Microsoft to lay off 10k workers
blogs.microsoft.com
blogs.microsoft.com
No one on my team has any information about this beyond the Satya email, so this is either a "no news is good news" situation (assuming you don't actually want to be laid off), or a poorly executed process. I'm hoping for the former for the sake of my team.
Except people care even less about your job experience since you're "leadership" now and are expected to toe the line no matter what.
This comes with the cost of the paranoia induced by seeing the corporate underbelly
Tl;DR = possessing insider info != insider trading
Generally speaking, with a layoff, they want all employees to hear it from official sources and not internal rumors.
What did the hints look like?
It went to 350 from 30
I am based in India. US folks would have seen different signs
I guess there are complexities with huge multinational companies, but that seems kind of designed to make people like your team worry.
My understanding is also that during mass layoffs big companiess can't just cut all low performers / juniors so this might be completely random but we just don't get to know that.
That seems like a trick question to me.
One of my cards was SO CLOSE, but he needed to galvanize some.
My rightmost column had Leadership, Accelerate, Innovative, and Challenge. Missing Galvanize.
This will never be good news, obviously, but please communicate the important facts clearly.
Anything else is basically a lie.
"Look, investors have low confidence in the market right now and all our competitors are doing it. I need to send a signal or the stock is going to keep going down and I wont get my full yearly bonus. In the end it's all about the quaterly share price. I know, it sucks, but let's not kid ourselves, we all knew that's the game we are playing here: go work for a small company if you want long term strategy. We might buy you when you are done innovating. You can always come back next year if it's a hiring market anyway."
He could have left that part out.
Which makes me think of two things; one, they want to get rid of very specific people, people who wouldn't quit on their own. And two, that they can't just reduce staff count without an announcement, because staff count is one of those metrics that shareholders use to determine whether they're staying, buying or selling stocks.
A quiet reduction of staff? They can't hire people anymore, this is bad, I should sell my stocks!
A round of layoffs? They're cutting costs, which will be good for profits, I should buy more! Or sell because I've lost confidence.
Honestly, the stock market and shareholders are not rational.
https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
The announcement itself has an "if-by-whiskey" feel to it. On the one hand, they claim to be "aligning cost structure with revenue". On the other hand, they also claim to be investing in "strategic areas for our future". It tries to spin it in a way that appeals to both value and growth investors respectively.
No analogy is a perfect match, that's what makes it an analogy. The water here is the precious resource.
(Yes, I know about copyright law and taint, but there is an awful lot to be done which isn't specifically commiting code to the main project. Unit tests, debugging, porting other software, create a startup for embedded "Windows" deployed with ReactOS with free licensing etc.)
THE Recipe for success, that is.
It doesn't even make sense. They're going to fire 10k people. The result? A 1.2 BILLION charge. Firing these people costs them 120000$ per person. And with that, their personnel cost won't drop until end of Q3 + let's say 2 months, so let's call it 2024. They could have let each of these employees do nothing until 2025 for the same amount of money!
They will definitely hire 20k people by 2025 too. It just seems to awkward and stupid.
Usually reductions in staff are well received by Wall Street because operating expenses should be reduced. I think there's a joke about a CEO saying "oh stocks down, time for layoffs!"
I hate it when head honchoes try and get cozy with you by signing off with their First Name only --way to take the name away from anyone else in the company with the same name. 99% of the people in a large company like that never met you and don't know you on a first-name basis.
Instead they present themselves as your friend. Even if you don't believe it, social norms dictate that in general you act like you do. Like Zizek says, "fuck you, you're a boss, act like it!". Then you're unsure of what's happening. Do they really feel bad? Maybe they're trying their best, maybe they really care about me personally.
It's same with all this corporate-speech that's been emerging recently. They're not your family, they're not your friends, and if it comes to it they will fist you so hard you'll be tasting their perfectly-manicured nails.
I think it's very important to always have this in mind and not to tie up your identity with your work. You are a line item on a spreadsheet somewhere to them, nothing more. If you start believing otherwise you are setting yourself up for mental health problems when your use runs out and they kick you to the kerb.
And while employees might give him a hard time for this, shareholders can definitely give him a harder time if they see a (potential) decline in dividend. So cutting cost to keep dividends steady with a decline in profitability and revenue is the easiest fight for him.
While it sucks, when working for a large tech company which is publicly traded like Microsoft antics like this should be no surprise to anyone.
What's the worst they can do? Fire him? He's worth somewhere between $300m-$800m according to Google. Even if he's "only" worth $100m. He'll never have to worry about providing/monthly expenses to cover rent/food. Can't say the same for employees. Obviously that's not his responsibility/concern. Just an interesting take.
What's harder? Getting squeezed by shareholders or being unable to afford your rent?
Let’s see how fast the stock tanks then :)
That's enough time for a new bachelor's degree.
5% headcount reduction is attainable just by freezing hiring and letting churn happen and performance management.
With nearly any company I've seen employees who can dodge performance but are a low performing employee. It drags down their team, and makes your high performers quit.
Layoffs like this might not even have front line managers input aside from, "who is critical to keeping the lights on in the company". All those things that have helped an employee avoid being PIP'ed out are gone.
The managers who I've talked to in these situations will almost always pick their high performing individuals regardless, because they know if they don't they'll be cut next due to poor performing team.
IME, if the company does not let go of executives, they are just tagging along with their peer companies on the layoff train. If they do make cuts at the VP/SVP level then the company really does have margin/profitability issues.
You must be new here. I work for a blue chip Fortune 200 widely known for their binge-and-purge cycles. Management is never affected. They just reshuffle the cards.
I've been predicting another "purge" in 2Q, but I suspect we will lag the tech sector, so maybe it will be EOY.
What level?
Typical corporation structure I've seen is
CEO -> CEO -> SVP -> VP -> Director -> Managers
You're saying the managers at the bottom are generally safe? I feel like that's not typically true?
https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
Moreover, none of the evidence was collected under the current economic environment, where a decade of cheap money and growth fantasies have fueled an unsustainable hiring frenzy.
Have you ever taken an economics class? Plenty of economists take a perverse glee in claiming that things like the minimum wage and child labor laws are detrimental, I don’t think that “sometimes layoffs are good” is a taboo point.
And that’s before we get into discussing business school professors…
We're gonna sit here and pretend that Microsoft, a company that printed $72B in net income last fiscal year somehow needs to lay off 10k workers to survive?
Thrive, yes. It is one of the factors that allowed them over time to get to $72B in net income.
Remember, e.g., the Jack Ma era and his proclamations that we should all get into arts because tech will take care of the rest?
Is the current round of layoffs an admission that the "software will eat the world" scenario will not happen or an indication that it can be done with even fewer tech employees?
During growth, you make big plans and you invest in growth. You hire people to build new things.
Oh snap. Growth is gone.
You cancel your lofty plans and you stick with things that are working. Anyone who was hired for grand plan things is a burden and let go. Sure. Some under performers too, but I don’t think this current wave in the cycle is the end of software eating the world.
It is quite possible that these businesses are wrong about the future. They have been before. But as predicting the future is impossible, one has to make an educated guess and live with it.
Either statement is reading too much into it. It's a reaction to economic conditions and the state of the labor market.
Rae Days were reviled and helped end the viability of Rae's party the Ontario NDP.
The thing is... I don't get it? Would people have rather had mass layoffs? Rae 100% did the right thing here IMO.
In the above those being cheated are actually hit twice vs if you layoff those trying to take advantage of the system the cheated get double benefits.
C-suite will get a raise from the stock price bump.
Congrats on our system.
These large companies are ultimately doing what the Fed wants them to do, no point blaming the c-suite for that?
eg. https://www.forbes.com/sites/dereksaul/2022/10/12/does-the-f...
It's politically incorrect to say the Fed is trying to make x% people lose their jobs but that's basically what they're scheming for the past year or so...
Our system relies on the fear of the bottom. Capital is in charge, they require the threat of destitution in order to continue to get away with their continued extraction. When wages go up, more power is vested in the worker which isn't okay by the folks at the top.
The execs get paid a lot - but there's not that many of them, and there's 200k people at MSFT making an average salary (with benefits) >$200k. That's >$40B per year. The execs don't take home >$2B per year.
Satya made <$60M last year. There's not 35 execs at MSFT making the same amount of money or higher. There's 18 others, and they make a lot less money on average.
This 10k layoff, at an average salary of 190,302, is about $2b a year. So yeah not quite - but for them to suffer no consequences is still pretty gross.
This is in part, due to the fact that he has nothing to do with Microsoft anymore.
This part of your statement has no relevance given MS's position, even taking into account the current market.
MS as a company is in no danger here. In fact, they are doing quite well.
You hire people if you need them, fire them if you don't. It's really that simple.
Your employer doesn't owe you a job.
Do you have any actual numbers on the number of execs vs workers and their salaries?
Plus, every sale of the company's stock by a key executive is immediately reported to the SEC and publicly available on the SEC and company's websites. Wall street watches this like a hawk. If any key exec unloads more than a few percent of their entire holdings at any one time, it will hurt the stock price pretty substantially. Effectively, it makes it so the CEO can't sell a lot their stock at once while they are CEO.
The big numbers you see for CEO compensation for this year are largely stock options that were granted years prior which vested this year. Almost all of Satya's compensation is performance-based instead of guaranteed. The company he leads must deliver sustained profitable growth over the long-term for his comp to be worth a lot. The fact it's worth a lot this year is almost entirely due to him already delivering on his commitments to shareholders in the past. Keep in mind that the average public company CEO is in the CEO job less than five years. Satya is in the minority that is succeeding. Due to the high visibility of the CEO role, the majority who don't succeed have a high likelihood of never earning significant compensation again.
That's not our number at all. GP said "executives" which includes a lot more than the CEOs. For all I know 1% of the company could be executives
It's not how business works.
You hire people if you need people, and you pay them the least you can get away with, so you maximize profits - because long ago, you raised money with the promise to the people you raised the money from that you would do this, and you have a Fiduciary obligation to do so...
We agree then that employees should put in the least amount of work that they can get away with, right? Fair's fair.
They're particular individuals who will take a stance like what you're outlining and sit in a limbo state outside of performance firing them. They bring down team moral, high performing employees feel cheated, etc.
Please show me one public company that has said - sorry shareholders - we're returning 100%+ of profits to our employees forever.
You can't raise money from Shareholder A with the promise to never return the money.
That's a donation. Not gonna be able to raise money like you can from VCs and IPOs.
Being nice to workers, and never returning money to shareholders because you're overpaying your workers are two entirely different things.
FAANG has treated their workers quite well for a 10+ years, and shareholders have not cared, because profits and growth have been enormous.
They could've treated their workers much better and paid them 2-3x as much money, though. But they didn't. Because they would've gotten sued by shareholders.
Probably not. Google makes $1.6 million in revenue per employee, and $400k in profit per employee. Wages in tech for these money printing companies are more set by arbitrary norms than any real financial basis.
https://www.statista.com/statistics/217489/revenue-per-emplo...
Compared to unions and socialist ideals, FAANG has treated workers okay because of the arbitrarily high income compared to when the working class gets even more exploited in other industries. Being better than bad situations doesn’t mean a good situation.
Some big tech companies were colluding to keep wages stagnant by not hiring workers at other companies. Wages were lower until the collision was uncovered and companies like Facebook came around and started paying more. Colluding against workers is not treating them well.
Pay and some stock options aren’t the only ways to treat workers better. Capitalism doesn’t have to control every part of why we are nice to other people.
There. Corrected.
https://mronline.org/2022/05/26/u-s-federal-reserve-says-its...
> For example, when interest rates go down, it becomes cheaper to borrow, so households are more willing to buy goods and services, and businesses are in a better position to purchase items to expand their businesses, such as property and equipment. Businesses can also hire more workers, influencing employment. And the stronger demand for goods and services may push wages and other costs higher, influencing inflation.
[0]: https://www.epi.org/blog/inflation-minimum-wages-and-profits...
Hopefully that buys you some more time to find a new job or line up an ACA plan if you're in a state with decent ACA plans, because actually paying for COBRA out of pocket for months at a time is indeed very expensive.
(It also would be totally worth it if you had existing expensive health care needs in your family)
TL;DR: Treat COBRA as an options contract.
I've never paid for it, the one time I had it come up it was something like $800/mo for me as a single 20s laid off person. Not top priority.
The ACA just states that insurers can't refuse a customer who wants to purchase a plan just because they have a preexisting condition. It doesn't actually require that the plan cover treatment for said condition.
In many states - including wealthier deep blue states - the marketplace plan options are actually quite terrible.
> Health insurers can no longer charge more or deny coverage to you or your child because of a pre-existing health condition like asthma, diabetes, or cancer, as well as pregnancy. They cannot limit benefits for that condition either. Once you have insurance, they can't refuse to cover treatment for your pre-existing condition.
If you have a disease or syndrome, the treatments for that condition (whether pharmaceutical, outpatient, or inpatient) may simply not be on the list of benefits provided by the insurance plans offered.
It's legally distinct from, but analogous to, a nodiscrimination clause. They can't refuse to cover your mammogram (which they cover for everyone else) just because your initial diagnosis for Vamipiric Brain Syndrome occurred before your plan went into effect. But they can choose to say they they don't cover Nosferatudone for anyone (when Nosferatudone happens to be the only effective treatment for Vamipiric Brain Syndrome).
(There are, separately, certain treatments that all insurance plans must cover by law, although that's separate from the ACA, and it's a very limited set).
Yes, I'm well aware of that, and those requirements are incredibly bare-bones. Nearly any insurance provided by employers far exceeds those requirements, whereas the same cannot be said for insurance provided on the marketplace.
This post is about people who are losing employer-provided insurance, and there's almost no universe in which the non-COBRA options available to most of those people aren't markedly worse than what they're losing, even if we ignore the increased cost of self-purchased insurance.
If one exists, and as I stated in the original post, in many states, even the best plans available on the marketplace are quite terrible. And that's a problem that's actually gotten worse in recent years, not better, as plans have left the exchange (and providers have dropped marketplace plans from their networks).
> and your pre-existing condition won't impact the price of the good insurance plan.
Your "pre-existing condition" won't impact the price of the insurance plan relative to others who are purchasing that same plan, but you quite likely will be in a situation where the "good" (eg, gold) plans are the only ones which will provide the coverage that you need, and those are the most expensive ones. This satisfies the letter of the law, but in practice it still means that often people with chronic health condition either are are forced to pay more for coverage or are literally unable to get coverage for their conditions at all (because none of the marketplace plans will cover it).
The protections provided by the ACA are much more narrow than you're portraying them as, which is understandable because it's a common misconception about how the ACA operates, but it's unfortunately a very important distinction.
One person said this, without mentioning either their state or any details of their previous plan.
> a "blue northeast state" that, according to you, has inadequate options.
I did not say that every "blue, northeast state" has "inadequate options". I said that many states have terrible options, and that, contrary to the stereotype of ACA issues being limited to poorer red states that refused to expand Medicare, this set includes wealthier blue states.
> Do you have any evidence that the plans aren't sufficient?
You stated that "public exchanges are guaranteed to cover their existing condition", an assertion of universality. This is completely false, for reasons that I have explained. The federal statues guaranteeing coverage for individual conditions are incredibly narrow and exclude both the most expensive conditions for patients, as well as almost all expenses for chronic conditions.
Furthermore, it's very easy to disprove this assertion of universality, because it's incredibly easy to find counterexamples - the ACA has been around for a decade, and there are tons of forum posts all over the past ten years from people struggling to find non-COBRA coverage that continues to match their needs after losing a job. A marketplace plan cannot deny you an insurance plan for a preexisting condition, but that doesn't mean that there exists a marketplace plan that will cover it.
The fact that you happen to know people who are satisfied with their coverage for themselves is neither here nor there, because it does not contradict the main point: the ACA is no guarantee that people losing their jobs will actually have any non-COBRA options to address their health needs (and given that Microsoft has pretty comprehensive insurance and employs people in nearly every state, it's all but certain that the marketplace options will be appreciably worse for many of those people than the status quo).
At no point have you provided any actual evidence, other than an unsourced offhand anecdote (which I addressed), to support your bold initial claim.
I've taken the time to provide much more in the way of both evidence and explication than you have presented. If you'd like more, then perhaps first you can provide some concrete evidence to support the scope of your original, claim, and also address the specific examples that I revealed which refute the premise of your claim.
Others here have provided first-hand accounts of acquiring adequate coverage on exchanges.
Does private employer insurance not have the same limitations?
Yes, but insurance sold to private employers is a completely different market, and it is almost universally better than the insurance plans available on the exchanges.
The ACA originally tried to hide that vulnerability by making insurance mandatory, then it appeared when that forcible mandate was repealed.
Edit to reply to the reply: Right, it's not insurance. Insurance is pooling risk. If you wait until the risk event has already happened, it's not insurance, it's just paying your own costs with extra steps.
I don't think that's even "insurance" at that point....
America may quite possible have the absolute dumbest system humanly possible.
Of course the countries with those laws have never created a company like MS in the first place, so..
>>people with health issues will be on their own
Maybe the US sorts this sheet out, really about time
You can close your eyes and cheer about profitability, but the bill is coming anyway.
What does this do to morale and retention?
It says "through the end of FY23 Q3". Microsoft's fiscal year ends at the end of June, so their "FY23 Q3" is the current quarter.
It feels like it would demoralize workers; everyone was already on eggshells leading up to such an announcement and it would suck to continue working while stepping on eggshells for a full year, wondering if tomorrow is your day.
I worked for place which did several mass layoffs. The way they did it was by emailing everyone at end of day Thursday explain that everyone needed to be in the office at 9am tomorrow. Then the next day they'd call people into rooms one by one and tell them they no longer have a job.
It sucks for two reasons, one because in the span of 24 hours you go from feeling secure to panicking about finding a job. And two because everyone who is still there knows that at any point the same thing could happen to them.
The places I've been where they've been up front have been much more pleasant in comparison. While people can feel stressed and demoralised they at least know where they stand and can keep their options open. Managers come across as honest and sympathetic to the situation instead of secretive which helps avoid rumours of impending mass layoffs every couple of months. Plus it also gives everyone a chance to say goodbye.
I also don’t see how it gives people time to say goodbye considering you still won’t know who is leaving until they’re laid off, which can happen anytime anyways.
Spreading it out does nothing but create more stress and pressure for both the people going and the people staying.
Big brain: I'm telegraphing that we'll be letting lots of people go so they will self-select and we won't have to fire as many. I imagine that someone could have this idea, but I doubt it benefits the company in practice.
Micro brain: 'If you have not received notice that are are affected, your are safe! Resume being 100% productive until you receive notice that you are fired at a later time. That is all.'
Having lived through 2001 dot-com bust, I can say that being the retained employee can be worse than being laid off.
If I was laid off tomorrow, though, it would be a relief and I could call it a day.
2 They probably want to. It creates clarity for employees after what other commenters here described as months-long rumours. The damage to morale would be greater if they do it in pieces.
2b It is also a better story for investors.
https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
Satya Nadella: Microsoft's Products Will Soon Access Open AI Tools Like ChatGPT | WSJ - YouTube
This assumes AI taking people's jobs has anything to do with these layoffs. The press release mentions AI, but not in that context. I don't think these people are being laid off because MS is getting ChatGPT to write their code instead.
Wow, that way way, better than what we get by law in my EU country when you're laid off (just unemployment benefits). Looks like big tech in the US has loads of perks.
I am a EU citizen having lived in the US for almost a decade and I still can't overcome the stress of losing my job because of this.
Average US worker << Average EU worker < US Big Tech Worker
Wow. Most places are not like that. Get out of there.
lol. No. Your team will do just fine if you dropped dead today. Trust m. Teams are always fine.
Take the time off and get down off the cross.
We don't say it out loud because it's not polite but everyone is replaceable. In fact, there's many things we don't say because we are polite but I sort of feel like people tend to mistake politeness for support. But that's another thing all together and I digress.
Statistically, the average US workers has a much higher purchasing power than the average EU worker.
Unless by average you meant poor people or workers on minimum wage in which case you'd be correct, but that's in no way average anymore.
EU workers have much better vacation, healthcare, parental leave, severance pay, etc than US workers on average.
Though, it's not exactly a vacation, as you're expected to prove to the unemployment office you are actively looking for a job and interviewing and you're not allowed to leave the country during that period. I mean you can leave the country, nobody will stop you, but you'll not receive unemployment or healthcare coverage for the period you're out of the country.
You can make it a vacation if you're system savvy enough and know how to game the system and aren't risk averse.
Fundamentally, they chose this approach because those who receive the benefits will have to sign NDAs and because they don't want their reputation as an employer to be poisoned.
There is no contract stating how much PTO you can take, its up to your manager, could be zero, could be four weeks, who knows. Could change when your manager changes.
Its an accounting trick to remove PTO from the accounting books and remove a paid benefit to employees.
https://www.cnbc.com/2022/05/16/microsoft-ceo-satya-nadella-...
163K employees in 2020 to 220K employees in 2022.
And they're on the low of the hiring boom.
While obviously bad that seems like... as far as speaking for the entire tech industry not really that bad?
Do you know if the other big tech layoffs followed a similar pattern.
Or am I missing something here.
I'm glad we agree
> But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money.
How does this follow any logic at all. He does not even dispute that overhiring took place. Should companies continue with a stupid hiring frenzy until they run out of money? This is the logical implication.
> They are doing it because other companies are doing it.
How is this explanation better than any other? This is such a strong claim and he offers ZERO evidence for it. And gross overgeneralizations like "oh, there are cases in which..." are argumental rubbish. This infuriates me because this is bad science and plainly opinionated.
1) Layoffs != Hiring frenzy. A company can slow or stop hiring but also not do layoffs. It's actually a common way to downsize softly.
2) Most of these companies are profitable. Running out of money isn't likely.
1) I really have no issues with layoff in Big Tech. They pay very very well and no parent who was let go can't feed his family all of a sudden. If you were even a semi-decent employee, you can find a job at another place quickly. So many places still look for people in spades.
There are as many good business reasons to contract your workforce, as there are bad ones. And it's likely you hired a lot of low-performers and quacks during peak hiring. Now is the time to do so without creating public outrage.
2) This implies that the reason for layoffs are exclusively linked to payrolls. And the guy in the interview suggest as much as well. I dispute this notion.