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“Copycat” layoffs won’t help tech companies or their employees

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Re: “Copycat” layoffs won’t help tech companies or their employees

#191

Post by rsj_hn »

mrj wrote: post #181
rsj_hn wrote: post #177

Earlier quoted context omitted.

I will assume you are asking in good faith, so here goes. What you think of as "profit" -- e.g. just some random, arbitrary, completely free bonus that Google should be grateful to have at all -- is actually the cost of capital for Google. It is a payment to equity , and the amount of the payment is determined by the interest rate as well as the time path of expected future earnings, adjustment for risk, and other fa…

Serious question: I don't follow what you mean by payments on equity? Google doesn't pay dividends it appears: https://www.dividend.com/stocks/communications/media/interne... It's a pure growth stock right? I thought any initial investors exit during the IPO.

The "payment" can be taken in the form of higher share price, share buybacks, dividends, future dividends, etc.

It does not have take one specific form or another. Despite the fact that Google doesn't pay dividends, it's not a charity. Investors purchase shares of Google in order to get a return, and they have a choice between buying Google or a mortgage bond or ATT, etc.

Now for growth companies like Google, they are effectively "paying" investors with promises of stock price appreciation and high future dividends. This is why they are more sensitive to stock price declines than income investments like a cable company. It's a two edged sword - they are faster to hire and faster to fire and are more responsive to their share price.

At some point, the growth companies discover they need to start paying dividends or doing regular share buybacks in order to stabilize their price, when their growth story is no longer believed by the market.

Re: “Copycat” layoffs won’t help tech companies or their employees

#192

Post by eftychis »

oxfordmale wrote: post #103
tubs wrote: post #96

Earlier quoted context omitted.

But if everyone is freezing far fewer people will leave.

The job market is still very active. There are plenty of opportunities in more traditional sectors such as insurance and banking. I also suspect some layoffs have gone too far, especially with some early indicators that 2023 might not be as bad as forecasted. As a result, these companies will likely start hiring again in the second half of 2023, even if it is only to replace disgruntled staff that want to switch jobs…

Self fulfilling prophesy: if everyone is cutting demand, supply will also reduce its urgency to regrow. Which affects also inflation. This is a complex chaotic system that we have the epidemic effect of belief/gossip of layoffs and recession running on top.

It is hard to time. We make it hard to time. Most likely yeah, all these layoffs are causing the problems, and following what the FED instructs them indirectly to do.

Re: “Copycat” layoffs won’t help tech companies or their employees

#193

Post by fencepost »

idopmstuff wrote: post #56
tarr11 wrote: post #31

The professor recommends across the board pay cuts as an alternative to layoffs. > One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of…

I think the problem with this strategy is that it causes the wrong people to leave. If you're a top performer, you're going to feel like a 10% pay cut is very unfair, and you're going to be able to get another job elsewhere fairly easily, even in this environment. If you're not performing particularly well, it probably doesn't feel as unreasonable, and even if you don't like it, it's tough to leave. When done correct…

I think the problem with this strategy is that it causes the wrong people to leave.

That's a possibility, but there's also a good chance that very good performers who value stability will stay, particularly with senior management taking larger cuts. Will you keep that 1-in-1000-and-knows-it person? Perhaps not. Do you want to? Perhaps not (see the whole "fire the indispensable person" philosophy).

If you still get rid of bad performers but keep good to excellent ones because of good management, even if you lose the occasional rockstar your overall team quality will still rise.

Re: “Copycat” layoffs won’t help tech companies or their employees

#194

Post by JKCalhoun »

tarr11 wrote: post #31

The professor recommends across the board pay cuts as an alternative to layoffs. > One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of…

I believe simply a pay freeze would be equivalent to a 3% cut. That way people don't feel you are "taking away" salary they may have come to expect.

That in addition to a hiring freeze might get the company close to the mark in a year's time.

An annual pay freeze then can be re-evaluated again next year.

Re: “Copycat” layoffs won’t help tech companies or their employees

#195

Post by dasil003 »

As much sympathy as I have for the human side of layoffs that are called out here, I feel the researcher is not being intellectually honest. This paragraph is the worst offender:

> Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue. Layoffs are basically a bad decision.

First of all, if your strongest argument that layoffs do not cut costs is that sometimes companies hire them back as contractors, then I don't think you have a leg to stand on, because that's not really a layoff! In this case, "layoffs" is just a smokescreen to reclassify workers.

Pointing out that layoffs don't solve ineffective strategy, loss of marketshare or too little revenue is a facile argument at best. Yes, trivially, getting rid of people does not solve your business strategy problems. But at the same time, there may be no solution. The world may simply be moving on from what your company has to offer. Bringing in the MBAs to try and force the issue can have a lot of ugly outcomes that go well beyond layoffs.

At the end of the day, businesses ebb and flow, and they can only support a certain size of headcount based on the economic environment in which they operate. It would be nice if leadership had the clairvoyance to always avoid overhiring and give ironclad promises on perpetual employment, but such is not the world we live in. Coming with an absolutist position that layoffs are universally bad, backed by a bunch of flimsy strawman arguments, is not very helpful for people that actually have to make these decisions. Seems more like pandering to a generation that has never known a bear market.

Re: “Copycat” layoffs won’t help tech companies or their employees

#196

Post by janalsncm »

jmyeet wrote: post #182
idopmstuff wrote: post #56

Earlier quoted context omitted.

I think the problem with this strategy is that it causes the wrong people to leave. If you're a top performer, you're going to feel like a 10% pay cut is very unfair, and you're going to be able to get another job elsewhere fairly easily, even in this environment. If you're not performing particularly well, it probably doesn't feel as unreasonable, and even if you don't like it, it's tough to leave. When done correct…

This is, for lack of a better term, "capitalist brain rot". It may even be "American brain rot". I don't mean this in a disparaging way to you, individually, by the way. Myth #1: Most people believe they're "above average". In your post you talk about cutting the "bottom 10%". You feel comfortable with that because you likely believe you're not one of th ebottom 10%. It's yet another example of how true the Steinbeck…

When you say meritocracy is a lie, are you referring to Daniel Markovits by any chance? He had a very stimulating conversation with Sam Harris in 2020 that I’ve recently re-listened to.

Meritocracy fails to live up to its promise because high performing parents always help their kids by artificially boosting their competence with e.g. test prep services. So tests tend to measure preparedness for the test, rather than a more abstract measure of merit. There are a lot of other interesting points made which I am not doing justice.

However, I am not quite sure what you meant in the context of the workplace. Do you mean just that in practice and even in principle it’s impossible to accurately measure merit in a company? Because that’s pretty clear to me.

Re: “Copycat” layoffs won’t help tech companies or their employees

#197

Post by AbrahamParangi »

Saying that layoffs are imitative behavior is no more useful than noticing that almost all behavior can be described as “imitative”

If you hear people yelling fire and see people stampeding for the exit, does that mean there actually is a fire? No, certainly not, it could just be a panic.

But does that mean that you should stay put and wait and see if everyone else is wrong?

Re: “Copycat” layoffs won’t help tech companies or their employees

#198

Post by ryanwaggoner »

sicp-enjoyer wrote: post #89
coredog64 wrote: post #28

Earlier quoted context omitted.

I don’t think the math checks out: Salary isn’t the only expense, so you might be looking at a 15% wage cut to keep 10% of the workforce. With stock performance, I’ve already taken a 10% wage cut. Cut another 15% in cash and I’m gonna be super unhappy about my comp.

> With stock performance, I’ve already taken a 10% wage cut This is such a weird attitude to me. If it goes up you expect the gains, if it goes down the company is letting you down. Stock is supposed to involve some risk. It's not cash, and you will only be disappointed if you build your lifestyle around it being a certain price.

They didn’t say the company was letting them down, or that it was unfair. They said they weren’t happy about it. You can understand that risk sometimes doesn’t go your way and still have human emotions about it, as well as make different choices in reaction.

Re: “Copycat” layoffs won’t help tech companies or their employees

#199

Post by dieselgate »

AbrahamParangi wrote: post #197

Saying that layoffs are imitative behavior is no more useful than noticing that almost all behavior can be described as “imitative” If you hear people yelling fire and see people stampeding for the exit, does that mean there actually is a fire? No, certainly not, it could just be a panic. But does that mean that you should stay put and wait and see if everyone else is wrong?

Indeed, isn’t this kind of the definition of a “market” though? The analogy of yelling fire is a good one for this context

Re: “Copycat” layoffs won’t help tech companies or their employees

#200

Post by petilon »

Jiejeing wrote: post #140
petilon wrote: post #8

Not all of it is "copycat". During the pandemic consumer spending moved online. People purchased hardware to work from home, ordered more from Amazon and other online stores as opposed to physical stores, used online services such as Zoom and Microsoft Teams more. Tech companies responded to the increased demand by increasing the pace of hiring. Were they wrong to do so? Possibly, because they should have expected th…

One small correction: the pandemic certainly is not over.

Covid is not over. But the pandemic is over.
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