I've been through several layoffs, on both sides of the coin. The one consistent factor I've seen is managerial incompetence. Management will fail to provide any leadership or guidance to employees, then blame them for not being productive enough. They can't see their own incompetence, so they blame hiring practices and keep ratcheting up interview difficulty. It's like corporate America has evolved to protect the ego of the managerial class.
Layoffs Don't Work
111–120 of 801 posts
Re: Layoffs Don't Work
#112Earlier quoted context omitted.
This isn’t how all layoffs work though. Some, yes they are due to over hiring and a failure of management to plan. They are likely necessary for survival of the firm and generally last course of action. Although even those come with a cost to current and departing employees which harms the business. But the ones being discussed in the article are the consistent ones. The ones you do while you’re ahead to make your ba…
>But the ones being discussed in the article are the consistent ones. The ones you do while you’re ahead to make your balance sheet look better. Those come with a temporary balance sheet boost and all of the negative effects of any layoffs. This feels like a "no true scotsman" argument. The headline of the article is literally "Why layoffs don’t work", not "why consistent layoffs don't work". The only mention of "con…
Clickbait headlines aren't anything new. While a better headline like: "How the Layoff Culture that Started in the 80s and Spread to the Rest of Wall Street is Actually Harming Business's Long Term Prospects" would be better, punchy headlines like this one spur clicks and conversation as seen by this thread.
I believe we took different things from the piece and I imagine you'd disagree with my better headline. I understood the piece to be telling a story starting with Welch and Dunlap of how layoffs as a way to improve numbers actually damage those same numbers in the long term.
Re: Layoffs Don't Work
#113Earlier quoted context omitted.
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.
The industry norm is incredibly short tenures, and often when it starts increasing, it's paradoxically when the company is on the track towards complacency and eventual failure.
https://www.inc.com/jeff-haden/why-googles-high-turnover-rat...
This isn't some Google specific thing. The cargo cult "look at our super exhaustive, endlessly demanding hiring process" is a farce everywhere. It's actually a bit paradoxical because it actually selects for employees who don't want to actually stay with you, they just want to be able to say they were willing to endure your gauntlet.
Re: Layoffs Don't Work
#114There 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 c…
By the late 1960s, software projects had finally reached a certain size, and the particularities of managing these large projects were discussed at NATO software engineering conferences, and codified by Fred Brooks in 1975 in the Mythical Man Month. The upshot being, software projects at corporations can't be run in the same manner as non-software projects. Yet at Fortune 500 companies today, and in the past two years that includes at least some of the FAANGs, you see them trying to run software projects and treating programmers in the same manner they treat non-programmers, and it doesn't work.
I just happened to watch some old talk or interview with Gabe Newell recently, and he said industry thinking at the time Valve was founded was of a certain kind, and Valve took the opposite approach from the industry - the industry was looking to get cheaper programmers, and Valve went the other way and looked for the most expensive programmers, and so forth. Valve has probably less than 400 people working there (don't know the 2025 headcount), but makes billions a year in profit.
Re: Layoffs Don't Work
#115I 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.
Why do you lose 10% of your top performers?
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.
Re: Layoffs Don't Work
#116There 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 c…
Twitter was profitable before the takeover and now it is not
Maybe we disagree about what "profitable" means. Posting an authoritative source, so others can decide for themselves.
Re: Layoffs Don't Work
#117I 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.
Why do you lose 10% of your top performers?
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.
Re: Layoffs Don't Work
#118I 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.
Why do you lose 10% of your top performers?
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.
Re: Layoffs Don't Work
#119> After the early-2000s dotcom bust, Bain researchers found that stock prices for S&P 500 companies that had no layoffs or laid off less than 3% of their workforce increased an average of 9% in the next year. Meanwhile, stock prices were flat in companies that laid off between 3%-10% of their workers, and prices plummeted 38% for companies that laid off more than 10%. Failing companies go through layoffs. Companies l…
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
> And with that data you could say layoffs by themselves don't.
I think that is one inference too far? Layoffs may have saved some of those companies from bankruptcy. The Bain study is looking at share price performance and offers no data that would resolve that question.
Re: Layoffs Don't Work
#120Earlier quoted context omitted.
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.
>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. Maybe by "HFT" you only mean "those evil hedge funds that are pushing companies to chase next quarters' earnings", but there's nothing fundamentally wrong with high frequency trading. Market making[1] is high frequency trading, and basically i…
I am not saying HFTs can't sell but there should be penalty for higher frequency. It means they have to craft algorithms which will take longer term view of stocks (and their fundamentals) rather than ignorance of other participants