The formula is to lay off senior people who are at the higher end of the paygrade salary range and hire similarly experienced people at the lower end of the salary range. They can shave off ~50k for every such position. It sucks and it happens a lot when you are older.
Is that a "formula"? Or does this happen in some cases where certain factors indicate that hiring at reduced salary for a similar but less experienced worker will yield the same results?
If you have an employee in the company for 20 years and they haven't grown or shown any desire to grow, but has gladly taken raises and promotions; that employee has kind of worked against their own best interests.
If you have a department that has been inflated for a period of time due to temporary need, be it because the need was there or because of 'trends in the industry' a re-org may need to happen to free up resources.
I'm not going to come at this with so much cynicism out of the gate. Most managers and business leaders aren't the meme of the evil top hat monocle man trying to punch down, especially in the professional industry.
The problem is that even if the only thing you care about is money ... this is often a poor strategy. Because, achieving the "same result" is rarely something that is actually accomplished. The expertise provided by senior folks almost certainly translates into all sorts of unseen impact, such as crises averted that you don't even know about because they never happened.
People. Treating the people who work for you as the people they are. People who depend on stable employment for their lives & family, and who intrinsically deserve to be respected, rather than be tossed on the street to save a couple bucks.
But like what does that actually mean and look like in practice? Pay everyone as much as they want? Run every business as a non-profit? Pay everyone the exact same amount?
It’s great to say things that sound nice, I guess, but it’s hard to see how to translate that into the real world.
Yeah, like you say, it's a massive grey area and impossibly complicated question with no definitive answers (though you listed a few things that sound in the right direction to me). My point is if you're starting your decision-making process from this perspective:
> If you can pay less someone for the same result, it's an obvious win.
then you need to take a step back and re-evaluate what it is you are doing on this Earth.
It works fine for years (maybe even decades); however, eventually you end up as a has been wondering where it all went wrong. It happens to every company at some point. They still exists, but they are no longer the dominate force they once were.
Bezos has even said it will happen to Amazon at some point. Jobs said it happens when a company starts to be ran by sales/marketing instead of product.
I don’t think many companies do this or could be successful doing this. Unless the senior person is just performing like a junior one, they should have got laid off long ago. Most companies have the opposite problem (difficult to hire/retain a senior SWE, easy to hire junior ones, but you need experience to balance the teams out).
except employees aren't really like blocks of aluminum. a lot of their ability to succeed depends on their knowledge about the product and the organization, and their very human relationships with other people.
Isn't this generally because they didn't fire low performers one by one, but instead those people just build up and get laid off all together? It's a terrible pattern (firing known-bad staff is good for morale, layoffs are bad for morale) but extremely common.
As much as people hate stack ranking and enforced "unregretted attrition" at places like AWS, it seems like the only way to ensure managers actually fire deadweight.
The bigger problem was deadwood employees, but deadwood projects and middle-managers who built out their fiefdoms. The smarter approach would have been to do a better job moving around the best employees in more comprehensive reorg. But that is very difficult to execute well.
This always seems to be a worse problem than IC performance. Managers have power to remove ICs. But nobody really has a lot of power against politically strong dead weight projects.
Fun story. I worked with a guy who had a habit of killing any project he was on. Guy was fantastic at certain feel good maneuvers that had a tendency to suck all forward momentum and enthusiasm. He was a nice guy, and it was clear he had positive intent.
I would unequivocally hire this guy if I was a C-suite and place him on any project I couldn’t kill but wanted to stall out.
I was part of a layoff this year. I was the highest performing member of the team — and awarded as such — but my skip level VP didn’t like me. So I’m gone. It was similar across the board.. lots of my coworkers, many of whom were good at their jobs, were selected-out not based on performance either.
So yeah, sometimes you can cut the chaff this way, and sometimes it’s just a way for those in power to consolidate their crews. And sure… this is technically a management right, but some who were retained were kept because they were abusable more than they were useful.
Not OP, but I know my manager was let go because he didn’t agree with his manager (VP) in the new re-org structure. I’m glad he didn’t agree because we are customer facing engineers and under the new re-org, we would be under a person who had no desire to think about issues from an external client perspective. It would have made the entire team miserable and less efficient but the VP had an attitude of “why don’t you just do as you’re told”.
Sometimes it’s just poor leadership, but leaders have power.
I could say that my project was orthogonal to his interests, but also not optional (from higher ups). I made it painless but I expect that as much as anything, he didn’t like my face.
And, what was rough was that he oversaw our division for about 60 days. I know for a fact I wasn’t on the cut list from my manager or his manager.
Is this capitalist-rational? It is what it is. Is it about optimal organizational outcomes? I don’t see how it could be. Layoffs are about something, but righting ships? I don’t accept that.
The problem is that as the market increasingly becomes removed from reality the only thing left for "leadership" to do is follow the trends that their biggest investors are following.
What benefit would sound, thoughtful leadership provide in a world where the fundamentals have no connection with real world success? For years if you had made a profitable, viable and sustainable company investors would have scoffed at you. You would have been crushed by some investor hype fueled, unprofitable, impossible to sustain company chasing trends.
Reality keeps threatening to rear it's ugly head, but then we find a way to keep it at bay for another round of delusion. We all know something is not quite right but as long as there's money on the table we all keep playing the game. I mean we all know by now that crypto is a scam and COIN has more than doubled it's opening price at the start of the year.
I had a discussion with one of the CEOs who did that around a year ago, it turns out, it is just the usual influence and bandwagon ride, he said that the hiring is easier these days and unlike during the pandemic, “so we will let go those and hire others later, it won’t be a challenge”, and why he did it? Apparently from reading all the news that big companies are doing it. Now that was a small company following the big boys in tech, but why big companies would do that in the first place? Well, personally, I think it revolves around what said by Tim Gurner, the CEO of Gurner Group (1)
> We need to see pain in the economy, We need to remind people they work for the employer, not the other way around.
Yes, obviously he was attacked and apologized later, but he was honest, he said out loud what most CEOs say behind closed doors.
They have bosses/people with power over them like everyone else.
CEO is day to day in charge, but they have a board to report to, investors who will gripe, banks that will want more collateral of the share price falls, etc.
I’ve done all sorts of damaging things to keep people above me satisfied.
And I will do it thousands of times more over my career.
> I’ve done all sorts of damaging things to keep people above me satisfied.
And I will do it thousands of times more over my career.
Interesting. I understand why - your career matters more than another person’s career. But I can’t help but think nobody wants to work for someone who won’t have their team’s back. How do you strike a balance? Asking because I imagine I might face similar situations in the future if/when I go up the totem pole. Do you just say “it’s not personal, just business” and go on your way?
I will. I will work equally for someone who has my back as someone who does not.
I’m too cynical to believe you do have my back, so having it does not matter.
I am an IC, so most of my decisions have been about screwing customers. I’ve never had to directly deal with them as that is customer support’s problem. I’ve also hurt salespeople, but again, only had to hear about it through channels.
Right, even if they disagree with a particular trend, they probably have tremendous pressure to to conform. Going an independent path is very difficult and requires strong leadership skills and political capital.
Not without consequences, as they have power over me.
And I have no real stake in the outcomes of my department/company, so frankly even a 5 minute conversation is more expensive to me than frustrating someone I will never meet, even if it costs us sales.
Elon Musk starred a fad. The other tech leaders had to get in on the fad or seem out-of-date. The thing about fads is you don't do them because they're useful or because you thought it out; you do it because everyone else is and you don't want to look stupid for being left behind.
Owners of tech companies aren't immune to the same foibles that drive all of us; they just have more money.
It has nothing to do with Musk. Cisco, Verizon, HP etc have been slashing tens of thousands of jobs to please shareholders since before Musk knew what a 10-Q was.
Mass layoffs have been a fact of bigco life for ages. Tech layoffs seem novel in comparison, possibly because in the old days companies didn't have thousands of developers on the payroll.
No they do have a use or benefits, not for the employees though but for the corps, it is all supply and demand, once those employees who are mostly living paycheck to paycheck are let go, on a scale, you will have a lot of supply to further reduce the compensations or at least have the leverage when it comes to negotiations, so no WFH and the likes. Corps are never your friends or in your interests, unions are.
Blaming Elon for everything has reached a new level. I don't think you can be confident in this hypothesis, you would have to show that all these firms weren't reacting similarly because they had the same data and outlook. Twitter just went first.
One thing to consider for SFDC, the layoffs took a while to percolate. It was many months before the international employee base was impacted, especially in the EU, do to local labor laws.
So I think before we can get outraged we need to know what areas got laid off and what areas they are hiring for, rebalancing your workforce isn't necessarily a bad thing, although the way they handled it might've been done poorly.
I mean you can't exactly take Linda whose been in HR for 10 years or Frank whose a team lead in accounting and suddenly turn them into Sr. ML engineers.
True, but my impression is that large scale layoffs don't tend to be well targeted. It is almost impossible for them to be well targeted, just because of the needs for secrecy driving decisions into places far removed from day to day operations.
Inevitably the new hires won't be the same roles, but plenty of them would fit the same resumes. :facepalm
In class warfare it is a poor choice to give the wealth class this benefit of a doubt.
If their seemingly poor decisions—and to a laid off worker these were indeed poor decisions—were not made of incompetence, to a worker it is better to assume they were made out of class interest. Or as Marx’s razor goes:
> Never attribute to stupidity that which is adequately explained by class interest.
In this case you have no evidence to even hint that the people being rehired won’t fill up positions lost during the mass layoffs. If you are a worker, it serves you better to assume the mass layoffs were done with the sole purpose to enrich the shareholders at the cost of the business, and assume that the rehiring is evidence to the fact that this poor decisions collaterally affected the health of the business, and by extension, the value for their shareholder.
You're right comrade the scales have fallen from my eyes and I see clearly now there is only the noble honest upright workers of the world and the evil scheming capitalists, (also the kulaks that we will need to go after eventually).
How could I have not seen this before we are engaged in a war against the bourgeoisie and must recognize it as such all things in the world from the operations of the market to international politics are driven entirely by the rich waging war on the poor and nothing but.
Come unite fellow dog walkers, and baristas, rally to the cause underappreciated poets and artists you have nothing to lose but your chains, let us rise up in violence and consent no more to this explotation.
After all it was the capitalists who declared that "he who does not work shall not eat" it is the capitalists that prevent free and abundant healthcare from flowing to everyone, it is the capitalists that are the cause of greed and scarcity in society, let us dismantle their systems of oppression, the state, the church, the telecommunications corporations, the railroads companies, let us dismantle them all, for only then will we truly have abundance and plenty for all!
We were so convinced of an upcoming recession. The pandemic, domestic politics, a trade war, inflation, all of these things were signaling a downturn. We got articles like [1] "100% probability of U.S. recession in coming year, according to Bloomberg Economics forecast model".
No one will know until we are in it, but I have read that historically the recession starts once the Fed pivots and starts lowering interest rates.
If we make it out of this with a true soft landing, then Powell should go down as one of the best Fed Chairs in history.
Although, with inflation so high it wouldn't shock me to revise the definition of recession to include some inflation component. Because even though GDP is still growing, the average consumer definitely feels like they are in one.
People also say literally the opposite: that raising interest rates is what causes the recession. People even said that the fed was deliberately trying to induce a recession by raising rates. It cannot be both things, that both raising and lowering rates causes recessions.
Heck, isn't lowering rates what the fed does to juice the economy in the face of recession?
but it can be, of course. overstimulation of the economy leads to unsustainable bubbles, which when burst lead to recessions, and an unexpected and unnecessary understimulation can very well cause a recession. (case in point in 2008 the Fed likely overreacted[0], because everyone was so scared of the insane housing prices, claiming there's no economical reason for them, whereas now it's clear that there are multiple serious factors cooperating to keep housing prices absurdly high.)
I guess what I'd ask people who say "the recession is just around the corner, look at datapoint X" to also say what datapoint they'd use to determine that the recession is not just around the corner. Because it feels like the reasoning for why the recession is just around the corner simply fluidly moves between metrics as things change but the "just-around-the-corner-ness" never does.
There were and increasingly are some major concerns about the economy. For starters we're still seeing very low unemployment with rapidly decreasing personal saving rate (near record lows) [0], increased tapping into 401ks early[1], and record credit debt [2].
More people are working and yet are less able to pay for things. Even if you completely ignore inflation, something seems very concerning about this.
The fact that the market is divorced from reality doesn't mean that our economic fundamentals are strong.
That doesn't even touch on the looming crisis with commercial real estate impacting the already unstable small banks which is just starting to unravel now [3], or the major threats to the insurance industry that are starting to appear with increased effects of climate change [4].
What's going on right now economically is strange, and it's a far better to question "wait, why aren't we in a recession?" than it is to mock those who claimed we would be (though I do tend to avoid 100% claims).
You might be right but I'm gonna hold judgment until the interest rates are back down to something more normal for a while. Recession or not, the situation doesn't feel normal, and the current situation doesn't feel sustainable.
Edit: In reply to those who feel "normal" isn't a thing: replace it with "sustainable".
I'm thinking this might be healthier. When I was a kid it seemed normal that money in the bank would accrue real interest. Now that mine's doing that, something just feels right about it, like things are back in balance. Take my money, loan it out, pay me a little something back.
There's no such thing as normal. The 70s weren't normal what with the oil embargos and stagflation and the end of the Vietnam war. The 80s had banking crises and the beginning of Reaganomics. In the 90s, computers were really beginning to eat the world and geopolitics were realigning with the end of the USSR. The 2000s surely weren't normal—the dotcom bubble burst, 9/11 kicked off wars, the housing market imploded, etc. 2010s had really bizarrely low sustained interest rates. 2020s kicked off with some unusually stringent travel restrictions worldwide and a massive uptick in remote work.
What if the interest rates are normal now? How in the hell are 2.5% interest rates "normal." No one would ever relinquish their capital for that return. They were artificial...that is why we ran into problems.
This is normal interest rates, at least historically. The zero interest - savers have no choice but to buy equities / invest in technology ventures - environment post 2010 was the anomaly.
I agree with the feeling everything still seeming to be unsettled, but the interest rate environment is actually closer to "normal" today than the recent past. The extreme low-rate environment was the outlier, not today. The change itself though is certainly a cause of market shock.
Interest rates are at their historical average. We are coming off 15 years of absurdly low rates, which is why it doesn’t feel normal to you. 2008 wasn’t normal, and the economic affects that followed are the outliers.
We didn't go through a recession nationally or globally but there has definitely been a micro tech recession as the VC valuation bubble burst.
Its a good thing though, it means tech and normie salaries will converge. Economic data says post-covid the bottom 25% of society has had the biggest salary gains.
Which was pennies and thirty years too late. Hence, why the salary increases are just barely keeping thier noses above water. Sprinkle in the creeping erosion and you have people going under unexpectedly. Auto repairs are billed at $140 an hour--doesn't matter if its a brake job or a CAN BUS nightmare. Automobile quality has nose-dived as their costs have increased dramatically. The people at the lower end of pay scales cannot afford automotive transportation at all. They are going under just from that.
What a downer comment. If we never celebrate wins, what's the point? Life has sucked since the dawn of time, its only through the stride of civilization that people have hope of better lives now.
If anything you'd probably drastically increase your salary if boomeranging. Inflation has been no joke these last years, and getting a new job usually outperforms a promotion by a large margin.
Not doubting that chart, but it's worth a bit of skepticism.
If people are making more money relative to inflation and the workforce participation rate has been steadily rising, then why is credit card debt at record highs and personal savings at near record lows? That should imply that people are buying tons more stuff than they used to, because if you make more money, don't save the money and you still need more credit where does the money go?
Corporate america is strategy is incoherent. They probably needed to make quarterly profit benchmarks, so cut opex via layoffs. Now they are good, start hiring aggressively (again). Silly management, can't make up their minds.
Personally, I have adapted to expect the chaos and prep mentally. I encourage others to do the same, especially if you are at a risky tech company. Its best t never assume stability, especially nowadays.
There is one "small" twist: they were probably firing/letting go all the people that didn't want return to the office and now are starting again to hire people that will go to the office.
It sucks big time, and it's what more or less happening at my company as well (I'm fully remote, hoping to get fired and get a juicy compensation for that)
