goes. The best example of this (outside of private equity turn-arounds that are not widely known) is Twitter. Outside engineering talent was brought in as an oracle, immune to Twitter's bureaucracy. It reliably discriminated between value-adding and not. As a result, the company became incredibly lean and even consistently profitable.
  • sumeno 2y ago
    Twitter was profitable before the takeover and now it is not
    • alphazard 2y ago
      Maybe we disagree about what "profitable" means. Posting an authoritative source, so others can decide for themselves. https://stockanalysis.com/stocks/twtr/financials/ https://stockanalysis.com/stocks/twtr/financials/
      • sumeno 2y ago
        So over the 4 years before the takeover they had a net profit of $1.3 billion. What's their profit been in the 4 years since?
      • hkpack 2y ago
        I don't have that much of an experience analysing similar reports, but it seems to me to be a healthy and growing company? If you mean a negative cash flow and operating income - it doesn't mean much, as we need to know why. Taking into account the jump in "Revenue", positive "EBIT" and so on, I would imagine that it was because of some sort of "strategic investment", like some acquisitions probably? What am I missing? I would definitely be happy with such reports if that was my company.
• EasyMark 2y ago
  They work to get quarterly profits up/losses down, and that's really all the matters to stockholders who want to decide to hodl or sail.
• Delomomonl 2y ago
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• snozolli 2y ago
  I've been through several layoffs, on both sides of the coin. The one consistent factor I've seen is managerial incompetence. Management will fail to provide any leadership or guidance to employees, then blame them for not being productive enough. They can't see their own incompetence, so they blame hiring practices and keep ratcheting up interview difficulty. It's like corporate America has evolved to protect the ego of the managerial class.
• mathattack 2y ago
  I’ve been through several waves of corporate layoffs across many industries. Some observations: 1 - It’s rarely one round. 2 - Companies tend to be the most thoughtful on the first round. Then it looks easy and the precision (and severance) of future cuts goes down. That’s why it’s smart to take a voluntary offer. 3 - Cuts that are broad based (“Every department cuts 15%”) are a sign the company doesn’t know what’s going on or prefers harmony over hard choices. 4 - Layoffs can be a crutch for firms that don’t do performance management. (Less work to do a layoff than have managers counsel bad performers out) 5 - Managers should never promise “No layoffs”
• yalogin 2y ago
  Layoffs are a blunt instrument. I don’t know if al layoffs should be seen through the same lens. I see layoffs as signals from the companies. They see the future as unsure and so they want to reduce costs. That should be an immediate layoff for the ceo and his team
  • dehrmann 2y ago
    > That should be an immediate layoff for the ceo and his team Maybe not quite that, but investors and the board (hah!) should ask really hard questions about how they got there.
• Workaccount2 2y ago
  Real talk here, and I'm sorry for being "that guy" Why do tech workers get so wrapped around the axle of layoffs when most people are in a chronic state of tech job hopping? I know multiple people who have worked their entire career thus far without ever staying at a place for more than 3 or 4 years. Some no more than two. Tech job culture is practically a mono culture with "hop jobs" being a hallmark. From an employers perspective it's not laying off a bunch of family members (Southwest has an average tenure of 11.5 years), it's laying off a bunch of people who were gonna dip in 6 months to a year anyway. I know this is controversial take, but recognize that the tech industry is an outlier industry, with outlier amounts of money and outlier amounts of volatility.
  • CaffeineLD50 2y ago
    I resent the fake legal douche move of falsely asserting "low performance" as the rationale for their cuts. Some people work hard and take pride in their work. And on top of their gaming down our wages with h1b workers and low benefit contracting they have the gall to assert we're low performers when what they want is a $20 million bonus for their execs. But yeah, I see your point.
  • filoleg 2y ago
    I cannot speak for layoffs in all industries ever, but I agree with your assessment of layoffs in big tech from personal experiences. I have way too many “lifer” friends in big tech who are deadly scared of layoffs and job hopping. They are also the ones who rarely got promoted and havent had a significant pay bump pretty much ever. On another hand, half my team at a big tech company got laid off back at the start of 2023. 4 months later, I caught up with them over drinks, and the results were rather interesting. They all got around 4-6mo worth of severance pay, spent 2-3 months just skiing/traveling/hiking/vacationing, then 1 month or so interviewing, and then starting their new jobs shortly after. All seemed rather happy, both with their new positions/pay (which had a significant paybump) and, essentially, paid vacation break they took right before. It seems like the heavity majority of those stressed about layoffs in big tech are lifers and those who are chronically averse to and dread the interview process.
    • 2y ago
• CaffeineLD50 2y ago
  "Companies who enact them as part of a broader change in strategy, Cascio says, fare better than those who enact them simply to cut costs." Ah, the old strategic realignment PR BS. "Its not cost cutting because our C levels are clowns and screwed up. Its a strategic realignment for AI investment ". Lol. Didn't Salesfarce and Fakebook both use that one? When will AI replace upper management? It can't do any worse.
• qwerty456127 2y ago
  > Companies must invest to train current workers to pick up new tasks — and invest to recruit replacement employees after the economy improves or the company’s financial troubles clear up. It always baffled me how could a businessman fail to understand that loosing a reliably working employee (even of mediocre productivity) is like shooting your own leg - resulting in having to look for a replacement, train them and hope (certainty is value worth money as well) they are going to be as good. To me it seems it is always better to increase the wage to avoid losing people already working for you so you save yourself from the hassle.
  • slackernews9 2y ago
    [dead]
• scott_meyer 2y ago
  Layoffs are not about cost, they are about power. The economic result is just confirmation. A large company in actual financial distress will sell off a division.
• bawolff 2y ago
  Seems like a clear case of correlation != causation. Of course layoffs are correlated with bad company performance. I dont know if they help, but i would expect the pattern either way.
• giantg2 2y ago
  "Kelleher wasn’t around to see them. He died in 2019." That's how it works. You have someone who is a great leader who started a company and treated their employees well, then the behemoth corporation waits for them to die to start gutting their values. It happened at my company. It's basically just a lite version of a private equity takeover.
• ripped_britches 2y ago
  A large airline like southwest is one thing but I’m always so surprised at how much over hiring we do in software companies. Every problem/opportunity seems to just need a few more headcount. Lots of managers are actively trying to increase their headcount for self promotional reasons. The whole thing seems really counterproductive.
  • horns4lyfe 2y ago
    And right now companies are doing the same thing with overseas hires, always assuming more is better
• mistercheph 2y ago
  This whole article is selection bias: > There are findings that suggest layoffs lead to both short-term and long term issues, including: > - A 2x as likely chance of bankruptcy compared to companies that haven’t done layoffs. Obviously! Because a huge number of the companies undergoing layoffs are about to go under and are using layoffs as a last ditch survival effort. The author may be right, but every fact and figure presented in this article fails to distinguish between healthy companies in healthy industries using layoffs as a lever to increase stock prices, and layoffs happening in industries/companies that are collapsing.
• nielsbot 2y ago
  Former Nintendo CEO Iwata said something similar: “If we reduce the number of employees for better short-term financial results, employee morale will decrease,” he said. “I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.”
• nullorempty 2y ago
  what about layoffs that balance hiring elsewhere - laying off in NA hiring in India.
• kazinator 2y ago
  Nothing kills your culture like layoffs, but what if the culture has been overtaken by a whole lot of getting nothing done while collecting pay?
• velcrovan 2y ago
  I can't believe no one here is talking about how horrible these charts are.
• ssssvd 2y ago
  Had been advocating slower hiring & targeted reductions in a mid-sized tech firm for years after COVID, but it happened much faster under a newly appointed CEO. Under new leadership, we executed 1/3 layoffs framed as a "culture refresh" and to briefly lift the stock. It wasn't about survival, we had plenty of cash, okayish growth and fantastic ARR - more about a new corp-backed CEO adopting a "do-it-like-Elon" approach. Being mostly Europe-based but US-led, it turned into a massive and costly process (Americans don't exactly dig EU/UK workers rights - Spain was the biggest shock), stalling most productive activity for half a year. Internal trust and brand perception tanked. Since it began with ousting old execs, it quickly devolved into a blunt-force exercise with no internal knowledge, led by scared managers with percentage targets - many good people were cut. Managers hesitated to shield talent, given the "culture reboot" framing. I ended up personally cutting entire offices. When the CEO's broader strategy failed (for reasons beyond layoffs), high performers started eyeing the exit. Ironically, many first saw the layoffs positively - COVID overhires had left uneven team dynamics, and some dead weight was on high salaries. But when it became clear there was no coherent plan, people began leaving. That triggered a chain reaction. Senior hiring pipelines dried up (reputation matters, esp. when your top-talent is on the way out and is loud about it), and panic set in. Eventually, it turned into survival mode. The CEO didn't last long after that.
  • mock-possum 2y ago
    > Americans don't exactly dig EU/UK workers, right? I’m actually curious to hear your take on it - what’s your experience been?
    • ssssvd 2y ago
      UK was horrible. No real protection for workers - just layers of mandatory legal mumbo-jumbo with zero actual chances for people to keep their jobs. It was like ripping off the band-aid 1mm at a time for four months. Spain/France were an employer’s nightmare. Anyone without another job lined up secured a "special deal"—workers have massive leverage, they know it, and they’re actively litigious. People on parental leave had close to a year of guaranteed no-shows. The reaction was, of course, "never again" rippling across American corporate circles. The rest of Europe was okay-ish. US was predictably the easiest. We were generous with packages, but it's easy to see how the system can be used to screw people over. Middle East was the roughest. Visas in UAE/Qatar expire instantly, and the local tech market is almost non-existent. We extended until the end of the school year to help with visa concerns, and some people managed to arrange golden visas. But for many, it was a massive shock — losing both jobs and residency overnight.
• andrewlgood 2y ago
  Unfortunate click bait title for such an important topic. The various metrics quoted of why companies without layoffs appear to do better do not address the idea of underlying causes such as companies doing better do need mass layoffs while companies not doing as well likely to reduce expenses with actions to include layoffs.
  • culi 2y ago
    The article compared companies within the same industries (e.g. the airline industry) which faced the same problems
• FooBarBizBazz 2y ago
  People are overthinking this. It's about power, and inculcating fear. The CEO who "cuts" people at a company is like the Aztec priest who plunges the knife in atop the pyramid. The bloody spectacle is the point. It's as much about everyone who's watching as it is about the specific victim. It says, "I can do this to you. I can inflict pain without reprisal. Behold my power." That's the whole point. Who is afraid of whom? These people have the money. We depend on that money in order to live. They are reminding us of that fact. Now they demand obedience and harder work. 40 hours? Not enough. Elon sleeps at the office, why don't you? You have to be "super hardcore". Partly, this is punishment for the challenge that was raised to CEO power from around 2016 to 2022. CEOs have been furious that they have felt fear of their workers. Now they want those workers to feel fear. In interviews, Andreesen has said almost exactly this, if not in quite so many words. A similar theory is at the root of Fed policy, which hinges on the idea of a "wage price spiral". In their view, inflation is caused not by the accumulation of capital within a price-insensitive upper quantile, or by the constriction of economic chokepoints by consolidation, but by workers' ability to bargain for higher wages. The solution to inflation, they essentially come out and say, is to put workers in their place. There is a united front here. It is about who fears whom, the end. It is about your emotional state. In a literal sense, it is terrorism. So in that sense, yes, layoffs work. Are you financially independent? No? Are you afraid? Yes? Then they're working.
• jpgvm 2y ago
  I find layoffs very context sensitive. Atleast 2 of the fast growing companies I have been a part of have had serious layoffs that were very successful in cutting dead weight that had accumulated because of fast and loose hiring and poor middle management. So it can be done well. By and large though they are a sign to jump from the soon to be sinking ship... so it's very important to know what kind it is and act accordingly.
• deviantbit 2y ago
  This is a terrible opinion piece. Layoffs do work. Cutting hours does not work. I am always amazed how few people understand how a business operates. They think its a community organized event where there is unlimited revenue. There are a few basic accounting principles employees need to understand. It all revolves around Assets = Liabilities + Owner’s Equity. If you think otherwise, take a "Cost Accounting" course. This is a pure numbers game. Everyone wants to wrap a psycho analysis into something that has ZERO relevancy. If a company is bleeding revenue, it cannot sustain the overhead of employees. They have to go. Cutting hours does nothing for those on a salary, and those that are hourly, benefit costs are far more expensive than their wage. If a company has stagnant growth, that means leadership has made bad decisions, and things have to change. Employees feelings don't matter on a Balance Sheet, Income Statement and Cash Flow Statement. There is not a "Employee's Feelings" column on the ledger. Everyone can be replaced. No one is special, unless you're a majority shareholder.
  • ryandrake 2y ago
    I mean, everything you said is true, but only because we have deliberately set up the system as such. Shareholder Primacy is a choice we have made as a society. It's not some natural law or something carved by god into stone tablets. It's not hard to imagine alternatives, but obviously the shareholding class is going to work hard to ensure that only their preferred rules have traction. Whether or not alternatives are workable given human nature is another thread altogether.
    • astrange 2y ago
      Shareholders don't have "primacy", eg they're last in bankruptcy. If you're asking for them to never get anything, then they're not going to participate, and this is supposedly a forum about startups. In tech the employees also tend to be shareholders which I think is healthier.
    • Out_of_Characte 2y ago
      >only because we have deliberately set up the system as such. No one can sell at a loss all the time. That's just stupidity. Either I get a return on money invested later or I get a return on my balance sheet now in the form of profit. Shareholders primacy is because they can only be cut trough a buyout.
• jmyeet 2y ago
  Don't work to do what? If you think layoffs are about efficiency or saving the company, at least in tech you couldn't be more wrong. Companies like Meta and Google have done multiple rounds of layoffs despite being insanely profitable and never taking a loss. The real purpose of layoffs is to get people to do more work for the same or less money (by firing people and distributing their responsibilities to those who remain) and to suppress wages because nobody is asking for raises when they fear for their jobs. Big Tech is really out of ways to grow their business. The only way they can keep growing profits is by cutting costs and the biggest cost is labor. It's really that simple.
• hackburg 2y ago
  [dead]
• ChiMan 2y ago
  The more fundamental question is: If mass layoffs are so necessary, then who’s responsible for the unnecessary mass hiring? In any mass layoff, fire that person first. Get to the root of the problem.
• hankchinaski 2y ago
  The tech layoffs are the results of couple of years of exuberance that happened right after 2020. Companies are laying off and we are getting back to trendline. Nothing to see here.
• asveikau 2y ago
  I feel that companies just repeat discredited strategies because they are conventional wisdom, and no amount of explaining why layoffs don't make sense will stop them from laying off. It's mostly about conformity. They heard that all the serious companies are laying off. So they've got to lay off too. Can't be seen breaking convention. With big tech, a few years back when over-hiring was the conventional wisdom they were for that too.
• russellbeattie 2y ago
  A couple weeks ago Google announced more layoffs in their HR and cloud divisions. They have $100 billion cash on hand, literally more than any other tech company, and much more in longer term investments. In round numbers, that's enough money to cover roughly 10,000 employees for 25 to 50 years (depending on how much you think the salary averages out to). Regardless, the CFO said one of her priorities this year was more cost cutting.
  • doktorhladnjak 2y ago
    It's a business, not a jobs program
    • russellbeattie 2y ago
      Did I suggest it was? Apparently you missed the topic of this thread: According to the article, layoffs are bad for business. I was pointing out that there doesn't seem to be an immediate need for layoffs at Google, based on the fact they have more money on hand than some small countries. Even with horrible future revenue projections, that seems like a reasonably large buffer. But now that you mentioned it, there's nothing wrong with a corporation looking out for the long term interests of their employees. It would actually be smart for Google to act like a "jobs program" and retrain staff, or find work until the business cycle comes back around. (Brandolini's law is alive and well.)
• homefree 2y ago
  This blog post is wrong, it also just doesn't matter in practice. Nobody who is making this sort of decision is going to give this kind of obviously false argument a second thought. When you're the one that actually has to make decisions that matter you're going to be better at ignoring bullshit. The audience for this is just people wanting something to upvote that sounds good to them - driven by motivated reasoning. > “You could blame the workforce,” he says, “or the managers and leaders who are leading that workforce.” They often do fire large swaths of middle managers - when Musk bought Twitter cutting out the middle of the hierarchy and the orgs that didn't need to exist was a big part of it. It's the same with DOGE. After the twitter layoffs they've shipped more features, faster, with better margins (and he fired the CEO). Meta and Coinbase over hired during the covid 'zero interest rate phenomena' and had to fix it. Reducing hours instead is a joke - I find it hard to believe anyone being honest takes that seriously.
• PeterStuer 2y ago
  Most places I've seen could cut 50-80% of people and maintain or even grow output. Will they cut the right 50-80%? Chances are close to nill. And the article is right that layoffs curb morale. Then again, what hurts morale even more, especialy for your true performers, is not laying of the incompetent, the 0 net contribution carreer ladder climbers or the pfiepdom pyramid seat fillers and the bloated 'management support' departments.
  • int_19h 2y ago
    What hurts morale the most is when layoffs affect teams and people who are clearly not "underperforming". I've seen some star devs getting swiped up into mass layoffs, and that is incredibly demoralizing because it hammers home the point that it doesn't actually matter how good you are at your job, how much esteem you have with colleagues etc. Not even your manager will be able to help you if the entire team gets canned. When your choice is basically having someone incompetent on the team vs not having the guys who carry it the most, I think most people will take the former. Incompetence can be managed to minimize damage, but there's no substitute for lack of competent people.
    • PeterStuer 2y ago
      Fully agree with you on the impact of firing competent people. I think you severely underestimate the impact of not firing or even promoting the incompetent or the zero or negative contributers.
• gjm11 2y ago
  Does anyone here understand the "The consistency of layoffs" graphic? The best guess I have is that the number of layoffs in each year is indicated by some sort of measure of the "overall height" of that slice of the image, so e.g. somewhere around 2020 the number is very large. But it's not at all clear, and it's especially not clear which if any of the various small-scale ups and downs we are supposed to take seriously if this is how it works. It's a good candidate for the worst statistical graphic I've seen this year. (The opening-door one earlier in the article is another.)
  • Centigonal 2y ago
    Truly a terrible graph.
  • ftwynn 2y ago
    Thank you. It's gotta be the worst graph I've seen in multiple years. Like someone just overlayed some axes on a desk.
• MichaelMoser123 2y ago
  the key phrase of the article is "Nothing kills your company's culture like layoffs" I think that company culture stands for a framework that enables internal cooperation within the company. Now i am not sure if cooperation is currently valued over internal competition in the tech industry, but my impression is that the opposite is the case for most shops. So the question is: how did we get here? what are the factors that have led to the prevailing choice of priorities? The article says its the stock market that values short term gains over anything else. Now maybe its really because running fast and breaking things is the only way we know how to do things in tech?
• nis0s 2y ago
  The most direct way that the U.S. government can control inflation is via layoffs of federal workers. Private companies are jumping on the bandwagon to get rid of hires made during more booming times. The fact is that higher interest rates have cooled down investments, which factors into the decisions made by companies to fire staff. Note though that companies which actually build stuff, like Apple, are adding jobs, instead.
  • kahirsch 2y ago
    > The most direct way that the U.S. government can control inflation is via layoffs of federal workers. I'm not sure what you're claiming here. Civilian employees are less than 3% of federal spending, so it won't have a measurable effect on spending. Some employees, like IRS employees, bring in revenue.
    • deleted 2y ago
      [deleted]
• philipdavis 2y ago
  Hmm Goldman has been trimming 5% or so every year, and looks they have been doing fine so far.
• danieltanfh95 2y ago
  IMO its both ends. Overhiring and layoffs are both indicators that managers need a strategy change. Unfortunately Wall Street boys don't understand that employee productivity is directly correlated with stability. People don't actively try to improve how they work if they expect to be switching a job or getting laid off. You need employees to build a sort of nest where they want to be most productive in. Both overhiring and laying off is extremely destructive to the company because you increase volatility in social dynamics.
• fullstackchris 2y ago
  Americans perplex me (and I am one) we live in the most capitalist focused economy in the world and yet everyone acts that they are guaranteed a job. Sorry, but even in "socialist countries" in Europe / rest of world this is not even the case. Then the country turns around and elects someone like trump - thinking collectively someone like that will improve this situation? Especially the FAANG folks - they get pissed when getting fired from there like DUDE you are literally in the top 0.01 of earners on the planet get over yourself. Poor financial planning and overleveraging yourself are not excuses when you get laid off / fired!!! Just go read stuff on Blind for more of what I am talking about... i.e "got laid off... nervous to retire with 7 million?!?" like hey, some of us here will probably never see that kind of money in our entire lives
• hintymad 2y ago
  > Nothing kills your company’s culture like layoffs,” Kelleher once said. Or maybe the culture is already rotten before the layoff. I've seen so many companies in the bay area have become so bloated and bureaucratic. Directors and VPs have very senior engineers who exclusively go to meetings to "align". Directors who report to directors who report to directors who report to VPs who report to VPs who report to VPs. PMs and engineers and managers are all gatekeepers who focus exclusively on ensuring that a project will not fail before it is even conceptualized. Distinguished engineers draw bigger boxes and pass them to Principal Engineers who draw smaller boxes and pass them to Senior Staff Engineers to draw even smaller boxes until a poor E5 or E4 engineers implement the whole thing. We have so many professional box drawers, expert meeting goers, seasoned report writers, fierce gatekeepers, anything but engineers who can implement systems end to end. As a result, a 6-month one-person project gets finished half assed by a team of 60 with 5 layers of report chain. A 3-week project requires 3 months of approval and another three months of PoC. In such case, what can a company possibly do to at least survive a little longer, even in hope of improving its culture? I guess layoff is not a bad answer.
• jwarden 2y ago
  This article’s main point is that companies who do layoffs subsequently have poor financial performance relative to companies who don’t. Well obviously. It’s like saying surgery doesn’t work, because people who have recently undergone surgery are more likely to be experiencing health issues.
• namaria 2y ago
  The premise that CEOs are stewards of companies is flawed. Their pay exploded over the period covered in this analysis. Hurting companies doesn't matter to them.