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Comment by karl11 | Hacker News Reader

Revenue is irrelevant when looking at savings, you have to look at net revenue or gross margin. Majority of Spotify’s revenue goes to record labels. If you are making -40mm / yr then a $90mm swing is a huge deal.

Also, can’t just look at salary - employees cost a lot more than their salary. 10% employer tax, health care, other ancillary benefits, IT equipment / space, etc. A $150k salary probably costs the company $250k all in.

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The cost picture is as follows:

money saved on staff reduction - money spent on layoff packages - (temporary reduction in productivity, because of lower staff morale)

Research shows there is no long-term benefit of layoffs other than the short-term gain in cash flow. Layoffs are only beneficial if they are needed for survival of the company

Lower productivity is highly questionable.

I’ve really only seen layoffs boost productivity. Suddenly there is less overhead and fewer cooks-in-the-kitchen.

Morale hits are real, but tend to fade if people feel confident that they’ve survived another day.

Research shows layoffs result in a lowering of productivity:

https://www.boardoptions.com/Learning%20from%20the%20past%20...

https://pavestep.com/post/the-effects-of-downsizing-on-remai...

https://knowledge.wharton.upenn.edu/article/how-layoffs-cost...

https://garfinkleexecutivecoaching.com/articles/career-advic...

https://www.forbes.com/sites/radhikaphilip/2020/07/23/the-pa...

You arrived at this conclusion anecdotally. You can't do your best work with a constant cloud hanging over you, doesn't matter who you are.

Morale hits are real, but tend to fade if people feel confident that they’ve survived another day.

Layoffs result in a 30% increase in staff turnover. As markets tend to be more challenging, it can take some months before people actually leave. This can have a knock on effect, especially if senior and respected staff leave.

Where will the senior and respected staff go? To other companies where they won’t be senior and respected

Other companies tend to know that poaching season is at it's finest after a round of layoffs.

People who weren't pushed will be considering jumping.

I don't work for titles, I work for money.

No they don't, because you never know if you're next. I have a bunch of friends at Google (you know, one of the richest companies on the planet and 94% 'survived' another day). Many are scared. You don't know if there'll be another round and if you're in it. People aren't now magically more productive because they survived and their peers didn't.

The layoffs were literally two business days ago..

and?

They're calling for the next one already.

https://www.telegraph.co.uk/business/2023/01/23/google-staff...

Almost every round of layoffs I've seen has resulted in people doing pointless bullshit to "look busy" while not actually doing anything.

Can you link that research?

It is in the thread below.

My vague recollection from an HR person was employees are 1.5x or 2.5x (something like that) their salary as a cost to the company. So $250k sounds about in the middle.

What does laying off 600 people do to their net revenue/gross margins?

Do Swedish companies pay a lot into health care? Can you recover the cost of the IT equipment already paid for since these are existing employees?

Health care is paid through taxes in Sweden and your access to it is not dependent on your employment. You can have a private insurance (and I assume a company like Spotify does) but it’s mostly for getting access to some private doctors offices with shorter queues to some things. We don’t really have privately run hospitals as the US.

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