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

gsb.stanford.edu

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

#41

Post by btown »

di456 wrote: post #7

This misses the main driver. Valuations are no longer based on growth. The entire market has shifted to profitability over growth. Companies with a stronger balance sheet coming out of the recession will be better positioned for the long term. Seems that companies that gained their valuations through growth weren't sustainable in the long run. And at a macro level, economic policy has largely deferred recessions sinc…

The market shifting to profitability over growth was the motive, absolutely. But Elon's decimation of Twitter was the means and opportunity. And I think that copycatting those means of executing layoffs - 7am email notifications for 20-year employees, minimal consultation with lower-level management about who should be retained - will have significant ramifications on the morale of the remaining workforce. Perhaps some of it was unavoidable to avoid media leaks. But a lot of how all this was executed reflects a massive lack of empathy.

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

#42

Post by 33955985 »

di456 wrote: post #7

This misses the main driver. Valuations are no longer based on growth. The entire market has shifted to profitability over growth. Companies with a stronger balance sheet coming out of the recession will be better positioned for the long term. Seems that companies that gained their valuations through growth weren't sustainable in the long run. And at a macro level, economic policy has largely deferred recessions sinc…

Yeah. I’m a bit confused on how an article on layoffs misses the massive increase in cost of capital. The entire market has changed.

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

#43

Post by gibsonf1 »

I think this professor should study economics a bit. Its as if he thinks the world is what people think it is, rather than what the facts about the world tell us, and the economic facts at the moment are terrifying, and not because of what people are saying or doing about them.

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

#44

Post by sokoloff »

filoleg wrote: post #24
kazamaloo wrote: post #15

Earlier quoted context omitted.

I still regret not liquidating at the end of 2021 while all CEOs were selling their positions by the 10s of millions.

Were they abnormally liquidating those things at the end of 2021 compared to other years? Asking because I would expect executives to sell "by the 10s of millions" pretty much every year. Especially since they cannot really sell on a whim (in the US), as executives are legally required to file their stock purchase/sell plans with SEC far ahead of time.

10b5-1 plans do not have to be filed with the SEC.

(The use of a 10b5-1 is also not technically a legal requirement, but is a workaround to allow planned sales even if you become aware of material, non-public information between the time of entering into the plan and the time of the trade.)

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

#46

Post by zht »

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…

You would need more than 10 percent pay cut to offset 10 percent in personnel spend. Health insurance/benefits is a significant source of spending

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

#47

Post by darth_avocado »

novok wrote: post #23
darth_avocado wrote: post #13

Earlier quoted context omitted.

After having an opportunity to talk 1:1 with two of the most revered personalities/founders/ceos in tech, I’ve come to the conclusion that they are as much full of s** as the rest of us. Probably even more. I know the sample size of 2 is not scientific, but it was enough for me to not have any illusions about the nature of things.

Are they really going to tell you the "privileged" stuff 1:1 if they don't know you well, or the stupid stuff that they tell the public? At that level, trusting people you don't know is even more risky.

You don’t need “privileged” stuff to get an idea about how the other person thinks about things. Also, I am not talking about some “met at a conference” or “did an interview” kind of a setting, this professional work environments kind of a setting.

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

#48

Post by xyzelement »

I profoundly disagree.

You hired 7 dog walkers (one for every day of the week) to walk your dog Stinky during lunch.

A year down the road you realized you don't need someone to walk Stinky every day, you want to do it yourself sometime. You can say you overhired.

So you decide to keep 4 of the dog walkers and let 3 of them go. That's a 43% layoff, you heartless capitalist.

Who do you cut? Well Bob is the Sunday guy and you definitely don't need a dog walker for Sunday, so Bob's on the list (role elimination). Alice makes $25 per walk while everyone else makes $20, she's gotta go (overpaid/cost reduction) and Carol, you actually think she's not that good with Stinky. You had to have her when you thought you needed 7 people, but she ain't one of the top 4 (performance based)

So now you got 3 dog walkers instead of seven, you pay them on average less, their performance is on average better and they are focused on days you really need them. Yeah you don't have the same coverage but turns out you are fine without it. Stinky is happier too. You may even use your saved money ($65 per week) to hire someone you need more, like a cleaning lady.

Obviously you can fuck up layoffs but if done well you and Stinky can come out ahead.

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

#49

Post by wpietri »

treis wrote: post #29
wpietri wrote: post #9

Earlier quoted context omitted.

I understand you feel that way. And clearly, that's the dominant narrative about layoffs. What makes you value those feelings enough to reject out of hand a professor who has been studying it for decades?

Because you can't study an unprecedented situation for decades Because rules derived over the last decades or whatever don't necessarily apply to an unprecedented situation Because pretty much all the CEOs and employees say that productivity is in the toilet Because I don't see 20% or whatever more useful products/features coming out of any of these companies

So because of a situation you claim is unprecedented, you are advocating for doing the same old sweeping layoffs CEOs have done for decades?

Personally, I think the situation is an entirely precedented change in growth expectations that comes around a tightening of monetary policy and a possible recession. But assuming that you're right, on what basis are you claiming that the standard playbook will get new and better results this time?

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

#50

Post by onlyrealcuzzo »

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…

It's also based on the idea that Microsoft and Google and AWS are factories - and they aren't.

It's easy to get ambitious and hire a bunch of people for growth targets that aren't viable without ZIRP.

It's less so when you hire people to build orders you've largely already sold...

Why should you keep hiring if you already over hired?

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