[duped]

> Layoffs suck and no one wants to do it, but sometimes it's needed to save the ship.

Layoffs are the trolley problem but you get to pick how many people are lying down on each side of the track and if you want yourself to be one of them.

That said, if one reaches the conclusion that under their leadership they were forced to downsize by 20% (either due to over hiring, failure to reach revenue/growth targets, whatever) that should make that person one of the people on proverbial tracks. Compensation has little to do with it.

[Matticus_Rex]

>that should make that person one of the people on proverbial track

That's a satisfying thing to say, but as practical advice it's absolutely terrible.

Often that person's leadership wasn't the problem, but even when it was, that doesn't necessarily mean that the company will be better-off without them. And that's the question -- what will make the company most likely to be the most successful going forward? Even if the current trouble is because of some of that leader's mistakes, the answer is often to keep that leader. Sometimes it isn't.

[pixelatedindex]

> Often that person's leadership wasn't the problem

Then what is the problem? Ultimately you’re paid the big bucks for being held responsible. Why isn’t it never something like the CEO doesn’t get any stocks that year. I’m not saying he needs to leave the company but maybe he should take a substantial hit to his pay. He has enough money to put food on the table for many years, unlike the people who are let go where it’s mostly a mixed bag.

[s1artibartfast]

>Why isn’t it never something like the CEO doesn’t get any stocks that year.

Performance based compensation is absolutely standard for CEOs- Both in terms of options and stock grants.

[DrillShopper]

Do those metrics count "number of people laid off" explicitly?

We know they do implicitly because laying off people makes the company more profitable, but is there any penalty for killing jobs?

If not, shouldn't there be?

[s1artibartfast]

No, I dont think there should be a penalty by default.

The objective of a company isnt and shouldn't be to run a charity. Some amount of layoffs are desirable just as a matter of housekeeping. Layoffs can be a hard part of doing a good job.

I think there are extreme examples and tactics where layoffs cross a moral line but not a legal line. for example, I think the humane thing to do is freeze hiring before layoffs so you dont relocate someone only to let them go.

That said, there are already a lot of business incentives to avoid turbulence in headcount. It is slow and expensive to hire people and let them go.

[johnnyanmac]

>I dont think there should be a penalty by default.

I do.

>The objective of a company isnt and shouldn't be to run a charity.

Charities pay employees too. 501ks don't mean you run on all volunteers and that it's okay to remove them at your whim. Horrible metaphor.

Anyways, a company has 3 goals

1. serve the customer

2. support your labor to enable efficient production

3. overall stimulate the economy and society

These all help the bottom line of "make profit". Shareholders have little stake here so it's annoying that that is all they prioritize lately. because you then break all 3 rules just for them, who will leave on a whim for some other speculation. And then they wonder why they lose money as workers burnout and leave, as customers get frustrated and move, and the economy gets worse as money is pocketed to the rich instead of the public.

It'a all a horrid death spiral. It needs to stop. It will stop forcefully if not voluntarily.

>It is slow and expensive to hire people and let them go.

And who's fault is that? I don't remember shouting in glee whenever I hear 5 rounds of interviews, including 2 rounds dedicated to trivia.

>Its actually incredibly hard to to figure out which people to cut in an efficient manner.

it is. That's why Hanlon's razor simply tells me they aren't trying very hard. They need to cut numbers, maxiize money and care about next quarter next quarter. efficiency wasn' prioritized before the layoffs, why would it be now?

[DrillShopper]

> Layoffs can be a hard part of doing a good job.

Yeah firing people is so tiring - might have to skip my tee time!/s

[mulmen]

The purpose of a corporation is to make money, not jobs.

[s1artibartfast]

to play devils advocate, there are different levels one can look at that. From the level of the companies and owners, the goal is to make money.

From the perspective of society there are tons of answers. A common answer is that companies provide goods and services that give consumers more value than they cost, thereby enriching the lives of consumers.

It seems like some people, especially those who take issue with layoffs, tend to think the social purpose of companies is to give jobs/money to workers. This leads to a lot of frustration for those people because the entire economic system is set up such that jobs are an optional byproduct of making goods, not the other way around.

[duped]

We live in a society where there are more metrics than money. The entire notion of corporate amorality is a thin veil that people use to hide their own unethical and immoral behavior.

That's why I made the comment that layoffs are the trolley problem. It's an ethical question and companies don't always make the ethical choice, for example choosing profit over jobs in a downturn.

[pixelatedindex]

> Performance based compensation is absolutely standard for CEOs- Both in terms of options and stock grants.

Yes but you’re still making $1.5M after a 34% haircut. That seems like a reward, and not any real sense of taking responsibility when you have to let go 1 in 5. Wouldn’t it be better if he just got a base salary of 200K or something and no stocks for that year? He already has a bunch of equity and if he does well at the end of the year, that equity will be worth more anyway.

[s1artibartfast]

In what sense do you think it would be better? Would it advance CEO performance or the company? Would it bring the world more into alignment with some sense of moral justice?

[pixelatedindex]

It certainly would be some real accountability. They didn’t perform well and they’re mostly compensated in equity, so they get less of it. When they perform better, they’ll get more equity. Why wouldn’t this encourages the CEO perform better? The sword cuts both ways.

[sangnoir]

And who sets the standards? Their CEO-buddies on the boards. None of them would dare rock the boat.

One of the failure modes of 401ks and investment funds are large investment pools that don't vote at AGMs, leaving boards largely dominated by CxOs, to their own devices.

[s1artibartfast]

Either you dont understand my point, or I dont understand yours.

Im saying CEOs have financial skin in the game tied to company performance. They get less, often much less when the company shits the bed. This was in response to a parent post that seems to think CEO comp is entirely isolated from performance.

[sangnoir]

You probably didn't understand my point. You said CEOs are paid that way because it's the standard. In your opinion, who sets the standards for CEO compensation, and what are their day-jobs? The majority of boardmembers happen to be C-suite executives themselves.

My thesis is that the boards of public companies have been captured by the executives, and the diffuse shareholding has been ineffective in providing oversight to the boards at AGMs. If SWE (or teacher) remuneration were determined by a (nominally independent) subcommittee dominated by other SWEs (or teachers), I posit that incomes for that role would outstrip other roles at the same organization over multiple decades, due to biases and knowing who butters their bread. It would become standard practice, naturally.

[geodel]

Held responsible for what? The what part is written in contract for execs, movie stars, sport persons. I have not seen in any category people not getting paid per their contract for poor performance.

[teitoklien]

The ones out of job can join a different company, america’s unemployment rate especially in the tech sector tends to be low.

Them doing layoffs doesnt mean the people become destitute.

It is better to layoff people who are not adding value to a company, so that those newly unemployed folks can join a different company and build great products and add more value to the economy.

Ofcourse this only applies to US tech sector where hiring is tight. Especially when coming out of top tier companies like dropbox on your resume.

I don’t think its that dramatic, folks who tend to hold similar ideologies like you state, tend to not even bat a single eye, when average americans who lack the privilege of a tech worker lose their job to automation (with tech) or outsourcing or due to overburdened climate regulations and redtape leading to fewer factory jobs in America.

This is not the titanic, those people will move on to places where they’ll have a chance for promotion.

[dandellion]

Whenever people are laid off where you work, I suppose you always volunteer to take their place? Since according to you it's only such a minor inconvenience I think it would be hypocritical of you to not to offer to take their place.

Grandparent is not even saying that it should be avoided, just that the CEO should face some accountability from it. In many cases they have none at all, whereas the impact on the employees can range from actually quite low (as in your example) to very high. In fact there is no upper ceiling to impact to the worker which is the real problem. From the horror stories I've heard about the US they could even lose health insurance and end up with someone in the family dying because they can't afford treatment. Accountability is good precisely when there are such asymmetrical power imbalances, where one person makes the decision and someone else bears all the consequences. Either you add some feedback loops or the imbalance grows unchecked until it becomes unsustainable, and eventually you end up with a war of independence, or a French revolution and things like that.

With just a bit of empathy it should be easy to understand why accountability is needed in such situations to keep a good social dynamic long term. Someone with the empathy of a river boulder might think it's just people behaving irrationally, but I suggest you look into game theory and you'll see how some seemingly irrational behaviours like tit-for-tat are not as irrational as they seem.

[johnnyanmac]

>The ones out of job can join a different company, america’s unemployment rate especially in the tech sector tends to be low.

>Ofcourse this only applies to US tech sector where hiring is tight.

So, which is it? Will we move on or wont we?

>tend to not even bat a single eye, when average americans who lack the privilege of a tech worker lose their job to automation (with tech) or outsourcing

They keep trying to re-outsource tech every decade and we're in another wave. Why would I not be batting all my eyes at outsourcing?

[sangnoir]

> Often that person's leadership wasn't the problem, but even when it was, that doesn't necessarily mean that the company will be better-off without them

How convenient (for them)! When the company is doing well, they get millions in bonuses because their irreplaceable leadership skills - which make them 2000x more valuable than the least paid worker - were instrumental to the organization's success.

When the chips are down, it wasn't their fault per se, and the company still would be allegedly worse off without them, so laying-off waves of those who don't have decision-making power is the correct remedy, until the good times roll again, and senior leadership is ready to claim responsibility.

It must be nice to claim "macro-economic headwinds" as justification for poor performance and poor planning, but still get paid bonuses for the never-mentioned "macro-economic tailwinds"

[JumpCrisscross]

> must be nice to claim "macro-economic headwinds" as justification for poor performance and poor planning, but still get paid bonuses for the never-mentioned "macro-economic tailwinds"

What would you do if you owned a business? Fire leadership every time they make a wrong call? Or ban them from admitting they made a wrong call?

[johnnyanmac]

>What would you do if you owned a business?

- Find the issues, the ACTUAL issues. not "the stockholders are unhappy" issues. Not the "we overhired" issues. tangible issues hurting my bottom line. Economic head/tailwins is not a tangible issue for anything (let alone performance related) so much as a means to adjust projected earnings.

- Make an action plan, give tangible, reasonable goals. Not speculation on what appeals to monopoly money. We're a software company; if we can't collect internal data, how are we handling client data with any integrity.

- If anyone in leadership acted maliciously, they are gone. Full stop. Others are corrected. I can correct ignorance or incompetency. I won't stand deception and trickery among what should all be an aligned company with aligned goals.

(note, I won't codify a need to "fire someone" everytime a mistake is made either. a mistake is a managerial failing at best and a company failing at worst. Operate in a “a rising tide lifts all boats” mentality, not blame culture)

- if action plans and projected revenues look dire and we absolutely need to, introduce cuts. Try to cut my (assuming I'm earning anything) salaries first, then other execs. If absolutely necessary after they, we do layoff rounds. Ideally this should not happen because I have a proper savings chest for the worst times, but I'm not 100% opposed to layoffs as a last resort.

now of course, all this is unnecessary because dropbox is in fact not at the point where any of this is needed. Except maybe for Monopoly money. But yes, I have thought quite a bit about this scenario. And I still know this is still a shallow exercise since I'm missing tons of looholes and other scenarios.

[sangnoir]

If I owned a controlling stake in a business, I'd fire the leadership every time there's evidence of short-term thinking. The problem with public companies is systemic: a large fraction of shareholders want short term appreciation, and so they support and reward short-term mindsets in leaders at the cost of long-term value.

[JumpCrisscross]

> I'd fire the leadership every time there's evidence of short-term thinking

Have you owned a business? Worked for a manager who thought like this? You’re describing the sort of mercurial boss who fires people for disagreeing with them.

[sangnoir]

There's nothing mercurial about firing someone over poor strategic planning. Before you hire someone, you communicate the expectations of the job, amd if an executive prioritizes quick ones over long term big wins, that is a fundamental misalignment in values - not a spur-of-the-moment dismissal.

[duped]

If the leadership mistakes lead to the loss of livelihood and healthcare of thousands of employees because of their mistakes, yes, they should be included in the firings, or strongly considered for them - more so than any of the people getting laid off who made no mistakes, except working for a bad leader.

[flappyeagle]

Go start a company already — you’re on YC forums

[johnnyanmac]

1. This really shouldn't be advice handily thrown out like "learn how to play guitar". You gotta spend money to make money, and if you're laid off without a plan this is the worst time to spend money.

2. I plan to one day. I very much plan not to rely on a VC for that. The purpose for my company is to not require millions to ship products users want/need and to stay extremely lean. A small team of "full stack" developers, to put it roughly. I should already be in a very solid position by myself before I come to such a crossroad.

3. I will admit I am not this "full stack" dev yet. I will still need some months/years to get to this point myself. So I'm a "student" as of now.

[flappyeagle]

No one is ready. You become ready by just doing it

[johnnyanmac]

I agree with you in spirit. In reality, the "I quit my cushy 9-5 job to make my own game" is such a meme in my industry that I want to have a plan B and C for if/when I fail.

And right now I barely have a Plan A.

[sangnoir]

I have started a company[1], but that's neither here nor there. I vehemently disagree with your insinuation that I couldn't challenge leadership culture had I not.

Founding a company doesn't make one infallible or irreplaceable. Though to be fair, it doesn't feel that way when it's your company though!

1. I will note that this is an incredibly low bar.

[flappyeagle]

You want to be the boss. Start a company. You want someone else to control your employment, work for someone else. It’s simple.

[lucianbr]

> Often that person's leadership wasn't the problem

What's the basis for this claim? I would rather think often it was the problem. Not absolutely every time, but most times. After all, the C-suite makes the decisions. I can not believe management decisions do not influence the course of a business.

Sure, it's possible that outside circumstances were such that no decision could avoid a bad outcome. But that's a rather unlikely possibility. Most of the time, outcomes depend on decisions. Otherwise businesses would be some headless automatons. And if that was the case, we should not pay execs much at all.

It's an obvious cheat: when times are good - it's all because of the leaders, when times are bad, it's all because of the environment. This is what they claim, but it is not the truth. Again, what's the basis for this claim? Any proof, studies, anything?

[duped]

I didn't say which track they were on in the problem, just that they're on one of them.

[steveBK123]

Generally leaders are not going to fire each other.

So sometimes a doomed strategy will be pursued far longer than you'd expect, barring some board or activist intervention.

Some of it is self interest, some of it is hubris.. but also one can easily blame a bad run on some broader economic situation, specific competitor actions, or right strategy with wrong team (so fire the team) .. this works for a while until it doesn't.