The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).
The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
And this is what tech did better than any other industry. The average required know-how depth of a tech white collar worker is easily two three levels below when compared to other industries. Pharma and chemicals come to mind from personal experience.
The reality is that working at a place like that or a FAANG for just a few years sets you up for a great career no matter what happens. So even if you get fired after a few years you are still better off.
It's good to have coworkers who can think rationally and make decisions this way, too. It's a virtuous cycle.
Drift? I think you mean Sprint.
When someone makes $500k+, what does "unpaid overtime" even mean?
It means shit work/life balance, thus missing on a lot of people that would want to have it and results in worse productivity (people need time off or they break).
Solution: take a job that doesn't pay $500k.
I hate this saying and rarely say it, but "you can't have your cake and eat it too"
No one should take a $500k job and expect the culture to be 9-5, clock in clock out.
It takes most people 10+ years to earn $500k (often still working their asses off overtime). $500k is a shit ton of money.
In fact, it will make it worse, because you’ll keep telling yourself to hold on for the money while your mental health exponentially deteriorates.
https://www.mayoclinic.org/healthy-lifestyle/adult-health/in... https://www.helpguide.org/articles/stress/burnout-prevention...
People get addicted to the dopamine hits of getting things done and when they hit a wall, enter a vicious cycle of depressive withdrawal. Recovering from burnout by taking a break is simply resetting that dopamine addiction. Just a personal theory.
If you work in a high paced environment with competent colleagues, management and tooling, you can just keep rolling with the punches and never hit the wall.
A lot of people at hedge funds like having a baseline level of good stress in their lives. It's only when the stress starts to make you feel insecure that it creates problems.
I worked at one of these firms for a while, and my "burnout" point came when I realized I wasn't actually getting rewarded for my extra contributions to the company (my bonuses were going up by a small amount each quarter, no matter what).
Fingers crossed white collar jobs are on the verge of being AI’d away.
Real logistics information should be made public and democratically planned online across the globe in an organized way, not micro managed by elites who spend a lot getting us to memorize and recite that they own imaginary things.
I don't know, but I imagine that there's a pretty substantial difference between an isolated layoff and an industry wide layoff. Maybe it hits differently when you get to see the sausage made.
Where is a top performer at Google going to go? I'm sure there's some companies out there that aren't doing layoffs right now, but most of those probably can't offer FAANG/MANGA salaries.
My own pet theory about this round of layoffs is as follows. The tech companies spent 2021 massively over-estimating the value of boot camp folks and new grads. They spent 2022 learning a tough lesson. I saw this first hand. So much lost time mentoring low-quality hires.
Now they will spend 2023 massively underestimating the value of their senior folks (10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc.). The problem in 2024-2026 will be that experienced engineers/managers and PhDs who know how to operate well in industry do not grow on trees. Fixing that mistake is going to be a LOT harder than firing a bunch of junior engineers. It may take a decade or longer, and I think the burnt bridges could even be existential for at least one of the FAANGs. (I also bet you'll guess a different one than me, so maybe more than one ;-))
Also: the alternative is not just startups. Smaller companies, sole props, and of course also skiing.
I am getting very close to that "~10 years to infinity" number in my accounts. I might do a startup, probably self-funded, likely keep it small. I know who my first 5 customers will be, the work will be fun, I know I can execute well. Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code. Totally not worth the ridiculous pageantry when I can do it on my own or with 1-2 helping hands.
I'll be making a tiny fraction of what I make today, but the work will be enjoyable and I'll be building what I've wanted to build for the last ten years. Also, I will own the damn thing, which is much more tax-efficient than taking a few years of massive paychecks, and that's something I am more sensitive to now that my money is making so much money. If I were laid off today, I'd need at least double my current comp to return to a FAANG. And even then probably wouldn't.
Why are these large companies so slow? Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
A combination of risk aversion, regulatory burden, and process. The corporate machine can't afford to trust the judgement of individual contributors or even their managers or even their directors or sometimes even their VPs.
Credit where it's due: some of that is because of real risks that large corps do need to worry about but scrappy startups don't need to worry about.
A lot of it though -- especially the burdens that come from standardized processes and distributed responsibility -- boils down to a combination of (1) the cost of treating employees like cogs and (2) some amount of empire building.
> Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
It can go either way, but the question is kind of ill-formed. The decisions that slow stuff down happen at the VP+ level. If you're being slowed down by an IC, it's usually not the IC's fault (you'd rather not even have to interact with them in the first place, but someone VP+ demanded that you must).
That said, generally the valuable people with tons of experience are the ones building/fixing stuff. The "process implementation cogs" are typically more commodity-like labor.
So a lot of time is spent evaluating a program in stead of just doing the program.
Only thing I'll say is it won't be Apple, since they did none of the above/didn't get into the "hiring Spree" in the same way all the rest of the tech giants did, which includes what I'd call FAANG-adjacent spots like Uber, etc.
They’re likely to be at the stage of their life where their “runway” is their kids’ college tuition, or their (possibly early) retirement plan. Most will be far more inclined to take a (stable) pay cut rather than make a risky bet.
Plus, this whole downturn is rooted in drying up credit. Startups are more likely to fold than ever, and will largely have to either slow hiring or reduce non-equity compensation.
You've got college, housing etc. covered, so it's fine to go take risks in order to get large lottery tickets.
This is an interesting way to think of the Leetcode style interview. If you don't require any particular experience and you have built your company's systems in a way that any "competent" developer can join and be effective, layoffs may not be such a big problem.
Before you mention that one is a UI library and the other is a programming language: that's my point.
There are a lot of FE devs that work backwards from React to JS/TS.
If anything, complexity grew like an atom bomb.
If it's really possible, I think it's the very rare exception.
Sure - ~any decent programmer can jump into ~any codebase and do your JIRA tickets. But there's a more holistic ownership you miss out on that's going to be the difference between a system aging gracefully and a system becoming a giant hunk of butchered junk that's been one-small-jira-ticket-ed to death over a decade and now needs a very costly and distracting replacement/rewrite.
I worked at a different company that did the opposite of this. Programmers were expected to stay either 1 year or 10 years, and you'd be compensated according to which bucket you were falling into. They had excellent retention rates, and the dev team was small, <30 engineers. We never rewrote systems. They had owners who had either written them, or been handed off apprenticeship-style over the course of a year or two from the former master to the new master.
Place 1 was a fucking mess of tech debt and had constant incidents that made high value customers mad, execs mad, and oncall engineers mad. One of my coworkers literally went into his first oncall shift, got paged at night three times in two days, and resigned the next morning when he found out that yeah this is just kind of normal and good luck convincing leadership to let us fix it.
Place 2 literally never had tech incidents. The worst oopsies were generally related to (it was a trading shop) other people in the market fucking up and resulting in trade breaks that we had to clean up after hours, or exchanges having problems and sending us garbage data that we had to resolve by calling someone from the exchange to confirm order statuses and so on.
I only left place 2 because I was moving across the country and they didn't do remote (and still don't, even post covid). I was laid off from place 1.
I've seen people nope right out of there, and (anecdotally) it's always been an experienced person seeing something that was worse than they should've expected, and having an idea how unusually bad it is.
How did this work? You got a raise after 10 years?
You're anyway better with job hopping.
But even more important, I think most top performers understand and accept the risk that their employment may end. For example, the company can fold. It is easier for top engineers to accept that because they likely have better connections and can pretty easily find a good job elsewhere. My 2c.
Is this true this round? I have noticed a few things:
* On the hiring front, much more demand for senior, staff, principal devs, less demand on the junior / intern front.
* (Anecdotally) A LOT of junior / new people laid off. It seems in this round companies want a small but elite force, rather than opting for junior people.
Yes, and that's the number one thing successful small business owners learn. The ones who don't learn this aren't successful.
You want as many of your staff as possible to be easily replaced. If you're running a restaurant, do you really want the success of your restaurant to hinge on a single talented chef?
Nope. You make sure that there's a process so that another few chefs can drop in quickly without changing the menu or the quality of the food. All the other kitchen staff don't do "complicated", they follow instructions.
If the business depends on having developers that are in the top 5% (say, one of the criteria to working on the code is understanding Haskell with Monads), the business is at constant risk because the developers are not easily replaceable.
Why? top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning. With that said, it's not always easy to identify who's who-- it's possible top-performs are affected or incompetence isn't, which can erode trust.
That's thinking from a notch or two below top-performance. Top performers know what's "in the wheel house" for others around them and how to use it optimally. Don't be fooled by local maximums!
https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
- The people let go might have been good friends or at least people they enjoyed working with.
- While they’re not targeted, their coworkers are, they’ll sympathize with the tension. Also that workforce is now doing the same work amount with fewer people.
- They are expected to do a lot of education and bringing people up to speed. More churn means more work, and it’s also harder emotionally if you’re not sure how long the person will stay in the company.
Not always.
Sometimes projects are killed, so amount of work stays the same, or even better - some people are moved to help other teams
In my country that would be illegal
I've been through one of the tech layoffs that happened during the pandemic, so N=1 and all, but this was exactly what happened.
On the day of the layoffs, few top performers were affected. It was a classic layoff with an HR email and immediate lockout. Managers of affected people learned later. Some people learned they were being laid off after hearing it in mainstream media first.
After 6 months, many best performers (more than 10% in my opinion) have left after struggling with low morale. A lot of company knowledge was lost, portions of the codebase became unmaintainable, projects went from being certainly doable to being in perpetual uncertainty about cancellation. The responsibilities of the the top performers fell on less experienced people, some received promotions but buckled under the pressure in disruptive ways.
Two years later, the company is still rebuilding but has obvious competency gaps. There was also difficulty in filling them because HR was disproportionally affected by layoffs. The distrust in management persists and more than a few people are openly talking about leaving. Though the hiring in tech has cooled down which had a chilling effect on people leaving, too.
You guys are acting like companies are too dumb to think of these very basic concepts. I have personally witnessed discussions that can roughly be described as “ok we need to add an extra three people in order to fund retention for X.”
If every semiconductor manufacturer reduces headcount by N%, there may not be much incentive for an engineer to jump ship. If only one of those companies doesn't lay anyone off, though, the dynamics are completely different.
If the company was laying off the deadwood and the quiet quitters, the top performers know who they are, and are not concerned about being laid off themselves.
Top performers don't particularly care to work with deadwood and quiet quitters, either.
That's a big if, though.
Executives doing layoffs also tend to do them quickly and plan them in secret in order to reduce the chance leaks. That means they are deciding who to cut with very limited time and information. They make lots of mistakes.
Both times I've been through large layoffs, I saw skilled respected peers get the axe while deadwood didn't. It causes the loss of valuable employees and completely destroys respect for executives who are apparently so clueless that they don't even know which of their employees are worth keeping around.
Of course, every company is different.
I hate the false positive (including a good performer incorrectly beyond that required by the depth of layoff) more than anything else for its deep unfairness to the individual, the team, and the company.
This can be a good thing. In my experience these people are generally unambitious people who's claim to fame is that they held a job for a long period of time rather than any innate talent.
And when you have a majority of seniors who's only value is in being a well of knowledge, they're resistant to any change that reduces the value of that knowledge. This can quash innovation and perpetuates the anti-pattern of information hording.
It's more plausible, that yeah, layoffs are trust destroying and life ruining, but they make shareholders rich, so they are a rational choice expected from CEOs.
I find it very easy to believe. A lot of executives appear to have a prime motivation that is "number goes up" which IMHO makes them extremely susceptible to the same levels of groupthink and other cognitive fallacies as one would see on /r/wallstreetbets.
I appreciate that isn't necessarily the case for all executives but given that executive's fallacies are mostly disproved by a slow to react and sometimes illogical economy as opposed to a nearby cold logic machine, it makes cliff-marching much easier for them.
Mike has been married for 12 years, happy couple, no children. He suddenly changes in attitude and make his wife life a nightmare every single day, turning his brother in law against him, losing the one job his wife's brother gave him out of pity. Never crosses a line, but jobless and a constant jerk, he ultimately get the divorce document handed over by his wife.
Is he stupid? He might have won the lottery and had his own agenda for what he would do with the money. And that's a personal affair. Let's not underestimate to which extent business and the capital at wide can go making up stories, getting books to look a certain way for a zero sum profit far below the cost inflicted to the other parties.
In that regard, I wonder if it becomes a Wall Street meme--layoffs for the sake of doing layoffs. Companies that performed layoffs made shareholders rich, so therefore if your company isn't doing layoffs in a layoff climate it's assumed that shareholders are better off putting their dollars somewhere else.
It's definitely one of those "if we're not growing, we're dying, lets cut all the employees off"
But if they didn't do layoffs when earnings showed an increase in OPEX the shareholders would see it as a bad sign, so to signal to those that this is a serious-business™ the layoffs happen.
Crisis of confidence are pretty well known/studied, this seems to be a flavour of trying to avoid a crisis of confidence if the herd mentality isn't followed.
It all just sounds stupid, and like higher management aren't too far away from behaving like children and not responsible adults.
1. Actual market costs requiring a diminished future projection of cash flow
2. A Market expectation of investors who'll rate your company as less valuable if you dont.
I'd posit right now #2 is more likely than #1 given all the record profits being reported everywhere. When #2 happens, it's definitely going to affect people. When there's no actual problem, just some future expectation of problems, that's going to cost you.
It wasn't a massive mistake if the rapid growth grew their stock enough that paying a few hundred/thousand extra employees for a year or 2 was worth the cost.
it sounds like you knew at the time that it was a mistake to hire this much and you were part of the interview processes.
did you ever speak up, tried to make a case that it is the wrong move?
Pretty similar to the stupid "did you submit a PR?" response to literally any issue with open source software.
Maybe you didn't mean it like that but that's what it sounds like.
You’re not under any obligation and can keep your head down if you like. I can see the spreadsheets with perfect clarity. I need to marry that data with the more complex and hard-to-get view of the elephant that can only from the people who are working with/on it every day.
It’s fair to disagree, but in my mind it is why you pay top $$$ for great executives. But also unfortunate that an average executive can cause harm to a business due to a large sphere of influence.
And no: not all tech companies have over hired during the pandemic and they are not firing people these days. No one talks about them because that doesn't sell.
I have a couple observations from going through layoffs at a growth stage startup. If you have to do layoffs then you shouldn’t worry too much about protecting top performers—a noticeable percentage of them (10-20% maybe) will leave on their own _after_ the layoffs. You have broken trust with these folks, and they almost surely have other options. The people who stay either deeply and firmly believe in the company (good!) or for some reason feel like they don’t have other options (less good). Secondly, layoffs don’t end with the pink slips—your company is choosing to go down a long, slow path of rebuilding until almost anyone who remembers the layoffs is gone anyway. It will be harder to recruit top talent at standard market rates for awhile because folks will want to price in a risk premium to hedge against continued future instability, so replacing the fired folks may actually be more expensive in the long run.
do you realize that for most software engineers at the hi-tech companies, the majority of their compensation is in the form of equity?
and at startups, reduced headcount cost gives more runway for the company and hence employment.
But the vast majority of software developers get no or very little equity.
There are notable exceptions. Apple rejected (thus far) all three of those trends and is weathering this period much better than most of the industry.
Immensely.
In the USA 401(k)[0] & 403(b)[1] plans are used by vast majority of people as their retirement funds. It is very rare for a small organizations to be able to offer full pension plans. What they do offer are investment plans like 401 & 403.
All those little 401k/403b plans, through the plans and the mutual funds are the "they" "shareholders", "getting rich".
In 2019 21% of US workers participated in pension plans, while 43% in 401K/403b [2]
[0]: https://en.wikipedia.org/wiki/401(k)
[1]: https://en.wikipedia.org/wiki/403(b)
[2]: https://www.pensionrights.org/resources/information-center/
https://www.personalcapital.com/blog/retirement-planning/ave...
Well... for whom though? When megacorp CEOs laid people off the stocks soared - massively enriching the C-suites executing the layoffs and the investors demanding the layoffs.
The error in your thinking is that the financials of the company and its continued success matters - when the people in charge are optimizing for THEIR OWN financials.
You could just instigate a hiring freeze and let natural attrition run its course.
But that would involve having some balls and managing a business in a way that is good for everyone.
Literally no thought is given to redeploying the labor force against the new set of projects. Just cut and rehire. It’s the ultimate short-termism, lack of vision and lack of leadership. Ironically all of these companies blather on about leadership but fail to even demonstrate a scintilla of it. Leadership just means “plays political game competently” at these companies.
"Past performance is not indicative of future results"
and this is just one prominent example.
This feels like another instance of Deming's (paraphrased) "People will destroy the enterprise to align to their incentives."
The people who make these decisions may be incented on the _short term_ cost savings. It's a fractally smaller version of the entire org aligning to shareholder expectations at the expense of company growth.
Sometimes layoffs are erratic and cause employees to question management's logic.
Most times, every employee is put on alert to not get complacent in their job and always be on the lookout for a better position. (this might be a net positive, POV)
What could possibly be more clear than
"we were spending $X and now we're spending $(X - c)"
> Both with direct and indirect costs
Employees themselves are direct costs that are removed with layoffs.