The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).
It takes long time for the layoff effects to hit the company.
The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
And this is what tech did better than any other industry. The average required know-how depth of a tech white collar worker is easily two three levels below when compared to other industries. Pharma and chemicals come to mind from personal experience.
I worked at a bigco that followed this approach. I think the alleged fungibility of programmers is surface-level.
Sure - ~any decent programmer can jump into ~any codebase and do your JIRA tickets. But there's a more holistic ownership you miss out on that's going to be the difference between a system aging gracefully and a system becoming a giant hunk of butchered junk that's been one-small-jira-ticket-ed to death over a decade and now needs a very costly and distracting replacement/rewrite.
I worked at a different company that did the opposite of this. Programmers were expected to stay either 1 year or 10 years, and you'd be compensated according to which bucket you were falling into. They had excellent retention rates, and the dev team was small, <30 engineers. We never rewrote systems. They had owners who had either written them, or been handed off apprenticeship-style over the course of a year or two from the former master to the new master.
Place 1 was a fucking mess of tech debt and had constant incidents that made high value customers mad, execs mad, and oncall engineers mad. One of my coworkers literally went into his first oncall shift, got paged at night three times in two days, and resigned the next morning when he found out that yeah this is just kind of normal and good luck convincing leadership to let us fix it.
Place 2 literally never had tech incidents. The worst oopsies were generally related to (it was a trading shop) other people in the market fucking up and resulting in trade breaks that we had to clean up after hours, or exchanges having problems and sending us garbage data that we had to resolve by calling someone from the exchange to confirm order statuses and so on.
I only left place 2 because I was moving across the country and they didn't do remote (and still don't, even post covid). I was laid off from place 1.
> One of my coworkers literally went into his first oncall shift, [...], and resigned the next morning
I've seen people nope right out of there, and (anecdotally) it's always been an experienced person seeing something that was worse than they should've expected, and having an idea how unusually bad it is.
When you know for an absolute fact that you hold ownership and are held accountable for a codebase, assuming you're competent, things like tech debt and bugs suddenly become much more important and consequential to you.
Ah no nothing like that. And 10 is just a pithy way to say that they want people to stay a long time if they're good. And they did that by, each year, if they wanted you out, you got a very small bonus. If they wanted you to stay, you got a very large bonus. That's all I meant - they retain you by giving you many dollars via payroll.
It's how it works in the trading world. The base is decently competitive (for devs anyway) but the bonus is based on trading results and functions similarly (from an incentives/alignment and retention perspective) for how stock works for other companies.
I think the point is that salary + bonus = your real salary, but they give much if it in the form of a bonus so they can more easily choose to give your overall "salary" a cut.
> The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
I don't know, but I imagine that there's a pretty substantial difference between an isolated layoff and an industry wide layoff. Maybe it hits differently when you get to see the sausage made.
Where is a top performer at Google going to go? I'm sure there's some companies out there that aren't doing layoffs right now, but most of those probably can't offer FAANG/MANGA salaries.
Startups. Top performers at Google, if they've been smart about their finances, are sitting on a few million in the bank and have runways between ~10 years to infinity. They can afford to work for equity for a few years to take a slice of the pie when the company takes over another industry.
My own pet theory about this round of layoffs is as follows. The tech companies spent 2021 massively over-estimating the value of boot camp folks and new grads. They spent 2022 learning a tough lesson. I saw this first hand. So much lost time mentoring low-quality hires.
Now they will spend 2023 massively underestimating the value of their senior folks (10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc.). The problem in 2024-2026 will be that experienced engineers/managers and PhDs who know how to operate well in industry do not grow on trees. Fixing that mistake is going to be a LOT harder than firing a bunch of junior engineers. It may take a decade or longer, and I think the burnt bridges could even be existential for at least one of the FAANGs. (I also bet you'll guess a different one than me, so maybe more than one ;-))
Also: the alternative is not just startups. Smaller companies, sole props, and of course also skiing.
I am getting very close to that "~10 years to infinity" number in my accounts. I might do a startup, probably self-funded, likely keep it small. I know who my first 5 customers will be, the work will be fun, I know I can execute well. Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code. Totally not worth the ridiculous pageantry when I can do it on my own or with 1-2 helping hands.
I'll be making a tiny fraction of what I make today, but the work will be enjoyable and I'll be building what I've wanted to build for the last ten years. Also, I will own the damn thing, which is much more tax-efficient than taking a few years of massive paychecks, and that's something I am more sensitive to now that my money is making so much money. If I were laid off today, I'd need at least double my current comp to return to a FAANG. And even then probably wouldn't.
>I also bet you'll guess a different one than me, so maybe more than one ;-)
Only thing I'll say is it won't be Apple, since they did none of the above/didn't get into the "hiring Spree" in the same way all the rest of the tech giants did, which includes what I'd call FAANG-adjacent spots like Uber, etc.
> Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code.
Why are these large companies so slow? Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
A combination of risk aversion, regulatory burden, and process. The corporate machine can't afford to trust the judgement of individual contributors or even their managers or even their directors or sometimes even their VPs.
Credit where it's due: some of that is because of real risks that large corps do need to worry about but scrappy startups don't need to worry about.
A lot of it though -- especially the burdens that come from standardized processes and distributed responsibility -- boils down to a combination of (1) the cost of treating employees like cogs and (2) some amount of empire building.
> Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
It can go either way, but the question is kind of ill-formed. The decisions that slow stuff down happen at the VP+ level. If you're being slowed down by an IC, it's usually not the IC's fault (you'd rather not even have to interact with them in the first place, but someone VP+ demanded that you must).
That said, generally the valuable people with tons of experience are the ones building/fixing stuff. The "process implementation cogs" are typically more commodity-like labor.
Because for FAANG to invest resources in a program, they need to make sure that it will return hundreds of millions of dollars. Don’t forget that every year they need to show to the shareholders that they grow with double digits, and for FAANG this means billions of dollars in extra revenue.
So a lot of time is spent evaluating a program in stead of just doing the program.
This as well. Things that make for fantastic lifestyle businesses -- a few people doing mid-seven revenue with minimal compute expenses -- just isn't worth it for a FAANG spending an order of magnitude more than that per hour just on one guy's compensation package.
The highest performing, most expensive employees are going to be pretty senior and pretty experienced, ie older - the demographic least inclined to bet the farm on equity in a startup.
They’re likely to be at the stage of their life where their “runway” is their kids’ college tuition, or their (possibly early) retirement plan. Most will be far more inclined to take a (stable) pay cut rather than make a risky bet.
Plus, this whole downturn is rooted in drying up credit. Startups are more likely to fold than ever, and will largely have to either slow hiring or reduce non-equity compensation.
I think there is another point of view to this. Once you hit the 5-10M NW range as employee, you're basically free to take risky bets on start ups. You're looking for something that will be game changing (10M+) rather than another 500K in the bank.
You've got college, housing etc. covered, so it's fine to go take risks in order to get large lottery tickets.
The problem is that "industry wide" doesn't mean much if you know your company is doing well. It's jarring seeing "record profits" and "layoffs" mentioned within a few weeks/months of each other. If you get laid off even when things are going great, what hope do you have for knowing when the next layoff occurs?
I think this is the logic that can make a company like Citadel, which fires 10% of their staff per year, work out well. If you have no expectation of job safety, it attracts a certain kind of person, but there's also no love lost if a layoff round is a little bigger than normal.
Exactly. I worked at a Citadel like fund and that's the vibe. The calculus was like this - I'd rather risk being fired than work in a place where low performers are cozy.
The reality is that working at a place like that or a FAANG for just a few years sets you up for a great career no matter what happens. So even if you get fired after a few years you are still better off.
It's good to have coworkers who can think rationally and make decisions this way, too. It's a virtuous cycle.
Being ambitious and having an environment that lets you run (and rewards you for it) is what prevents burnout at a place like that.
A lot of people at hedge funds like having a baseline level of good stress in their lives. It's only when the stress starts to make you feel insecure that it creates problems.
I worked at one of these firms for a while, and my "burnout" point came when I realized I wasn't actually getting rewarded for my extra contributions to the company (my bonuses were going up by a small amount each quarter, no matter what).
Great anecdote, but burnout generally isn't caused by that for most people. At its core, it's because of stress. Incompetent coworkers and organizations may certainly cause stress, but rarely is it so bad that it causes burnout.
The ambitious people who take 500k/year jobs at HFT firms are to top .25% of "workers" in some abstract measure, and have different expectations and causes of burnout relative to the median burnout experiencer who is for example a school teacher or administrative assistant in an office job. Some people have an addiction to the fast pace, feeling of being need, and stress.
Loss of efficiency/productivity might not be the product of burnout. It might be the cause.
People get addicted to the dopamine hits of getting things done and when they hit a wall, enter a vicious cycle of depressive withdrawal. Recovering from burnout by taking a break is simply resetting that dopamine addiction. Just a personal theory.
If you work in a high paced environment with competent colleagues, management and tooling, you can just keep rolling with the punches and never hit the wall.
> When someone makes $500k+, what does "unpaid overtime" even mean?
It means shit work/life balance, thus missing on a lot of people that would want to have it and results in worse productivity (people need time off or they break).
I’d rather do actual work than generate signals for wealth managers to personally capitalize on in a government protected and policed fiat currency scam. It’s no different than a church deeming priests the most pious.
Fingers crossed white collar jobs are on the verge of being AI’d away.
Real logistics information should be made public and democratically planned online across the globe in an organized way, not micro managed by elites who spend a lot getting us to memorize and recite that they own imaginary things.
> The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
Yes, and that's the number one thing successful small business owners learn. The ones who don't learn this aren't successful.
You want as many of your staff as possible to be easily replaced. If you're running a restaurant, do you really want the success of your restaurant to hinge on a single talented chef?
Nope. You make sure that there's a process so that another few chefs can drop in quickly without changing the menu or the quality of the food. All the other kitchen staff don't do "complicated", they follow instructions.
If the business depends on having developers that are in the top 5% (say, one of the criteria to working on the code is understanding Haskell with Monads), the business is at constant risk because the developers are not easily replaceable.
While they certainly have some people who are cogs, all of the small businesses I know are heavily reliant on their owner constantly being around being that person and putting in soul-crushing hours, though, as they can't rely on anyone else and yet simply aren't large enough to have the entire business be built out of cogs. A result of this is that they are businesses that are fundamentally trapped at their current size because of this reliance on their size, and I will claim the only way they grow is by figuring out how to bring on other dedicated strong people to help them get some horizontal scale. I honestly don't think you can try to do the "everyone is a cog" thing until you are at least a medium-sized business.
You are talking about a Franchise model. At a good nice restaurant the individuals recognize me as an individual. You can't just drop someone in and have them know what I like or the service I am used to. You can make yourself a McDonalds, but you better not have any large customer contracts because they are not compatible with the 'franchise' everyone can do everything model (because they expect individualized attention, and often individualized features).
> The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
Is this true this round? I have noticed a few things:
* On the hiring front, much more demand for senior, staff, principal devs, less demand on the junior / intern front.
* (Anecdotally) A LOT of junior / new people laid off. It seems in this round companies want a small but elite force, rather than opting for junior people.
Companies have always preferred to hire experienced ICs. They hired juniors because they couldn't find or afford more senior people. It does seem that a lot of juniors are being impacted. But the hiring front likely reflects the fact that there are now more senior folks in the market, and likely that they can offer lower salaries since job seekers have less leverage.
Things might be a little different regarding losing trust of top-performers when layoffs happen broadly across a sector.
If every semiconductor manufacturer reduces headcount by N%, there may not be much incentive for an engineer to jump ship. If only one of those companies doesn't lay anyone off, though, the dynamics are completely different.
Top performers are pets. You use layoffs to generate excess opex savings in order to retain them.
You guys are acting like companies are too dumb to think of these very basic concepts. I have personally witnessed discussions that can roughly be described as “ok we need to add an extra three people in order to fund retention for X.”
> The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
I've been through one of the tech layoffs that happened during the pandemic, so N=1 and all, but this was exactly what happened.
On the day of the layoffs, few top performers were affected. It was a classic layoff with an HR email and immediate lockout. Managers of affected people learned later. Some people learned they were being laid off after hearing it in mainstream media first.
After 6 months, many best performers (more than 10% in my opinion) have left after struggling with low morale. A lot of company knowledge was lost, portions of the codebase became unmaintainable, projects went from being certainly doable to being in perpetual uncertainty about cancellation. The responsibilities of the the top performers fell on less experienced people, some received promotions but buckled under the pressure in disruptive ways.
Two years later, the company is still rebuilding but has obvious competency gaps. There was also difficulty in filling them because HR was disproportionally affected by layoffs. The distrust in management persists and more than a few people are openly talking about leaving. Though the hiring in tech has cooled down which had a chilling effect on people leaving, too.
I am not sure about this (not disagreeing, just not sure). First, 10% of top performers out in 2 years is a normal attrition rate for a 20 year tenure. And I suspect mean time at the company is much lower.
But even more important, I think most top performers understand and accept the risk that their employment may end. For example, the company can fold. It is easier for top engineers to accept that because they likely have better connections and can pretty easily find a good job elsewhere. My 2c.
> The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
This is an interesting way to think of the Leetcode style interview. If you don't require any particular experience and you have built your company's systems in a way that any "competent" developer can join and be effective, layoffs may not be such a big problem.
This is why React is so popular; not because it is inherently good or performance or has great DX but because of how easy it is to swap one so-so React dev for another so-so React dev.
Cynically, aren’t corporate blub languages like Java and Go kind of built on the same notion? That is, they intentionally limit the amount of complexity possible so that there is a low ceiling for mastery and workers are interchangeable.
Have you ever seen a company (from the inside) where everything was easy and clean and documented, and you needed no institutional knowledge / context be effective?
If it's really possible, I think it's the very rare exception.
> The main effect is that you lose the trust of the top performers.
Why? top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning. With that said, it's not always easy to identify who's who-- it's possible top-performs are affected or incompetence isn't, which can erode trust.
> top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning
That's thinking from a notch or two below top-performance. Top performers know what's "in the wheel house" for others around them and how to use it optimally. Don't be fooled by local maximums!
There are many factors involved in employee assessment of employer suitability. Steve Blank has observed [0] that when top employees recognize that when an employer moves to assessing them from a purely financial perspective, it's time to go.
> If you cut 10%, expect 10% from the top to flee within a couple of years.
If the company was laying off the deadwood and the quiet quitters, the top performers know who they are, and are not concerned about being laid off themselves.
Top performers don't particularly care to work with deadwood and quiet quitters, either.
> If the company was laying off the deadwood and the quiet quitters
That's a big if, though.
Executives doing layoffs also tend to do them quickly and plan them in secret in order to reduce the chance leaks. That means they are deciding who to cut with very limited time and information. They make lots of mistakes.
Both times I've been through large layoffs, I saw skilled respected peers get the axe while deadwood didn't. It causes the loss of valuable employees and completely destroys respect for executives who are apparently so clueless that they don't even know which of their employees are worth keeping around.
As someone sometimes in that position, if I can get 85-90% accuracy (in both directions), I think that’s about the best I can possibly do in a 500-ish person organization.
I hate the false positive (including a good performer incorrectly beyond that required by the depth of layoff) more than anything else for its deep unfairness to the individual, the team, and the company.
It's rare that "deadwood" and "quiet quitters" do literally zero work. Even if you feel that your job is secure, you might not appreciate having their work dumped into your lap, especially since there's a good chance that it's not critical-path work. And you might not want to be in an environment where morale is low and trust in leadership just took a major hit.
They're deadwood if they cost more than the value they produce. Nobody missed them. And the livewood didn't have to go redo all the stuff they messed up.
Another terrible effect is that the people who aren't laid off have to onboard the next wave of new hires. I've seen a lot of poisonous behavior as a result of someone having a chip on their shoulder because a friend was laid off, and that can have disastrous consequences for someone who has less experience and needs support.
> The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
This can be a good thing. In my experience these people are generally unambitious people who's claim to fame is that they held a job for a long period of time rather than any innate talent.
And when you have a majority of seniors who's only value is in being a well of knowledge, they're resistant to any change that reduces the value of that knowledge. This can quash innovation and perpetuates the anti-pattern of information hording.
Depends on the environment. In a startup, the top performers often say basically “what took you so long? Glad we can move faster now. And try to hire some more top performers for me to work with.”
You typically are asked to work longer hours to make up for missing staff, deal with a lot of nonsense and get "at least you didn't get laid off" as a reward at the end of it. When the money people turn out their pockets (become low performers in their role) no point in sticking around or at very least, no reason to coutinue to be a high performer when the business is signaling its going to be a low performer in regards to the value its going to be able to deliver to you.
- The people let go might have been good friends or at least people they enjoyed working with.
- While they’re not targeted, their coworkers are, they’ll sympathize with the tension. Also that workforce is now doing the same work amount with fewer people.
- They are expected to do a lot of education and bringing people up to speed. More churn means more work, and it’s also harder emotionally if you’re not sure how long the person will stay in the company.
My issue with analyses like this is they argue that layoffs are a bad idea and it's just companies shooting themselves in a foot. That's what people want to hear, so it gets a lot of clicks and citations. But, this also means that all the big companies (and that's a lot of them) that just announced layoffs made a obviously bad move. Are they all stupid? I find it hard to believe.
It's more plausible, that yeah, layoffs are trust destroying and life ruining, but they make shareholders rich, so they are a rational choice expected from CEOs.
I find it very easy to believe. A lot of executives appear to have a prime motivation that is "number goes up" which IMHO makes them extremely susceptible to the same levels of groupthink and other cognitive fallacies as one would see on /r/wallstreetbets.
I appreciate that isn't necessarily the case for all executives but given that executive's fallacies are mostly disproved by a slow to react and sometimes illogical economy as opposed to a nearby cold logic machine, it makes cliff-marching much easier for them.
And stupidity isn't the only possible reason for a party to engage in what seems like a counter productive move.
Certain motivations are often hidden.
Mike has been married for 12 years, happy couple, no children. He suddenly changes in attitude and make his wife life a nightmare every single day, turning his brother in law against him, losing the one job his wife's brother gave him out of pity. Never crosses a line, but jobless and a constant jerk, he ultimately get the divorce document handed over by his wife.
Is he stupid? He might have won the lottery and had his own agenda for what he would do with the money. And that's a personal affair. Let's not underestimate to which extent business and the capital at wide can go making up stories, getting books to look a certain way for a zero sum profit far below the cost inflicted to the other parties.
Agreed. Most of the time using a substantial layoff to boost your balance sheets would raise eyebrows with shareholders. This layoff spree is gives shortsighted leadership the cover they need to bump numbers during a not-a-recession-for-PR-purposes recession.
Most of them over hired like crazy during the pandemic bubble. I wouldn’t say they were stupid but collectively most of them made a massive mistake. So yeah it isn’t hard to believe for me. I don’t think the layoffs are a stupid decision but I do think the extreme over hiring as if the bubble was a new normal was. Between 2020-2022 I literally conducted over 200 interviews for my previous employer. It was like we couldn’t hire fast enough and I would always hear that we were way behind from what we wanted to hire.
> Most of them over hired like crazy during the pandemic bubble. I wouldn’t say they were stupid but collectively most of them made a massive mistake.
It wasn't a massive mistake if the rapid growth grew their stock enough that paying a few hundred/thousand extra employees for a year or 2 was worth the cost.
I’d agree with you if any of them that did this had a stable or positive stock price. Looking at tech stocks and it’s hard to find an example where I feel the hiring was a good thing.
Lmfao. Do you know how hiring works at a large company? When your management chain has won a few headcount marbles during this quarter’s game of Hungry Hungry Hippos, it’s not in your interest to blithely challenge them on it.
This sounds like a typical HN accusatory comment. "It sounds like you should have dropped everything to solve whatever issues you have. Did you? No? Well it's your fault then."
Pretty similar to the stupid "did you submit a PR?" response to literally any issue with open source software.
Maybe you didn't mean it like that but that's what it sounds like.
That would likely be a career limiting move.
I remember the dot-com bubble days. We'd hire like mad... literally anyone who could spell HTML or PHP. There was no reason to speak up. We didn't know the gravy train was going to be over in a couple of years.
I might think this way if this was my first rodeo. When executives allocate money for hiring I assume they've put some thought into it with data outside my immediate view. You think I should be questioning executives? Most of us are out here just trying to survive and making C titles look bad in public is how you get fired immediately.
There’s a middle ground between saying nothing and making them look bad in public. Talk privately to your director/VP. Ask questions. You don’t even have to come right and say you think they’re wrong, but showing interest in the direction and financial health of t the company is unlikely to hurt you in any way.
Nope, I expect the people making these decisions who are responsible (and paid extremely well) for the financial health of the company to be doing an exhaustive due diligence when it comes to budget. The only real question is do any of these executives take responsibility for their actions. That question has ultimately been answered over the past couple of weeks so why bother asking...
We are doing due diligence, but it can never be exhaustive; the single best source of qualitative information is from talking to people who are closest to the work and then trying to synthesize a view of reality from the multiple points of view expressed.
You’re not under any obligation and can keep your head down if you like. I can see the spreadsheets with perfect clarity. I need to marry that data with the more complex and hard-to-get view of the elephant that can only from the people who are working with/on it every day.
It depends entirely on what's driving the layoffs, is it:
1. Actual market costs requiring a diminished future projection of cash flow
2. A Market expectation of investors who'll rate your company as less valuable if you dont.
I'd posit right now #2 is more likely than #1 given all the record profits being reported everywhere. When #2 happens, it's definitely going to affect people. When there's no actual problem, just some future expectation of problems, that's going to cost you.
Just a quick reminder regarding those "they", "shareholders" - it is a pet peeve of mind how we tend to forget who are the vast majority of these sharholders "getting rich" by the count of people, not necessarily by the value.
In the USA 401(k)[0] & 403(b)[1] plans are used by vast majority of people as their retirement funds. It is very rare for a small organizations to be able to offer full pension plans. What they do offer are investment plans like 401 & 403.
All those little 401k/403b plans, through the plans and the mutual funds are the "they" "shareholders", "getting rich".
In 2019 21% of US workers participated in pension plans, while 43% in 401K/403b [2]
The median 401k balance is downright scary. For ages 55-64, it's only $84k. Percentage participating in these plans doesn't mean much if they don't have much in it.
In that regard, I wonder if it becomes a Wall Street meme--layoffs for the sake of doing layoffs. Companies that performed layoffs made shareholders rich, so therefore if your company isn't doing layoffs in a layoff climate it's assumed that shareholders are better off putting their dollars somewhere else.
That's the gist I get from currently working in a company that did layoffs, the affected number of employees will not impact OPEX in any meaningful way if the issue is cash got more expensive, even less compared to pre-2020/21 levels.
But if they didn't do layoffs when earnings showed an increase in OPEX the shareholders would see it as a bad sign, so to signal to those that this is a serious-business™ the layoffs happen.
Crisis of confidence are pretty well known/studied, this seems to be a flavour of trying to avoid a crisis of confidence if the herd mentality isn't followed.
It all just sounds stupid, and like higher management aren't too far away from behaving like children and not responsible adults.
Most executives and shareholders I meet are truly clueless in their business and how to be effective. I think this shows more in larger organizations because lower level employees are far removed from important decisions.
It’s fair to disagree, but in my mind it is why you pay top $$$ for great executives. But also unfortunate that an average executive can cause harm to a business due to a large sphere of influence.
Interesting takeaway. One of the big lessons I took away from the prior three years is that there’s an absolute ton of groupthink and trend chasing among tech leadership. Going all in on remote, over hiring 21-22, now layoffs all come to mind.
There are notable exceptions. Apple rejected (thus far) all three of those trends and is weathering this period much better than most of the industry.
Part of the problem is that it’s very difficult to quantify the higher order effects of layoffs. It’s easy for an exec to understand “if we fire a bunch of people then our labor costs will go down”. It’s much harder to anticipate the effects of “if we fire a bunch of people then those who remain will be demoralized, will lose trust in us, may leave on their own, may be too distracted to work effectively for awhile, etc.” That means the risk assessment is a comparison between a sure thing and a bunch of possibilities—and there’s a long history of companies surviving after layoffs. It seems perfectly rational.
I have a couple observations from going through layoffs at a growth stage startup. If you have to do layoffs then you shouldn’t worry too much about protecting top performers—a noticeable percentage of them (10-20% maybe) will leave on their own _after_ the layoffs. You have broken trust with these folks, and they almost surely have other options. The people who stay either deeply and firmly believe in the company (good!) or for some reason feel like they don’t have other options (less good). Secondly, layoffs don’t end with the pink slips—your company is choosing to go down a long, slow path of rebuilding until almost anyone who remembers the layoffs is gone anyway. It will be harder to recruit top talent at standard market rates for awhile because folks will want to price in a risk premium to hedge against continued future instability, so replacing the fired folks may actually be more expensive in the long run.
The companies are doing it for a short term stock price bump. They are always incentivized to think short term because of the way our distorted markets work.
These companies laying off people are doing so because they made a mistake to begin with (over hiring). So, yeah, if you make one mistake, you can make another.
And no: not all tech companies have over hired during the pandemic and they are not firing people these days. No one talks about them because that doesn't sell.
If my interpretation of the overarching sentiment here on HN is accurate, it is that the big tech companies make tons of profit and hence the layoffs are unnecessary. It is within that context that I said that.
Ouch with those down votes. Prolly don't say "all" cause absolutes are almost always wrong. But the sentiment is correct. They're not in those positions because they're technically smart, but because they're good at social climbing and empire building. And in my experience exceptionally bereft of integrity. Layoffs are a tool in their C level signaling system. Maybe they're good for the company and maybe they're not, but they're doing what the other C levels are going so they're mostly safe from repercussions and scrutiny.
> The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive.
Well... for whom though? When megacorp CEOs laid people off the stocks soared - massively enriching the C-suites executing the layoffs and the investors demanding the layoffs.
The error in your thinking is that the financials of the company and its continued success matters - when the people in charge are optimizing for THEIR OWN financials.
I've got already a message of a former colleague working on Gitlab. He wants to leave. He thinks thats better to negotiate a salary while in a job, than when you are desperate running against the clock. We are going to take him back.
If your plane is gonna crash without dumping some excess weight, killing everyone on board, what do you do? You throw a ton of stuff out of the plane in an effort to continue on. This is what layoffs are. It’s a survival mode tactic. The cost of lower morale is smaller than the cost of complete failure.
When all of these companies act together to influence the labor market, they can subsequently cut long-term costs due to the natural suppression it effects on wages. I'm seeing very significant reductions.
typically a company also refocuses where they spend effort or make changes how they operate and that leaves a lot of people without meaningful work that matters. not only will those people be demoralized, but those around them too, together with continue collaboration and communication complexity. waiting for that to organically resolve it self would be terrible leadership.
Many/most of these companies have a huge portfolio of projects underway and have lots of open headcount that they’re hiring for. What sense does it make to say cut an engineer from one org only to hire another one a month later for another org?
Literally no thought is given to redeploying the labor force against the new set of projects. Just cut and rehire. It’s the ultimate short-termism, lack of vision and lack of leadership. Ironically all of these companies blather on about leadership but fail to even demonstrate a scintilla of it. Leadership just means “plays political game competently” at these companies.
google’s profit not only dropped 34% in the last quarter, it is also the fourth consecutive quarter that their profit as dropped. if they didn’t change anything and just continued on, what do you predict the next 4 quarters would look like? what do you think the comp of those at google will look like taking into account that more than 50-60% of one’s compensation is equity?
So the plane has been flying over valleys at record altitude and we see a couple of mountains ahead that we will easily clear. Despite being absolutely no where near crashing, let's throw a couple of crew overboard so that we can continue to climb to new heights and keep the hype engines of our overvaluation going?
These pat responses still elide whether future results are contingent upon drastic action. You simply cannot justify all actions by claiming past success is irrelevant.
Maybe you missed the memo, but corporations are supposed to grow exponentially, for all eternity -- never mind the Laws of Thermodynamics (or any other sanity check, for that matter).
I would imagine there are two occurrences at play, some employees affected by both some by one, but 1. You're wondering when you'll be next 2. People you have been working with are just gone now.
> and in the end not clear they're a financial net positive
This feels like another instance of Deming's (paraphrased) "People will destroy the enterprise to align to their incentives."
The people who make these decisions may be incented on the _short term_ cost savings. It's a fractally smaller version of the entire org aligning to shareholder expectations at the expense of company growth.
Productivity takes a hit for a week. And then starts up anew with new direction and new energy.
Sometimes layoffs are erratic and cause employees to question management's logic.
Most times, every employee is put on alert to not get complacent in their job and always be on the lookout for a better position. (this might be a net positive, POV)
What are the different kinds of layoffs? 7% sounds like one person from every-other-pizza-team but in practice isn’t it more like “we laid off the self driving garbage truck team (70 of 1000 employees) in order to focus on our core infrastructure and future as a builder of large language models”?
I think it's a brinksmanship game. The company that does the least amount of layoffs and survives will be in the better condition coming out of the recession.
The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).