[hallarempt]

Yes. They never are. A recent study investigated this and neither stock price nor productivity nor profitability improved. All mass layoffs do is crater employee morale. And yes, it's a "others are jumping into the lake with their clothes on, let's get our brooks brothers shirts wet, too" thing without any rational cogitation involved..

[ajkjk]

That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

Granted, getting into that situation was probably "executives making stupid mistakes" -- seems like it usually is -- and granted, they're probably not saying "we have to do these layoffs because I was an idiot last year", and they're probably not taking commensurate pay cuts. But still. It can certainly and obviously be good for the company's health to have fewer people on its payroll.

[bonsaibilly]

> That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

Well, the evidence is that mass layoffs aren't having the result of being very positive for companies that engage in them.

Given that what you say also feels true, in my experience, an explanation immediately suggests itself:

Big companies rarely if ever manage to mass lay off only unproductive staff, or net-drain internal orgs. Rather, they're almost always implemented as an across-board X% haircut for most departments with little targeting whatsoever. So in the end, they don't solve the problem you're identifying, and that's why the evidence says they end up doing nothing positive for the company.

[snotrockets]

I think its more complex than that: even if, by magic, you managed to lay off every non-contributing worker, and only them, the affect on employee morale is significant, and would cause contributing employees to leave completely or contribute less. Reducing the total output for the company.

And I'd also suggest that very few, if at all, employees has zero contribution. It's just that some of those contributions are invisible to you.

[HeyLaughingBoy]

> So in the end, they don't solve the problem you're identifying

It may be unpopular to say this, but of course it does. Just hire more people if you need to and hope that you're making the right decision. Yes, it has a terrible effect on employee morale, but that's a tough thing to quantify so it won't show up on the balance sheet.

It's too soon to know if the impact of layoffs on most of the companies doing them is positive or not. twitter is an anomaly: that was driven by basic stupidity!

When the $BIGCO I worked for was acquired, instructions were to cut 8% headcount across the board. We were explicitly told that they expected that some valuable people would be cut accidentally, but that's unfortunate. No one should be unreplaceable and if they really are, this is a way to find out and change processes so it can't happen again.

[ajkjk]

I wonder if, despite not being a benefit, they avoid a worse outcome at the same time? perhaps the evidence can distinguish those, not sure. It seems like if "not a benefit" means "the stock or performance or profitability didn't go up"... well, I think stock prices are a very trailing indicator of the health the company, since executives are incentivized to pamper over anything bad about it. So the layoffs may reflect the fact that "things have been bad for a while" and thus the metrics staying flat would imply that they would have gone down if they _hadn't_ done it.

[ROTMetro]

They risk laying of RedundantHuman93, who years ago was super human according to the metrics then, and retains the most in-depth institutional knowledge from being core to the business, but on paper for this layoff and it's (holy financial crusade) metrics looks like a lesser performer because their projects are just 'part of the institution' or they are bogged down in tons of unsexy deadwood 'keep the business running tasks' at this point and uninteresting 'overhead' that 'anyone can do'. But once they let RedundantWetware93 go the company realizes the mistake and have to hire them back as a consultant at greater expense, now with zero buyin from ParasiticMeatsackConsultant93, and as they interact with many core people/departments their lack of buyin and the reason for it impacts large core groups of biologicalLoborUnits. The company is also less flexible as they now have to schedule around Deadwood93s availability. Without the 'underperformer' the company is at risk of falling out of applicable legal/industry regulation/various compliance requirements because that stuff's all invisible and 'of course someone takes care of that stuff' without thinking who catches all the little intimate details that require a proactive thinking human being. They stop paying attention to specific customer commitments/requirements/requests that are just going to be dropped now, with potential contractual lawsuits and definite loss of customer good will.

All humans are not just FutureRedundantWetwareMeatsacks that the all knowing bean counters can move around on a board. In reality business is about relationship/small detail institutional knowledge silo'd in individuals/humans proactively getting done what needs doing, many details that get poorly caught by tribal documentation systems.

If your people are truly cogs you don't have a business, you have a franchise, and anyone else can do the cookie cutter things your business is doing, and most likely better/cheaper/flashier. But for some reason HK and all these companies doing layoffs either don't understand that, or they WANT to turn their company into a generic franchise where everyone is interchangeable and lose the flexibility/capability/competency that being a business of interconnected humans gives.

[vineyardmike]

> That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

It’s tough. Look at Amazon. They cull the bottom 5% every year. It has a negative affect on morale because everyone is continuously on edge and having a bad month or two can be dangerous. Look at a layoff, it craters morale and reduces productivity.

The best bet seems to be to grow slow, hire and retain the best, and fire the low performers only as needed.

After that, look at corporate giants like IBM. They are laying off, yes, but historically they just lurched along, providing a paycheck to everyone.

[ajkjk]

I worked at Amazon (a while ago) and they both (a) did not do that and (b) what firing they did not, imo, affect morale. If anything the fact that really bad engineers were quickly removed was probably a net positive for morale.

There were a couple of dubious episodes, though, where a bad manager tried to do something to people they didn't like. Sometimes it worked (aka, negatively affected people) and sometimes the manager got in trouble instead. So it's not like all good. But it was heavily dependent on the managers you ended up under.

[giaour]

Layoffs may have second order cost saving effects (e.g., reducing competitive upward pressure on salaries, discouraging staff from asking for raises), but those seem impossible to measure

[im_down_w_otp]

What should a business do that has more people on payroll than their revenues can support?

[bombcar]

I think the argument is that you shouldn't get into the position where mass layoffs are the solution, just like you shouldn't get into the position where gastric bypass surgery is your only option.

Something like each team is maintaining themselves at a proper rate, laying off inside the team as necessary. But even then you will at times have to fire entire teams, but those aren't really a "mass layoff" so much as "we're not doing X anymore".

[HeyLaughingBoy]

Yeah, but reality bites. You're in the situation that you're in and you have to deal with what's in front of you.

[lesuorac]

I mean if your company makes ~150M a quarter and has operating expenses of 217M and cost of revenues of 53M a 6% cut towards your operating expenses isn't going to get you anywhere close to profitable.

https://investors.confluent.io/node/8031/html

[kdazzle]

Hiring freeze, for one. Then anyone that leaves won’t be replaced and headcount will (presumably) go down trauma free.

[coredog64]

If everyone does a hiring freeze instead of layoffs, there’s no attrition other than the PIP kind. Ask an Amazonian what that does for morale.

[munificent]

Use those people to build products that increase revenues. Isn't that why they were hired in the first place?

[phumberdroz]

Do you have a link to that study would like to share that with someone.

[rozim]

This may lead you to it: https://news.stanford.edu/2022/12/05/explains-recent-tech-la...