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“Copycat” layoffs won’t help tech companies or their employees

gsb.stanford.edu

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Re: “Copycat” layoffs won’t help tech companies or their employees

#31

Post by tarr11 »

The professor recommends across the board pay cuts as an alternative to layoffs.

> One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain.

Curious if there is research here on how this impacts the company? Seems like it would also increase stress and encourage top performers to seek new opportunities.

He also recommends hiring during a recession:

> He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating.

I suppose this works when it works, and then fails completely when it doesn’t. In essence, this increases the risk profile on the company which seems problematic too. Would be curious if there are studies that show the outcomes of these strategies.

Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.

Re: “Copycat” layoffs won’t help tech companies or their employees

#32

Post by __derek__ »

pookeh wrote: post #3

I always wondered if high profile CEOs and shareholders know something substantial of the upcoming future that us leaf nodes are just clueless about. Is it just copy cat or deep info for privileged clubs?

No, I don't believe that they greatly improved their crystal ball performance since July, when the now-infamous pay packages were still being doled out. Amazon started to tighten the belt a little earlier when it realized that it had too much FC capacity, but it was still rushing to add capacity as recently as July 2021.[1]

[1]: https://www.supplychaindive.com/news/amazon-earnings-logisti...

Re: “Copycat” layoffs won’t help tech companies or their employees

#35

Post by treis »

blinkingled wrote: post #12
treis wrote: post #2

This just seems wrong to me. Productivity at the FAANGs was low pre-covid and tanked further when they tried to grow rapidly during COVID. Thanos snapping a significant portion of your workforce is probably the best way to get some level of productivity back. Ideally, you would carefully evaluate everything and trim the fat. But that's probably not possible and if it were it'd play out over a year or two which is wor…

How do you define productivity in this context? Musk style LOC? How many features you shipped? Let's pick one of the more sensible ones - features you shipped. Who defines those features - is top level management responsible for the product vision, overall strategy that then middle management turns into features? For companies like MAANG that are already hugely successful and have hit a wall so to speak, they don't n…

Are you arguing that productivity, however defined, isn't down at these companies?

Re: “Copycat” layoffs won’t help tech companies or their employees

#37

Post by MiscIdeaMaker99 »

wpietri wrote: post #4

I love this point: "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing." I really wish for a less supine tech press. I've not seen any of these titans of industry being held accountable for the apparent major mistakes of overhiring. And I'm not even talking actual consequences here; these people will surely get bonuses for this. I'd just like to s…

I would love to see the capitalists held accountable for the way they treat their workers, but I believe their decisions are primarily dictated by profits, regardless of what they say.

Hard questions can surely be asked, but once you weed through all of the empty narrative, you pretty much end up with the reason: extracting profits.

Re: “Copycat” layoffs won’t help tech companies or their employees

#38

Post by kcplate »

pookeh wrote: post #3

I always wondered if high profile CEOs and shareholders know something substantial of the upcoming future that us leaf nodes are just clueless about. Is it just copy cat or deep info for privileged clubs?

I don’t think it’s deep info, or even copycat, except of course that general industry tends to be driven by the same economic waves that roll over us from time to time. When executives expect recession conditions, they try to act proactively. One of the certain places they can quickly cut costs is in headcount.

Tech definitely bloated a bit over the pandemic because of the uncertainty. Pandemic is over, recession is upon us, this is more a normalization in my opinion.

Re: “Copycat” layoffs won’t help tech companies or their employees

#39

Post by nkozyra »

petilon wrote: post #8

Not all of it is "copycat". During the pandemic consumer spending moved online. People purchased hardware to work from home, ordered more from Amazon and other online stores as opposed to physical stores, used online services such as Zoom and Microsoft Teams more. Tech companies responded to the increased demand by increasing the pace of hiring. Were they wrong to do so? Possibly, because they should have expected th…

> During the pandemic consumer spending moved online.

I keep hearing this repeated as canon but is this quantified somehow? Did we really see a spike long enough for hiring sprees? And did it last until ... when? A few months ago?

It seems intuitive but I'd really love to see numbers.

Re: “Copycat” layoffs won’t help tech companies or their employees

#40

Post by musingsole »

wpietri wrote: post #22
sovnwnt wrote: post #14

> instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain. This doesn't seem like a good strategy for tech. Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions.

Will it? Most of the top performers I know are not very motivated by money, and instead value doing interesting work with people they like. Granted, there are a set of people who are very good at job-hopping while executing a performance of being a top performer. But maybe a company will do just fine those people hop away. Maybe it would do better.

Layoffs and paycuts don't bode well for any interesting work or keeping people in a mood where they are likeable.

The handwringing and psuedo-calculus of cuts does further damage to any interesting work.

Can't do interesting work when instead you have to fill in for a job previously covered by a junior engineer.

It'd take a hell of a company culture to fight these trends.

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