4 ms·

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 destru

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.
    - tmoertel 2y ago
      Everybody starts looking, but it’s the top performers who get disproportionately more offers and leave.
    - pixl97 2y ago
      https://en.wiktionary.org/wiki/Dead_Sea_effect https://en.wiktionary.org/wiki/Dead_Sea_effect
- Sammi 2y ago
  Because disloyalty breeds disloyalty and distrust breeds distrust. The top people have the best opportunities elsewhere, so they leave first. Even if they don't quit outright, they are likely to quiet quit, because why put in the effort when it is rewarded with disloyalty?
- EPWN3D 2y ago
  Top performers have options and value stability. They also know that they rely on their manager to accurately reflect their work up the chain. Some percentage of top performers report to deadbeat managers, so in an environment doing mandatory layoffs, they'll know that it doesn't matter how much they knock it out of the park, their manager will screw them. So of course they'll leave.
  - sejje 2y ago
    If you're a top performer stuck under a deadbeat manager, how are you able to signal to new companies that you're a top performer? I read posts here all the time about how hard it is to hire. How do top performers distinguish themselves as they go out for new jobs? When did this become easy?
    - BowBun 2y ago
      > How do top performers distinguish themselves as they go out for new jobs? During an interview process, and by using your network. Top performers aren't usually slinging applications through LinkedIn in my limited experience > When did this become easy? It isn't, they're referred to as top performers for a reason. It's easier for folks who excel in their fields, and that holds true across domains.
    - rwmj 2y ago
      The secret is that top performers are hired by word of mouth, they don't go through the usual processes.
    - ghaff 2y ago
      As others here are saying you know the right people. Which is probably a pretty unsatisfactory answer and seems very unfair for those who don't.
    - dharmab 2y ago
      I don't know where I fit on the scale but I'm confident I'm in the top 50%. I got only one job (an early one in my career) through the "normal" way of sending lots of applications for public postings. Every other job has come through my network or a targeted recruiting process. In most cases, someone you worked with before who liked working with you suggests to their employer or someone in their professional network they hire you. Could be an old classmate, coworker, open source collaborator, even someone you know through a hobby.
- Eextra953 2y ago
  I don't know if I'm a top 10% employee, but I'll share how layoffs influenced my decision to leave a job of 5+ years. I started looking for a new role after they announced the layoff of about 200 people in my organization. When I finally got an offer, I kept going back and forth on staying and negotiating or accepting the offer. There were many other reasons why I left, but a huge factor were the layoffs. I just kept thinking, they already had layoffs, what's to stop them from laying me off next? It's also a crappy feeling thinking that you/your team can be on the chopping block at any time.
- chasd00 2y ago
  Top performers are generally pretty sharp. If they recognize the company is struggling and decide they have a better future elsewhere then that’s where they’ll go.
- shortrounddev2 2y ago
  I have only ever quit jobs in response to layoffs. Layoffs demonstrate to me that the company is apparently low on cash if they need to fire people to make ends meet. If they are not low on cash, it means that they will arbitrarily fire anyone in order to pump up their stock. Though I've never personally been laid off, it's a black mark on the company that I think you can never recover from. It means I will never trust anything said at a quarterly all-hands. The projections they give us employees are spun to be more positive than they really are. During COVID, my company told us that we were going to be able to save money by breaking the lease on our office building and stop paying for amenities like the snacks in the break room and catered lunches (since nobody could use them anyways). This, they said, should save us enough money that we don't need to lay anyone off! 10% of the company was laid off a week later. The next day, I would later discover, the company applied for a PPP loan: they had laid people off pre-emptively so that they wouldn't be penalized for it next year when they sought to have their PPP loan forgiven. It illustrated to me that you can't trust leadership, ever. Once a company initiates a layoff, it's a permanent black mark on that company
- danny_codes 2y ago
  Anecdotally layoffs leave a bad taste. I worked at a smallish company that laid of 20% going into covid and within 2 years most of the best talent churned out. It gutted moral, basically.
- mock-possum 2y ago
  I think because - if you fire a poor performer, everyone kind of gets it - they weren’t doing a good job, they’re a drain on company resources, they’ve got it coming, basically. But lying off isn’t firing someone for performance - it’s admitting “we don’t have enough money to pay you” And that’s something that should be scary to everybody in the company. When your shitty coworker gets fired, you shrug and say, yeah, saw that coming. When your shitty coworkers get laid off, you look around nervously and think phew, l lucked out.
llm_nerd 2y ago
Companies churn through people constantly. Google famously has an employee tenure of like a year[1]. Most companies that subscribe to the Jack Welch "fire your bottom 10% yearly" philosophy don't usually declare a media stock-pump "layoff" but are just letting go of purported non-performers constantly. And there are a lot of "top 10%" performers who are very happy that the so-called deadweight isn't kept around just for some foolish notion of "loyalty". Sometimes layoffs are unfair, and sometimes the wrong people are let go. But often it's entirely necessary and the right people are let go. [1] - Which makes the whole gruelling, multi-month hiring process positively ridiculous. It would be much better for this industry if companies hire fast and fire fast, instead of delusions that they're finding the magical employee base that will be with them forever.
- pclmulqdq 2y ago
  I think if you look at companies like Citadel, which routinely fire the bottom 10% as part of the job description, it attracts a certain set of people who actually do feel "safe" in that environment. The trouble comes when you break your norms about layoffs. Also, Google's median tenure of <1 year was due to hiring, not employees leaving. In other words, that number included people who hadn't left yet. I think if you look at people leaving Google, average is about 3 years.
  - llm_nerd 2y ago
    >Also, Google's median tenure of <1 year was due to hiring, not employees leaving Google would have to be growing at >300% per year for this math to make sense. But even if it's 3 years ({X} doubt), that's still cartoonishly low for a hiring process that drags on for months and months. >I think if you look at companies like Citadel, which routinely fire the bottom 10% as part of the job description Almost all tech companies target firing/pushing out a considerable percentage of employees per year. It actually is incredibly common, even if it usually doesn't make the news. They used to do it overtly via stack ranking, but now they just do it more quietly. Microsoft punted 2000 "low performers" in the first two months. Brutal firings with zero severance, immediate cancellation of health coverage, etc.
InsideOutSanta 2y ago
I've seen this happen. I worked at an extremely efficient company that had a great product. We got acquired, and within months, were part of the acquiring company's yearly mandatory layoffs. They fired a bunch of (apparently random) people to meet the quota. This absolutely destroyed us. Morale was just gone. Within six months, about a quarter of our employees, mainly top performers who could easily find other jobs, left voluntarily. The whole thing self-destructed within another year, and the product we worked on was abandoned.
- marto1 2y ago
  > had a great product > We got acquired Can I just ask about the reason for this? Was it owners wanting off the ride?
  - InsideOutSanta 2y ago
    Owners made half a billion and got high-ranking positions at the buyer. Buyers bought it because they had a very specific problem that the product was designed to solve, and thought that it would be a competitive advantage to deny the solution to their competition. On paper, it was a good decision.
    - krainboltgreene 2y ago
      Classic capitalist efficiency right there.
- encom 2y ago
  >yearly mandatory layoffs That sounds grotesque. Who would choose to work at a company with that sort of bullshit dangling over your head?
  - ghaff 2y ago
    Tons of people have gone to work at companies with various stack ranking schemes. Most people need jobs.
jarsin 2y ago
I don't think its only psychological safety. If the top performers lose staff that did the mundane crap and now they have to do it they start to really pay attention to what the management is actually doing. Every layoff I have ever survived the staff inevitably ends up talking about how so and so manager and his favorite buddies are still out golfing every friday. Why the f are they still here etc. This resentment builds and builds.

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.
  - tmoertel 2y ago
    Everybody starts looking, but it’s the top performers who get disproportionately more offers and leave.
  - pixl97 2y ago
    https://en.wiktionary.org/wiki/Dead_Sea_effect https://en.wiktionary.org/wiki/Dead_Sea_effect
Sammi 2y ago
Because disloyalty breeds disloyalty and distrust breeds distrust. The top people have the best opportunities elsewhere, so they leave first. Even if they don't quit outright, they are likely to quiet quit, because why put in the effort when it is rewarded with disloyalty?
EPWN3D 2y ago
Top performers have options and value stability. They also know that they rely on their manager to accurately reflect their work up the chain. Some percentage of top performers report to deadbeat managers, so in an environment doing mandatory layoffs, they'll know that it doesn't matter how much they knock it out of the park, their manager will screw them. So of course they'll leave.
- sejje 2y ago
  If you're a top performer stuck under a deadbeat manager, how are you able to signal to new companies that you're a top performer? I read posts here all the time about how hard it is to hire. How do top performers distinguish themselves as they go out for new jobs? When did this become easy?
  - BowBun 2y ago
    > How do top performers distinguish themselves as they go out for new jobs? During an interview process, and by using your network. Top performers aren't usually slinging applications through LinkedIn in my limited experience > When did this become easy? It isn't, they're referred to as top performers for a reason. It's easier for folks who excel in their fields, and that holds true across domains.
  - rwmj 2y ago
    The secret is that top performers are hired by word of mouth, they don't go through the usual processes.
  - ghaff 2y ago
    As others here are saying you know the right people. Which is probably a pretty unsatisfactory answer and seems very unfair for those who don't.
  - dharmab 2y ago
    I don't know where I fit on the scale but I'm confident I'm in the top 50%. I got only one job (an early one in my career) through the "normal" way of sending lots of applications for public postings. Every other job has come through my network or a targeted recruiting process. In most cases, someone you worked with before who liked working with you suggests to their employer or someone in their professional network they hire you. Could be an old classmate, coworker, open source collaborator, even someone you know through a hobby.
Eextra953 2y ago
I don't know if I'm a top 10% employee, but I'll share how layoffs influenced my decision to leave a job of 5+ years. I started looking for a new role after they announced the layoff of about 200 people in my organization. When I finally got an offer, I kept going back and forth on staying and negotiating or accepting the offer. There were many other reasons why I left, but a huge factor were the layoffs. I just kept thinking, they already had layoffs, what's to stop them from laying me off next? It's also a crappy feeling thinking that you/your team can be on the chopping block at any time.
chasd00 2y ago
Top performers are generally pretty sharp. If they recognize the company is struggling and decide they have a better future elsewhere then that’s where they’ll go.
shortrounddev2 2y ago
I have only ever quit jobs in response to layoffs. Layoffs demonstrate to me that the company is apparently low on cash if they need to fire people to make ends meet. If they are not low on cash, it means that they will arbitrarily fire anyone in order to pump up their stock. Though I've never personally been laid off, it's a black mark on the company that I think you can never recover from. It means I will never trust anything said at a quarterly all-hands. The projections they give us employees are spun to be more positive than they really are. During COVID, my company told us that we were going to be able to save money by breaking the lease on our office building and stop paying for amenities like the snacks in the break room and catered lunches (since nobody could use them anyways). This, they said, should save us enough money that we don't need to lay anyone off! 10% of the company was laid off a week later. The next day, I would later discover, the company applied for a PPP loan: they had laid people off pre-emptively so that they wouldn't be penalized for it next year when they sought to have their PPP loan forgiven. It illustrated to me that you can't trust leadership, ever. Once a company initiates a layoff, it's a permanent black mark on that company
danny_codes 2y ago
Anecdotally layoffs leave a bad taste. I worked at a smallish company that laid of 20% going into covid and within 2 years most of the best talent churned out. It gutted moral, basically.
mock-possum 2y ago
I think because - if you fire a poor performer, everyone kind of gets it - they weren’t doing a good job, they’re a drain on company resources, they’ve got it coming, basically. But lying off isn’t firing someone for performance - it’s admitting “we don’t have enough money to pay you” And that’s something that should be scary to everybody in the company. When your shitty coworker gets fired, you shrug and say, yeah, saw that coming. When your shitty coworkers get laid off, you look around nervously and think phew, l lucked out.

llm_nerd 2y ago

Companies churn through people constantly. Google famously has an employee tenure of like a year[1]. Most companies that subscribe to the Jack Welch "fire your bottom 10% yearly" philosophy don't usually declare a media stock-pump "layoff" but are just letting go of purported non-performers constantly. And there are a lot of "top 10%" performers who are very happy that the so-called deadweight isn't kept around just for some foolish notion of "loyalty". Sometimes layoffs are unfair, and sometimes the wrong people are let go. But often it's entirely necessary and the right people are let go. [1] - Which makes the whole gruelling, multi-month hiring process positively ridiculous. It would be much better for this industry if companies hire fast and fire fast, instead of delusions that they're finding the magical employee base that will be with them forever.

pclmulqdq 2y ago
I think if you look at companies like Citadel, which routinely fire the bottom 10% as part of the job description, it attracts a certain set of people who actually do feel "safe" in that environment. The trouble comes when you break your norms about layoffs. Also, Google's median tenure of <1 year was due to hiring, not employees leaving. In other words, that number included people who hadn't left yet. I think if you look at people leaving Google, average is about 3 years.
- llm_nerd 2y ago
  >Also, Google's median tenure of <1 year was due to hiring, not employees leaving Google would have to be growing at >300% per year for this math to make sense. But even if it's 3 years ({X} doubt), that's still cartoonishly low for a hiring process that drags on for months and months. >I think if you look at companies like Citadel, which routinely fire the bottom 10% as part of the job description Almost all tech companies target firing/pushing out a considerable percentage of employees per year. It actually is incredibly common, even if it usually doesn't make the news. They used to do it overtly via stack ranking, but now they just do it more quietly. Microsoft punted 2000 "low performers" in the first two months. Brutal firings with zero severance, immediate cancellation of health coverage, etc.

InsideOutSanta 2y ago

I've seen this happen. I worked at an extremely efficient company that had a great product. We got acquired, and within months, were part of the acquiring company's yearly mandatory layoffs. They fired a bunch of (apparently random) people to meet the quota. This absolutely destroyed us. Morale was just gone. Within six months, about a quarter of our employees, mainly top performers who could easily find other jobs, left voluntarily. The whole thing self-destructed within another year, and the product we worked on was abandoned.

marto1 2y ago
> had a great product > We got acquired Can I just ask about the reason for this? Was it owners wanting off the ride?
- InsideOutSanta 2y ago
  Owners made half a billion and got high-ranking positions at the buyer. Buyers bought it because they had a very specific problem that the product was designed to solve, and thought that it would be a competitive advantage to deny the solution to their competition. On paper, it was a good decision.
  - krainboltgreene 2y ago
    Classic capitalist efficiency right there.
encom 2y ago
>yearly mandatory layoffs That sounds grotesque. Who would choose to work at a company with that sort of bullshit dangling over your head?
- ghaff 2y ago
  Tons of people have gone to work at companies with various stack ranking schemes. Most people need jobs.

jarsin 2y ago

I don't think its only psychological safety. If the top performers lose staff that did the mundane crap and now they have to do it they start to really pay attention to what the management is actually doing. Every layoff I have ever survived the staff inevitably ends up talking about how so and so manager and his favorite buddies are still out golfing every friday. Why the f are they still here etc. This resentment builds and builds.