Layoffs Don't Work

Half of this statement is true. A private company definitely can’t run at a loss forever. Although in the era of ZIRP a few definitely made a solid go of it.

However nothing requires an any company, and especially a private one, to be efficient. If an otherwise profitable and privately-held company wants to swell its middle management ranks or spend lots of cash employing the owners’ dubiously capable relatives, there’s nothing to stop it.

Incidentally that’s mostly true of public companies with diverse shareholders, too.

The idea that private enterprise is always efficient is a myth, as is evident to anyone who’s worked for a large enough corporation, or even a small one where management weirdly shields some obviously incompetent people for internal political reasons.

The only correcting factor is that companies can fail, and smaller competitors can sometimes find ways to undercut large, inefficient firms. But often the small company gets acquired or out-marketed. So there’s nothing inevitable about any of this.

They also didn’t used to be a regular feature of business.

It’s funny how such things become “ordinary” and “obviously good things to do sometimes” that haven’t always been the former, and may not really be the latter either.

Business management is vibes, trend-following, and fear of straying from the pack. And the best of that is vibes! That’s how bad it is.

Adding more rapid-fire context (for the sake of brevity):

* Parents changed jobs every few years growing up, which meant a new city, new home, new schools, and a complete cycling of relationships (forcibly out with the old, forcibly in with the new)

* I watched layoffs in non-tech sectors gradually go from tech-style severance packages, to no packages beyond the required WARN notice period payouts, to filing the notices and hoping nobody asks, to now just paying out any damages after-the-fact in lawsuits

* I spent ~15mo unemployed during the "Great Recession" of '08, ending up having to move to another region of the country for work and spending a night homeless, followed by six-months couch surfing, then another month in a hotel before finally having an apartment again

So all that put together, layoffs and job changes are incredibly traumatic experiences I do my best to avoid at all costs. I am one of those "lifers" who would much rather hunker down for a good wage today, buy a home, sock away savings, and work my way up an internal career ladder than throw myself into an entirely new workplace, colleagues, culture, and standards every year or two. I claw for multiple roles in an org (at the most recent one, I was juggling roles on Private Cloud & Public Cloud, Governance Councils, leading a CaaS ops overhaul, plus other PoCs) specifically to make myself as indispensable as possible and position myself on the internal promotional ladder, because I'd rather stay with one org provided I can eke out a modest living and take care of those I care about (myself included).

Now all that aside, there's also the reality that wage growth from job hopping hasn't turned out to be as big as folks thought. The real growth comes from career promotions, which companies hate doling out internally for profoundly stupid and arbitrary reasons (hence job hopping). I get the impression most folks would stay put if they could get the growth in their career they wanted, but companies would rather hire someone externally to fill a spot than promote someone internally operating at that level; I am very much in that group myself. Heck, we're seeing that now with folks not leaving jobs because they're having difficulty finding that growth (in comp and title) elsewhere, as everyone kind of knuckles down for tough times ahead. That taste of stability will create more "lifers" as you put it, especially when the world outside is increasingly unstable; it's natural that humans (and most animals) will seek stability in times of crisis, taking only as much risk as necessary to preserve their survival.

Something the article doesn't get into is the knock-on effect of layoffs in future business: if workers are let go for what they perceive to be arbitrary or irrational reasons, they're less likely to want to do business with that company again in the future. This is particularly why tech companies offer such good severance packages, as it's their mea culpa of sorts by trying to buy themselves a good reputation on the way out the door. When everyone is doing it though (like the current layoff cycles), it becomes a broader disgust or distaste for established vendors in general, and those workers - when they land a new role - are likely to want to migrate off their employer's products unless their career is tied to it somehow. This can reduce business after cuts had already been made, potentially putting an organization into a cycle of self-harm wherein more cuts are made in response to declining business, which then causes more declines in business, which leads to more cuts, etc. This in turn leaves a huge opening for new startups to enter the hole left behind by established players, undercutting them on pricing and providing better service.

So taking all of that into context when reading the article again, and it paints a pretty telling picture of widespread mismanagement at companies doing unwarranted and highly traumatic layoffs. If the only thing your leadership can do to grow the business is to layoff staff, that's a pretty telling sign that business ain't doing so great in general and leaders are out of ideas to improve it.