Microsoft Looks to Cut Up to 18,000 Jobs

> A lot of people have a tendency to over-value their work and roles.

I think most people are shitty at it on either side. You can be great at your work and role and still get the axe. Management doesn't often take that into consideration.

This struck me: the layoffs are motivated by two outcomes, one of which is "work simplification".

Automation eliminates jobs, I've said this for a while.

A friend of mine who has been CFO of a couple of Fortune 500 companies once told me that layoffs always drive a stock price up, and that it's also one of the single biggest proofs that Wall Street analysts have no idea how to run a real business.

He explained that any company who could shed a massive amount of its workforce within a year, or all at once, is a red flag for massive internal problems. At the time we had this discussion, he was the CFO of a company that had over 30,000 employees globally.

His thinking was that the same principals that small companies use (not hiring too quickly, etc.) should be scaled up regardless of the company size. You either need people or you don't. You don't hire too fast simply because you are experiencing rapid revenue growth, because revenues do not grow unabated. You hire as slowly as you can, so that when recessions hit or market forces change, you don't suddenly have 3 or 4 times the staff you need. His thinking (which I agree with) is that since those people worked extra hard to cover the work when times were booming, you don't turn around and lay them off just because things slow for a couple of years.

Those people worked hard for the company because they are good employees; he saw it as more important to have good employees on hand when things ramped up again rather than just cut them loose and hope he could get more good employees later.

Since that discussion, he's gone on to two more companies, leading one through an IPO as the CEO. All of his companies have operated like gangbusters - he comes in, revenues go through the roof, debt gets paid down and he's NEVER LAID ANYONE OFF. In the meantime, in his work history, he's been through 3 IPOS (two as CFO, one as CEO) and I don't know how much he made personally on each I do know that he cleared $41 million in a single day on one of them.

This is in complete opposition to what I've heard from several other CEOs, who tell me 'labor is your most controllable expense'. Yet, none of their companies (some also on the NYSE or NASDAQ) have performed anywhere near what my friend's has.

I think he's right. Wall Street is full of guys who have no actual experience running a business. They see layoffs as 'cleaning house' and 'cutting expenses' but the reality is that while that can be true, it more often is a harbinger that the company is not well run.

There are lots of companies with more than 127,104 employees that manage just fine. Boing across the street for instance. The reason for the cuts is two fold. First, Microsoft acquired Nokia and they're going to let go of all of most of the non-engineering staff, as well as a lot of the management. Second, Microsoft just restructured itself. It used to run like a conglomerate with VP essentially running their individual business like a fifedom ala the organizational chart comic (http://www.kaushik.net/avinash/wp-content/uploads/2012/08/or...). Over the last 3 years there's been a series of high profile executives let go with the intent of increasing cooperation between the divisions, then last year the company restructured going from 9(?) divisions down to 4. As a result there's a lot of redundant people and teams. This house cleaning is in part a result of that.

Subject: Important Company-wide Announcement

Dear Employees,

For our business to continue running, we must reduce the number of staff. This is an unfortunate but also inevitable reality.

[insert details of layoff here]

[insert honest platitudes]

Senior management wishes all of you the best of luck, and has every confidence that you will be even more successful at your next job.