Zenefits confirms 250 layoffs, 17% of company workforce
venturebeat.com
venturebeat.com
> Human resources and insurance software startup Zenefits
> has announced that 250 employees are being made redundant,
> representing 17 percent of the company’s workforce.
Notice that the job to be done is still there, it's just that the company has more people doing it than necessary.
But in this case, the company is laying off a lot of its sales force and recruiting team while mumbling further content-free buzzwords about refocusing its strategy. Meaning, they aren't growing any more, so they won't be selling as much or recruiting as much.
The job to be done is no longer there. Therefore, those aren't redundancies, those are layoffs, pure and simple.
The distinction is important, because "redundancies" can arise as you grow (e.g. acquiring), but "layoffs" imply that the engine is sputtering. Eliminating redundancies is a matter of optimization. Laying people off is a matter of scaling back your ambitions.
The company is obviously trying to spin this, and VentureBeat is regurgitating their press release word-for-word without any editorial oversight whatsoever.
Similarly, if a catalog transitions to a website once that's done the legacy catalog team could simply be redundant.
If buggy-whips were to disappear as a business because Buggy 2.0 (a/k/a the automobile) comes along, it was not commonplace to say that buggy -whip manufacturers or their employees were "redundant," but to say they were "obsolete."
That seems closer to the Windows 12 vs. Windows 11 teams analogy to me.
EX: ATM's did not remove the need for all bank tellers, but they removed the need for huge numbers of them.
The difference is if you still need anyone with the skill set or not.
> In this case, the company is laying off a lot of its sales force and recruiting team while mumbling further content-free buzzwords about refocusing its strategy. Meaning, they aren't growing any more, so they won't be selling as much or recruiting as much.
Given that affected parts of the company are those most directly implicated in the regulatory violations that have produced the immediate problems, I wonder if there isn't another level of spin here, and whether this isn't more a set of firings to purge the problem units than a layoff.
The same is generally true in American English, with "laid off" replacing "made redundant" and "sacked" being uncommon for the other alternative (but "fired" and "let go" being quite common.)
A big part of the plot in the British Office tv show was watching Ricky Gervais fumble his department through a merger that ultimately made him redundant. He kept assuring the employees there would be no redundancies.
Zenefits using the term redundancies may just be colloquial British phrasing. They've got much greater PR problems now that make the semantics of layoffs vs redundancies seem a minor concern.
They could just plan to get more out of a lower staffing level, this was fairly common in the "re-engineering" triggered layoffs of the early 90s.
My bet is we will see more layoffs like this because managers have erred on the side of overhiring. Now teams are overbuilt and there's no way they need as many employees as they have to achieve their goals.
So they lay them off. We'll be seeing more of this. Management will start erring on the side of cutting staff.
The one constant here is that management is always in error, it's just the direction that has implications for employees.
I would presume that there are still sales and recruiting jobs at Zenefits. Maybe "the jobs were made redundant" isn't quite as accurate as "Zenefits realized that the jobs were already redundant."
It used to feel like there was a distinction between being laid off (can't afford you anymore, have to scale down) vs being fired (you messed up and they don't want you anymore at any positive price). But gradually I heard "laid off" get used to mean any firing for any reason.
And it makes sense: anyone is going to want to make their termination reason sound better for them, while retaining plausible deniability -- "well, the word is ambiguous anyway". Plus, it's a sensitive topic where people don't want to reveal details of the reasons about third parties. So, expect any term for any termination reason get applied to broader and broader cases, to the point of absurdity.
"He was made redundant after groping the secretary."
"He was retired after they lost their major customer." But he's 35! "So?"
"She was downsized after using illegal accounting practices for the 15th time."
"The junior partner was let go after appearing drunk at a client presentation." (Note:"let go" can be a meaningful distinction in a case where leaving might have major penalties for the leaving employee but the managing partners waive those penalties.)
Gusto is pushing to switch for benefits management, but it's a bunch of work.
I feel a little gross about staying with zenefits after hearing about their company, but it's mostly free and seems to work.
They are also offering some other services like 401k, shift management and stock options planning.
I'm sure at some point I'll consolidate on one of these platforms, but right now they don't seem stable.
Everyone I have spoken to on the subject has at least one horror story, and this was prior to the recent revelations. Add that to the general behavor of the company and the employees. Although the CEO "took the fall" for it, it simply cannot be the case that everyone else is blameless - the culture there is rotten to the core. Andreesen Horowitz, and Lars Dalgaard in particular should shoulder much of the blame for encouraging business practices which are shady at best and downright illegal in all probability.
Nevermind, I can't actually do that because my account NEVER FUCKING WORKS. Between portal and ipay, the passwords at least used to be shared, even though you had to reset it literally every time you use the site. Now they're not even shared, you need to contact your HR department to get it reset, and even once you DO set a new password, it doesn't work.
Talk about a dumpster fire of a company.
Other than the website, I don't get why a normal employee would care about the difference between providers. What does one do with Zenefits that's so painful? Literally all I ever want to do is see pay statements and enter PTO. ADP's Oracle Forms implementation is a special circle of hell, so I don't really see how it could be worse.
Also, apparently I was rude to the supervisor I spoke with two days ago. Yet somehow their behavior -- wasting my time and repeatedly hanging up on me while on hold -- is totally cool.
For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?
The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could.
Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.
The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation.
Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?
And of course be a company with a convincing path to success, which is as a rare an entity as those 10x salespeople.
Doesn't that just mean you need to offer a higher percent commission, more equity, or whatever it takes to sweeten the deal?
Your equity isn't magically worth more than the equity of the company that already employs them. And if you give them a tremendous chunk of every sale they make, your COS is through the roof and you aren't making any money.
You might go raise a ton of cash and spend it buying great salespeople so you can buy some MRR and ARR, but everyone else is playing the exact same game, so you don't automatically raise more money than anyone else to spend on better salespeople.
In the end, what I am saying is that there is an efficiency in that market for salespeople such that anything you might think of doing to bring them on board, their existing employer has already done. And possibly better than you ever could.
Or perhaps the issue is that, in sales, there isn't the same multiplier phenomenon you see in engineering from massive scale/market opportunity. And this nonlinear effort-to-output relationship is what enables the market inefficiencies (sometimes in favor of companies, and sometimes in favor of engineering employees).
a YP seed would get you 30 work days...
If you are limited by number of solid leads, putting great salespeople on the leads will get a greater amount of value than putting a larger number of weaker salespeople on it.
Great salespeople aren't just taking orders. They are finding and closing opportunities which others would miss, and making those opportunities far more valuable. You can have 10x the value on a single sale in enterprise by having the right team on the deal.
I don't think labor hoarding is a good theory for why they're keeping their product team. If they don't have work for them now and are winding down they would be getting rid of them.
Rather, I think they believe they don't have a product they can sell right now, but they believe they can change it to make it viable. You need engineers to change your product.
David Sacks's original letter was heavy on the need to change the culture at Zenefits, and there's usually some degree of culture change at a company whenever a new CEO takes over. It could be that this is a convenient way to fire the ringleaders of the party culture, the people having sex in the stairwell, the most egregious rulebreakers or those who're disgruntled about having to go through all the regulated training, all without needing to build the paper trail that safely firing for cause would require.
This means companies still view their engineering workforces as "scarce" and hard to get, because they aren't paying market wages. Why is it only sales that gets the ax?
I don't recall any of their problems being traced to engineering. So, while these are for PR purposes styled as redundancies, I think its at least worth considering that it may be more of a purge of the problem parts of the company.