It may be done differently elsewhere, but at least in this case it was clearly not dead weight.
I believe that layoffs are happening for the following reason: the major tech companies do not see VC-backed startups as a large threat to their ability to hire in a world where cash is more expensive. The big tech companies are also concerned about the high cost of labor and rising compensation.
They now have an opportunity to lay off a relatively small portion of the workforce, flood the market with people looking for work, and reduce the average value of compensation packages offered to new hires, without causing some existential threat to their ability to hire when they want to. Because pay is based on a comparison to the broader market, this new norm can be used to depress raises and stock refreshes for everybody. We haven't seen what comp looks like for next year at Google yet, but I fully expect the numbers to be pretty dismal compared to last year.
The general belief is that the decision making didn't go below the VP level. Google is huge, so this often means 4-5 managers up from an IC.
But that's not the only reason why someone might not be worth keeping. Imagine if this employee got a negotiated contract of $2million compensation during the growth phase, company might not care that he was the best performing employee when they want to cut the cost by $2MM.
Low performers weren’t fired, product lines that weren’t successful weren’t shuttered, etc all because one of the goals was to have a line going up and to the right on the growth slide because market sentiment demanded it. The CEO wants to talk about 3x-ing the company at the annual meeting.
Now that investors don’t have as much cash to burn, market sentiment demands the shuttering of unprofitable business plays and a narrative around a more rational headcount.
So we are seeing both. A manager who grew their team 3x during the pandemic is just dumping their mishires that were difficult to fire in the we must grow above all else meta. In other cases companies are shutting down entire business lines and laying off both high and low performers in a mass cull (some places transfer out the high performers before the layoff others just shutter the division).
It is a great excuse to get rid anyone who disagreed with corporate changes or mangage to anger anyone in the management chain. Most big companies just put you on 'special' projects, then if you don't get the hint to leave, bundle you into the layoff pool.
As the power shifts to the employees, it becomes possible for employees to reduce output with impunity. Employers don’t have much choice, since you can barely fill the positions you have. It’s more expensive to replace a low performer than to just keep them.
But if some employers are forced to do layoffs, citing the economy, other employers definitely can seize this opportunity to embrace the power pendulum swinging back.
As some anecdata for seasoning, some of the higher ups at Salesforce told me they were pretty ticked off about how the employees seemed to have declined in engagement and productivity. So I bet this is a joyous occasion to let the bottom rung go and move the power pendulum back to the employer. You drop the bottom and expect more from those left. Double win.
I wonder, could it be that people are at their emotional wits end over what has happened to their lives since 2019?
There really is just no other reason I find convincing for why such a huge number of CEOs apparently all sat down and independently arrived at the conclusion they needed to fire precisely 5-8% of their staff.
Whether or not fat is trimmed like you say feels more like a side effect of a classic Silicon Valley cash grab. Investors don't give a shit who has to go, they tell their VPs to tell directors to tell managers "pick 4 to keep, the rest have to go" and that is what they do.
The other thing to think about is that firms also have to signal to their investors. If all my competitors are laying off, but I don't, it might signal that I'm not carefully managing my investor's dollars. Investors might then punish the stock.
Me personally, I've been trying to get managers to be more thoughtful about who they want on their teams, being more careful in the hiring process, coaching those who aren't up to snuff, and letting go of people who are underperforming. Doing that on a regular basis instead of playing layoff games seems to make for a stronger culture overall.
Apple in particular has particularly well entrenched profits and competitive advantage, so investors may view them differently.
Also, Flutter apps being a giant bitmap on the screen of web users is an insulting slap in the face.
Much more likely outcome is you drop a normal distribution of them - some good, some bad, most avg.
- Layoffs do a far better job of destroying morale and filling employees with fear for their own jobs than any sort of at-cause termination. Layoffs should also be filling shareholders with fear for the soundness of their investments, but apparently "profit line go up" is all that matters.
- Not-tiny corporations are perfectly happy to terminate even adequate employees (let alone "underperforming but not a total disaster"). They have a much easier time replacing workers than smaller businesses do; their obstacles come less from an unwillingness to terminate and more from an aversion to risk - namely, risk of a wrongful termination claim, which they mitigate through formalities like performance reviews and PIPs.
In short, by the time layoffs are on the table, a large company has likely already culled whatever it considers "dead weight". Businesses would also vastly prefer terminations to be for-cause rather than a formal layoff for the simple reason that firing someone typically makes it easier to wriggle out of being on the hook for unemployment than laying someone off.
I think right now a single small RIF is not viewed particularly negatively by staff as it is happening across most companies. What is more problematic are companies that are laying off 10% every 3 months each time telling staff that they are now on the right track!
I'm not sure layoffs prevent this
Is Google really in a bad position? Microsoft? Others who are doing layoffs? Or can they do them, bring down expenses, and juice the stock price under the cover of "everyone is doing it"? I don't know, but it is a bit head-scratching (to me at least) that profitable companies would be doing double-digit percentage layoffs
