[redundo_twa]

Throwaway account because I'm currently in the middle of being laid off ("redundancy" in UK).

I thought I always had that somewhat-cynical outlook by default, coming from a leftist family; but still, the unfairness of this process (first time for me in 20 years of work) boils my blood. Metrics massaged to target this and that, backstabbing, disrespecting people who built the company... all that will forever scar the company, no matter what. Your best and brightest don't want to live in fear, once you scare them like this they will leave.

I don't understand why companies with troubled books don't just spin off the departments they want to cut: give people a chance to fend by themselves, keeping teams together and offloading risk without losing knowledge and propagating fear.

[kemiller]

I'm not sure how that would work. I completely agree that layoffs suck, but when a company is at that point, it's usually because other options have been exhausted. But turning a bunch of people out who have never run a company (presumably) as a spinoff seems pretty cruel in most cases. Edit: most of my experience being laid off has been at startups, where I guess it's a bit different from big companies.

[redundo_twa]

>when a company is at that point, it's usually because other options have been exhausted.

Definitely not the case for me at the moment, but I won't bore you with the details.

I don't think it would be cruel at all. If a company cuts entire chunks of the business (products, departments, what have you), it's because someone made a management call that they don't want to bear the risk and/or losses associated to that particular segment, or they cannot imagine new strategies. That does not mean that such a segment is completely unviable, it might simply be that it's not as profitable as that someone decided it should be, or requires more effort that that someone is willing to invest (money, time, creativity etc).

It might still be a perfectly viable lifestyle business for the people working there, who only want to make a decent living. Giving them a choice and a fighting chance, imho, is a win-win situation: the business offloads risk, knowledge is not dispersed, relationships are kept positive. At worst, the spin-off fails, the company has executed a cheap round of layoffs with no hard feelings; at best, the spin-off succeeds, they get some service for cheap and/or dividends, everybody is happy.

I'm surprised nobody said "well, the laid-off people can still do it themselves, nobody stops them" and that's absolutely true; but doing it in an organised manner, with support from an established "mother" entity, is much easier.

Say I switch to the cloud and don't really need most of my datacentre anymore. Instead of just chucking it all away, people and machines alike, I set them up as a separate hosting company where i'm a minority shareholder, buy from them a small contract for my little bit of legacy stuff, and let them free to go find new customers or do their thing. If they fail, nothing of value is lost and I still have access to their talent pool because no bridge was burnt; if they succeed, my shares are worth something and I keep getting good service for cheap.

In a way, it's similar to what Amazon did when they first introduced AWS: they had internal overcapacity for some services and just turned it into another business. (sure, it was a new system etc etc; but when you boil it down, it's just that: they had more internal resources than they needed, and rather than scaling them down, they started selling excess.)

[asmosoinio]

I've been through something like this.

I did see it and a win-win, but it takes a lot of resources from the company. I don't see a say 1000 employee company in the middle of some crisis (hence the layoffs) having the capacity to execute such things. Or at least it's easy to see why this would not be a priority.

[mseebach]

Can you elaborate on the idea that companies should spin off departments? On the face of it, I don't see how that could work, but I probably don't understand your idea fully.

[asmosoinio]

I also did not understand how that could work in most cases.

I agree with allanienhuis, that it can work well for products.

I was myself working on a mobile app (before they were really a thing) at Nokia. The app was for analyzing golf swings. There was a department working on sports related products. Someone decided to streamline the company (around 2002 or so I guess - nothing major back then), and this department was killed.

We were allowed to spin off the app and related IP to our own company, and were able to continue working on it. At the time I think it was a win-win for both sides.

[allannienhuis]

The idea might work better for products than departments.

I worked for an employer who did exactly that when one of the new product/business they'd built wasn't growing (enough?) to warrant more investment. So he set up a couple of the developers working on the product with the rights to the product and helped work out new contracts with the existing handful of clients (it was large enterprise software). There was enough revenue (maintenance contracts) to support the two guys, and so the existing customers were taken care of in terms of maintenance. Worked out pretty well for everyone as far as I know.

[mseebach]

But was the alternative in that case to fire the two employees? It sounds more like the case that they wanted to cut the product.

Specifically, in the case of the article, spinning off the redundant employees leaving them in a new firm with no product and no revenue sounds like a cruelly dystopian option. And if the company was willing to put money into it, I'm pretty sure most employees would prefer that as a severance package instead.

[allannienhuis]

Cutting a product often comes with layoffs. The other products may or may not be able to support the staff that were working on the products being cut. Obviously the larger the company is the more likely there are other options aside from layoffs.

In this case I expect he might have made a spot for those employees working on a different product, but that's not certain - technologies & skills were different & the vertical markets were completely different.

And in this specific case, the two staff thought it was an amazing opportunity for them - I think their short-term salary went up & they got a lot more flexibility plus potential upside if they could grow the business even slowly. Obviously some downsides in terms of benefits, etc. But even if it didn't work out it would have been a pretty good line item on their resume. :)

[benatkin]

These seem like extremely competent developers. They could have transferred them to more important projects that had less competent developers in them, and let two or more less competent developers go.

[redundo_twa]

> I'm pretty sure most employees would prefer that as a severance package instead.

Possibly, but I think the employee should be given a choice. If even just 1% of laid-off people took the choice and succeeded, the entire economy would clearly benefit.

[benatkin]

Sounds like they should have shut down the product but kept the developers. If they were able to run the business on their own, they were probably 10x developers. Even if they lost half of their momentum by being switched to a new team, they still would have been great for the company.

[allannienhuis]

Shutting down the product is exactly what they were trying to avoid. As a business owner, he made commitments to his customers to support the software he sold them. Walking away from those commitments would have compromised his reputation and hurt his ability to sell in other new markets. I think it was primarily a personal obligation he felt towards his clients, and a matter of integrity.

In the B2B space, the costs of switching vendors/products is often a really big deal. Spinning the product off released him from the obligation (allowing him to focus on more promising products), and avoided (most of?) the pain for his clients.

[redundo_twa]

See my reply at https://news.ycombinator.com/item?id=16916590

[pascalxus]

if this only happens once in 20 years to you, then you've been quite lucky or have done quite well. In the tech industry, companies have lay offs on average about once per year: every year your there, you roll the dice.

It's not just troubled books. Many have lay off quotas they need to fill: jack walsh style of management. It's just how modern day capitalism works.

There is however, one upside. All that laying off means they'll have to do a lot of re-hiring to replace all the employees they laid off.

[fallingfrog]

I think it's also a union-busting tactic- if you keep the turnover high enough then people don't get to know each other well enough to form unions.

[fjsolwmv]

Laying off 5% every year means an average of 20 years between layoffs.