Are layoffs like a fashion statement, now? "Look, we're cool, too!"
why is everyone doing this at the same time?
why is everyone doing this at the same time?
2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main).
So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output.
Also known as recession.
The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
They are stuck on the horns of a dilemma they created 10 years ago with 10 years of sustained QE and ZIRP, which led to the asset bubble we now see deflating.
Also agree it's largely due to QE! I think the only thing I find weird enough to pause and think "huh, that's weird" is the timing. Labor gets market power and oh wow, we better fight inflation.
Maybe it just all happened at the same time and COVID caused it to bubble over. Just seems weird timing to me.
Once the flood gates open up by your competitors or the sector as a whole starting layoffs, it makes sense to get your own house in order.
And "currently everyone does so and the economy is bad" is a good excuse.
And there are many reasons why a company might lay of people even if it's currently not strictly necessary:
- you don't really need that many people (anymore), common for small companies which grew to fast
- you want to restructure your company majorly and doing it will less people is easier
- you prefer to go a bit slower, so that e.g. current investment money lasts longer
- you want to be more robust to a potential economic dive, so you reduce money cost at the cost of going a bit slower and in turn can compensate hits in actual revenue better (at least for some time)
- you have accumulated a bunch of people which are not bad enough to fire them because of performance but also you know you can get better people, so you use it as an excuse to let people go, go slower for a "not short but not too long" while and then rehire. Alternatively companies like Amazone do that every year fire bottom x% then rehire roughly the same amount.
- you expect salaries to fall in the industry as a whole by quite a bit
- financial distress (e.g. interest rates and/or profit)
Lastly group dynamics to affect Investors, CEOs, Board Members, HR people etc. too, so it might be a "everyone does so so we better do so, too" situation (potentially forced onto the company by the board of shareholders).
So if the layoffs come not because of hard "we have x to much cost" reasons but of "we need to be more robust for potential dives in profit and increased cost" reasons and an arbitrary number must be chosen which isn't affecting operation too much but also makes a difference 7% is a common choice "because that worked well for some other large companies". Especially when the push comes from shareholders without much company insight 7% is likely.
If your company is smaller you make decisions on a one by one basis (after having some target for rough performance where you cut). But the moment your company has 100+ or even 1000+ people that gets impractical so a % line is set for how many people need to be cut.
- They are on venture capital, not profitable, and the process around IPO, being purchased, or getting more rounds of funding has been complicated by the downturn. So, they need to change their rate of burn to last longer.
- Companies are profitable and their leaders want to keep the profit margin for their owners (share holders). If income is down or doesn't grow to the level it had then they can lay off to reduce expenses which pushes up profit levels. This has become trendy in the past 40 years.
- Income has been reduced and companies are breaking in less money. They may no longer be making a profit. To return to break even (or profit) they need to lay off.
There are other reasons. These are some that come to mind.
It may also be the case that this is an actual correction trend in the market to overhiring. Whether or not that's the case or the target is more of the former is ambiguous to any outsiders so this will be the explanation given because it puts things in a more positive light than the strategic "we have a golden opportunity to cut labor costs so let's do it."
There are other companies doing great -- Stryker (NYSE: SYK) is near their all-time high and has not done layoffs as far as I know.
I don't know if Gitlab hired a bunch during the PANDEMIC! They might be back to pre PANDEMIC! numbers.
My goal is ensuring executives are making decisions using the best information possible. It’s highly collaborative to maximize the amount of pooled information (because executives are deep experts, too). Based on how it’s gone so far, I think it’s innovative and has a strong beneficial affect on the quality of decisions (and output as you’d expect). ie- applying more technology & skills improves output volume and quality.
He got it exactly right.
Are you serious? Maybe you all should take a basic economics course. We are in a recession. Businesses know this. It doe snot matter if the Fed says if we are in one or not. Layoffs do not happen if the future business outlook is positive.