Large Round of Layoffs Expected at Microsoft

It's more that with the purchase of Nokia, MSFT got 25k new employees which is kind of a lot.

It's typically not one driving the other. Reducing costs by laying off employees can happen with or without reorganizing in a major way. If you want to get to a more effective organizational structure (arranged around company priorities and strategy, clear authority and responsibility, aligned goals, less hierarchy and unnecessary dependence, etc.), you can do that with or without significant layoffs.

So theoretically what happens in this case is the company's senior leadership decides on strategic priorities and a proposed level of investment. Once that's approved by the board, they look at the organization and specific resource allocation. It's not really that linear, though: changing market conditions and surprising opportunities or threats can lead to changes in how much they'll invest overall, which can have a big impact on the size of the layoffs. Of course the reality is typically a lot messier -- no idea what actually happened in this case.

They had a vague announcement about organizational changes a few months ago to a "flatter" hierarchy. It was the first hint of the layoffs that have now come to fruition.

Any company that has been around for as long as Microsoft, has a huge amount of dead weight in its mid-level management. I mean people whose main skill is mastery of the internal political process.

Lest people think I'm singling out Microsoft specifically, this same problem is present at Google as well, but is less of a problem because Google has not been around long enough to pick up the same amount of dead weight personnel.

The first generation of people at a company were fighting for market, and they rose due to their ability to deliver value to colleagues and customers. But when a company becomes successful, the resources available to teams within the company becomes somewhat decoupled from company revenue. Soon, political skill becomes as important or more important than impacting the company's bottom line.

Microsoft and Intel alumni in the late 90s used to tell me that they knew managers whose main goal was to grow the headcount under them, in order to grow their own prestige.

Today at Google you can see some of this same behavior in its nascency. Most of the deadweight is outside Engineering teams because its hard to bullshit when you have to deliver a product. Still, there are peripheral functions like business development, marketing, intellectual property, privacy, policy, etc., where you can always find a few deadbeats that talk slick, but don't seem to have much to show for their time except hiring more people and making a few high impact appearances at meetings. You can go a long way if you can talk the talk, look the part, and kiss the right asses.

Microsoft has been picking up useless deadbeats for nigh on 25 years now. They really need to shed these people.

One company you have to admire is Facebook. I don't know if its true, but I'm told you basically get fired at Facebook in the first year if you don't know how to deliver something of tangible value within that time. That is hardcore.

If that metric was applied at Microsoft and Intel, you'd see the companies shedding 25% of their workforce immediately.

I suspect even Google would shed 10-15% of its people.

Layoffs are fairly regular occurrences, and don't necessarily represent the end of a company. In fact, even if it wasn't just 5% of their workforce, and not mostly Nokia staff, it wouldn't be a concern — its just business as usual.

Companies often experience a raise in share-price after a layoff.