This article is just pandering to workers who have been or fear being laid off. If you fire every tech CEO who overhired during the pandemic boom there wouldn't be many left. You also have to consider how their performance would have been viewed if they didn't capitalize on the good times. Boards make CEO firing decisions based on who they think is the best candidate to lead the company going forward. Given the incentives of the American economy, most of these CEOs acted rationally with the information they had. We find it distasteful because they make so much money while workers bear the brunt of the pain, but the uncomfortable truth is that CEOs have no more crystal ball than anyone else with regard to macroeconomic conditions, and they are not graded primarily on their ability to maintain stable employment without layoffs.
Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
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Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#72The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.
If anything, fire the finance guys. They took on debt at variable interest rates during COVID and now that interest rates are hiking up that debt got a lot more expensive, resulting in the need to reduce head count, which is often the biggest expense at any tech company.
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#73Earlier quoted context omitted.
> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. This is a poor take. The function of the CEO of a publicly traded company is to execute on major objectives of the firm. This might be optimizing for max profit, but it might not, depending on what your majority shareholders communicate to the board and management (as well as how they vote their shares). A…
I'd like to see a few recent examples of CEOs making decisions for the future health of the company that knowingly lower the stock price for more than 2Q.
"Jeff Bezos explains to Amazon investors why no profits are a good thing"
https://www.theverge.com/2013/4/12/4217794/jeff-bezos-letter...
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#74When there is strong demand for a product, a company should hire more people so that it can keep up with demand. Likewise, a company should hire when it has short-term capital investment plans that require additional staffing. I don't think anyone would argue with that. When demand decreases, or when a capital-intensive buildout is complete, would it be incorrect for the firm to decrease its staffing levels? If leade…
Everything you say makes sense in theory, i.e. if we were in the early industrial world of Adam Smith.
How do you define "demand" in the context of SaaS? How many engineers do you need to run Google Search? Or Facebook? Or Spotify? Did the demand increase in the past five years? Have it decreased in the last year or so?
Here's the thing. None of these companies (Google, Meta, Spotify) have reported losses, not even a significant decrease in revenue over five years. They took the past year results, they saw a decrease in revenue, and they proceeded to lay off people. Google itself had a Q4 '22 revenue in line with the past years, except for the anomaly in Q4 '21 [0].
> If leaders expect to be fired if employees are ever laid off, then they will avoid hiring in the first place.
You are saying that the people appointed as the better at foreseeing market trends, and taking higher risks for higher benefits, will do neither of those? Then why do we need them in the first place? They would be useless.
> Unemployment today in the US is less than 3.5%! It's good for workers—and good for the economy generally—that managers are willing to hire people they may need to fire later on if things don't work out. Otherwise, those jobs wouldn't even exist in the first place.
You are conflating several things here - unemployment, workers' rights, and economy of scale. They are not necessarily connected, e.g. lower unemployment and higher wages don't push managers to take risks on massive hirings.
[0] https://www.statista.com/statistics/267606/quarterly-revenue...
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#75I think this is somewhat American thing where CEOs are paid hundreds of times more than regular employee. Certainly, you'd expect the board to fire the CEO who can't perform. It's just if both the board and the CEO are cozied up together, why should they. And granted, there's a global downturn which gives a good excuse to explain the losses.
To be frank though, firing the CEO probably wouldn't fix anything. You'd have to fire also other execs, maybe board members as well and you don't want to burn bridges with your golf buddies. It seems there's just poor accountability in general for management in US, not going to steer this off to politics but there seems to be an upper class which, once you reach, will take care of you if you're properly networked. Which is kinda how it goes in other places as well. US just has mastered capitalism in a whole another level.
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#76The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.
The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it.
Ok. By hiring too many people in the last couple of years and therefore now needing to incur the expenses and reputation hits of layoffs, those CEOs screwed up and fell short of their goals, right? So maybe they aren’t the best people for those jobs?
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#77[flagged]
Objectivity doesn't mean dishonesty, it just means there's a slant. Every outlet has a slant. Discussions around "objectivity" are usually disingenuous, and are really discussions about whether the slant meets the approval of the subject.
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#78The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable. And then, let's change the system.
> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they'll do it. How is failing to predict market conditions a few months into the future and over hiring part of making a publicly traded company money? If anything, these layoffs are an admission from management that they're wasting money.
It's not wasted money. They hired people at peak, and fired them when peak reverted. If they'd ceded market share to competitors who were aggressive when peaking then these CEOs should have been fired.
Re: Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs
#79Earlier quoted context omitted.
> The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. This is a poor take. The function of the CEO of a publicly traded company is to execute on major objectives of the firm. This might be optimizing for max profit, but it might not, depending on what your majority shareholders communicate to the board and management (as well as how they vote their shares). A…
corporations have a fiduciary duty to their shareholders. what that means is not well defined, and a ceo could say: i’m not doing layoffs because my analysis is that they will hurt our business, not help, but generally the meaning of their duty to shareholders is that they increase share prices and layoffs make that happen.
https://www.marketplace.org/2022/04/25/how-shareholders-jump...
> “There is a widespread and completely erroneous belief out there that there is some sort of legal duty that corporate managers have to ‘maximize profits’ or ‘maximize shareholder value,’” said Cornell law professor Lynn Stout, author of “The Shareholder Value Myth.” In Stout’s view, the misplaced assumption comes from an old case that cites stockholders’ interests. That case did not set legal precedent, she said, compared to a more recent case.
> “You can just pick up the Supreme Court case ‘Hobby Lobby’ decided just a few years ago,” she said. “Read the majority opinion, where Justice Alito says, and I quote, ‘modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else.’”
> By contrast, Delaware Chancery Court Judge Leo Strine, now chief justice of the state Supreme Court, wrote in the Wake Forest Law Review: “Corporate law requires directors, as a matter of their duty of loyalty, to pursue a good faith strategy to maximize profits for the stockholders.” The debate goes on.
https://www.americanbar.org/content/dam/aba/publications/bus...
> We evaluate the U.S. Supreme Court’s controversial decision in the Hobby Lobby case from the perspective of state corporate law. We argue that the Court is correct in holding that corporate law does not mandate that business corporations limit themselves to pursuit of profit. Rather, state law allows incorporation for any lawful purpose. We elaborate on this important point and also explain what it means for a corporation to “exercise religion.” In addition, we address the larger implications of the Court’s analysis for an accurate understanding both of state law’s essentially agnostic stance on the question of corporate purpose and also of the broad scope of managerial discretion.
It is not as black and white as "you must maximize profits" although this is consistently parroted by folks.