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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

#81

Post by oxfordmale »

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…

As a top performer, you are more likely to leave after layoffs, especially if layoffs feel indiscriminate. From LinkedIn, some people were let go as their projects failed, not necessarily because of their own performance.

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

#82

Post by fulltimeloser »

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 suppose this works when it works, and then fails completely when it doesn’t."

"60% of the time, it works every time"

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

#84

Post by tw20212021 »

33955985 wrote: post #42
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.

How is the 'massive' increase in cost of capital affecting Google, a company making 60bln profit a year from mostly services?

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

#86

Post by staticautomatic »

nkozyra wrote: post #39
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…

> During the pandemic consumer spending moved online. I keep hearing this repeated as canon but is this quantified somehow? Did we really see a spike long enough for hiring sprees? And did it last until ... when? A few months ago? It seems intuitive but I'd really love to see numbers.

I recently spent a couple years interviewing hundreds of global F100 executives and all of them said exactly the same stuff about both B2B and B2C demand moving online during the pandemic.

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

#88

Post by notfromhere »

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…

If you are a top performer, you're gonna leave one way or another. Because you have options.

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

#89

Post by sicp-enjoyer »

coredog64 wrote: post #28
sovnwnt wrote: post #14

> 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 the pain. This doesn't seem like a good strategy for tech. Cutting everyone's salary will dislodge your top performers who can get a better position even in poor market conditions.

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.

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

#90

Post by jmyeet »

It makes me physically ill to hear billionaire CEOs "take full responsibility" for the layoffs in an impersonal email while taking no pay cut themselves.

Look at Meta as one of the worst offenders. Meta's layoffs will save what? $5 billion a year? Assuming those employees were actually producing some value, the true savings will be less (since you also have to factor in severance costs).

Now consider that Meta has spent $36 billion [1] building the Metaverse with basically nothing to show for it.

Now Meta has fully internalized the idea that it cannot exist without a monopoly of some kind. FB (and even IG) are dwindling. The Metaverse is the answer to that. That's literally all it is. But there's no business strategy here, no value proposition to consumers (on the contrary, this is something consumers clearly do not want) and no product-market fit. Yet the intention here is to spend over $100B on this unproven effort. For what return on investment?

My point is that Meta could've achieved multiples of the "savings" from layoffs by simply scaling back or, better yet, scrapping entirely the Metaverse. Focus on the core business and acquisitions.

So many of these layoffs are purely virte signaling for "investor confidence" and nothing more. A less charitable interpretation is that it's aimed and making the remaining staff work harder and for less money, fearing future layoffs.

Meta in particular is rudderless and layoffs are a bandaid on that.

[1]: https://www.businessinsider.com/meta-lost-30-billion-on-meta...

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