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Layoffs Don't Work

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Re: Layoffs Don't Work

#91

Post by nthingtohide »

kibwen wrote: post #58
malfist wrote: post #33

Earlier quoted context omitted.

The stock market is like a sports betting pool where the players are allowed to bet on themselves

The stock market is just a predictions market, and any predictions market at scale destroys the subject of its prediction.

Can we have a different kind of stock market which forces participants to consider long term outcomes more? E.g. no HFT firm should be able to make a profit from such a stock market. Selling stocks earlier and often should result in a penalty or percentage being taken away as a fee. As a retail investor I would love to use invest and forget strategy based on trends observed in such a stock market.

Re: Layoffs Don't Work

#92

Post by steveBK123 »

_benj wrote: post #85
steveBK123 wrote: post #39

Earlier quoted context omitted.

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.

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.

These are great because often the founder managed to take money out at one round of funding or another and is insulated from downside.

Re: Layoffs Don't Work

#93

Post by cratermoon »

ellisv wrote: post #65
marto1 wrote: post #46

Earlier quoted context omitted.

> 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.

Even if mostly the “right” people are laid off, laying off a wrong person can have a cascading effect. Good people like to stick together. Get rid of a couple and the rest will start to leave.

Even if, from the company's perspective, if lays off all the "right" people, some of those people will be "wrong" from the point of view of other people on the team. Maybe the company didn't value a certain person, for corporate or HR reasons, but there's always a chance that person was a valued team member for human reasons.

Layoffs will lead to people leaving, regardless of how surgical or random they are.

Re: Layoffs Don't Work

#94

Post by dv_dt »

dietr1ch wrote: post #88
dv_dt wrote: post #66

Earlier quoted context omitted.

There is the question of if layoffs saved the company enough to save itself or improve? And with that data you could say layoffs by themselves don't. Today the question is why companies making good profits are making layoffs. And looking at the damage they cause is relevant in trying to predict company performance

> There is the question of if layoffs saved the company enough to save itself or improve? They at least secured management a final big bonus for dealing with that, so management and shareholders cash in a bit on the way down.

If the layoffs are taking a company which could be stably growing to one which is going downhill - in that case the execs actually hurting their long term compensation.

But i get it, it's like junk food for execs, easy to do, crisp in the action (even if not in the effects). But consumed carelessly its bad for company health

Re: Layoffs Don't Work

#95

Post by DanielHB »

JadoJodo wrote: post #74

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, ins…

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.

Re: Layoffs Don't Work

#96

Post by karparov »

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...

Re: Layoffs Don't Work

#97

Post by surajrmal »

llm_nerd wrote: post #64
pclmulqdq wrote: post #41

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.

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…

The Google tenure stat is misleading because it was taken at a time when the company was growing 20% per year. The actual statistic worth looking at was how long a person who is leaving had been with the company on average at the time of leaving or what percentage of the overall headcount leaves per year. While I don't feel comfortable sharing those numbers, I can confidently say they lower than the industry norm.

Re: Layoffs Don't Work

#98

Post by alphazard »

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.

Re: Layoffs Don't Work

#99

Post by gruez »

nativeit wrote: post #75
roenxi wrote: post #17

> 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…

Is it not incumbent on the company who hired the employees to ensure they are utilized sufficiently? Why imply it’s the worker’s fault for their own mismanagement?

>Why imply it’s the worker’s fault for their own mismanagement?

I'm not sure how you got the impression that OP implied it's the worker's fault. If during the 2021-2022 boom, some startup hired a bunch of junior programmers for $200k/yr, I think describing those people as "people who couldn't add enough value to justify keeping them employed" is a fair assessment of the situation. It doesn't imply that it's the junior programmer's fault, any more than it's not my "fault" if I'm asked to play a musical instrument with no prior experience, it sounding terrible, and people asking me to stop.

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