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Comment by laweijfmvo | Hacker News Reader

The first observation I had during a contract at Google was "wow, Thanos could snap away 25% of the people here and it wouldn't impact the actual business(es) at all." If Google is getting serious about this, their stock is bypassing the Moon and going straight to Mars.

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Have mass layoffs ever wound up working out well for a tech company?

I was at Google from 2013 -> 2015 as an FTE. My impression was that there was a mix of dead wood and high performers. I knew people that basically did nothing but come in late, find the best cafe for lunch, and leave early. While others worked 12 hour days.

But the problem with laying off the deadwood, rather than firing them for cause, is that it causes the high performers to look at other opportunities and leave.

> But the problem with laying off the deadwood, rather than firing them for cause, is that it causes the high performers to look at other opportunities and leave.

Can you explain the difference? Is being "deadwood" not cause for firing? I'm probably an average performer, but I find working with "deadwood" extremely demoralizing.

A layoff generally means "business is slow, so we don't need you anymore" (its not you, its us), where firing for cause generally means "you're not performing up to minimum standards" (its not us, its you). In most places in the US, a layoff comes with state unemployment benefits, where as being fired does not.

Most importantly, a layoff leaves other people with the feeling "that could have happened to me, I'd better start looking for new opportunities", where as a firing for cause generally allows one to think "that person was such a slacker, how did it take so long"...

> A layoff generally means "business is slow, so we don't need you anymore" (its not you, its us), where firing for cause generally means "you're not performing up to minimum standards" (its not us, its you). In most places in the US, a layoff comes with state unemployment benefits, where as being fired does not.

Workers terminated for performance can collect unemployment benefits usually. The terms and meanings differ state to state and person to person.

Trouble is, even if that's true, knowing what 25% aren't needed isn't always obvious. Research and development of new areas is just table stakes for a company of Google's size (unless it just wants to milk search for as much cash as possible before it dies).

25% of staff's wages are a lot, but the risk of going out of business because all the talented people are left continually fighting fires is worth a lot more.

Google is so overstaffed, the first 25% they cut doesn't really matter.

I think the point was that Google is so overstaffed that they wouldn’t be negatively impacted even if they picked the “wrong 25%” to lay off. All the xooglers I have talked to basically agree.

I wonder if there's an actual correlation between layoffs and stocks prices

There absolutely is causative change in share prices. Investors love hearing that costs are being reduced.

https://www.jstor.org/stable/3088174 : "Results show that layoff announcements trigger negative returns for both U.S. and Japanese firms. Specifically, layoff announcements of U.S. firms are associated with a negative 1.78 percent abnormal return ..."

https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12532 : "They find that investors do not react if a layoff announcement signals proactive management (e.g., cost cutting) but penalize the firm if the layoff indicates reactive management (e.g., decline in demand). The penalty is also positively associated with layoff size but unrelated to firm size. Further, investors have become less punitive over time, or if its stock is traded on an exchange in civil law (vs. common law) country. "

> On what planet have you been living on? There absolutely is.

First, you could have phrased this differently and been less aggressive. Edit: I see you edited your comment after the fact. Good job.

But more importantly, has their been a study on layoffs like this and long-term health of companies? By the metric of the stock price, Boeing is doing better than it was 20, 30, 40+ years ago. Yes, they've have some problems, but the modern Boeing is, according to the share prices, more valuable and therefore a better company.

So, I'm also genuinely curious about if research has been done on this outside of immediate stock price and more about general strength of companies.

Is it? You need to normalize the price vs the market or industry. How has Boeing done compared to Airbus over the last 20 years? How about vs the market at large?

Yes. Getting rid of fat most certainly improves investor confidence and stock prices at least in short run.

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