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Comment by pizzathyme | Hacker News Reader

Unpopular opinion, but I don't understand this type of comment. It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off.

But what would that even look like? A fine? That would probably make no practical difference, and would discourage them from making changes that need to be made. Fire them? Then you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs.

Layoffs are awful. They affect lives and families deeply. But all businesses don't go up and to the right forever. Reductions are a necessary part of running competitive companies.

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> But what would that even look like?

> Iwata ran the Kyoto, Japan-based video game company [Nintendo] from 2002 until his death in 2015. To avoid layoffs, Iwata took a 50% pay cut to help pay for employee salaries, saying a fully-staffed Nintendo would have a better chance of rebounding. [0]

[0]: https://www.cnbc.com/2024/02/13/nintendo-ceo-once-halved-sal...

This is probably the best answer in terms of what people want to see, that would also still give the company the best leadership going forward.

If the CEO taking a paycut materially reduces the size of what would otherwise be a large layoff on the basis if reduced cost savings, the CEO was way overpaid to start with. (And it probably doesn't change the number of people the firm can usefully employ under changed conditions, even if it provides cost savings, because the latter is based on whether employing them makes more money than it costs, to which external cost savings are probably mostly irrelevant.)

By taking that pay cut, how many employees could Nintendo keep that would otherwise have been fired? 5? 20? Certainly not in the hundreds or thousands. This just seems like virtue signalling.

Edit: to expand on my point re virtue signalling: the article states the CEO took a salary cut, not total compensation (and it doesn’t elaborate on the value of the cut). Salary is a small fraction of CEO total compensation - the bulk of which is stock based, and even in the event that stock grants were also cut, the CEO surely already had significant stock. Cutting a relatively small component of compensation in order to boost the stock price which disproportionately adds to the CEO’s personal wealth seems like virtue signalling to me. If the CEO said “shareholders be damned, morale and culture are all that matters in the long run, no layoffs etc etc” that would seem more meaningful.

I feel like this would be the few times where virtue signaling is probably a benefit. It can make all the people in the company feel like the leader is on their side, and maybe make the employees less resentful and be more productive.

It shows the rest of the staff that you actually are taking responsibility.

Optics matter. When a CEO approves mass layoffs, and ALSO approves a 60% salary increase, I can only conclude that the CEO is nothing but self-interested. Rewarding yourself for firing a statistically significant percentage of your company SHOULD indicate failure, not success.

It may signal virtue, but it has direct, practical, beneficial impacts on the company. I don’t see why that would be virtue signaling.

What would someone need to do in order to avoid being reduced to a virtue signaller?

5 or 20 workers (and their families) who don't get jerked around for stuff way outside their control is an absolute win.

Right now, there is no actual downside for executives. Just less upside. Did they earn XX Million this year or XXX Million. Some tangible downside would be nice.

I mean, heck, why aren't they fired? And really, it's more then middle management where that'd make a huge difference. If bad performance led to actual shakeups in the entrenched middle management, we might actually see business practices change rather than continue on through the established fiefdoms and petty corporate politics.

Taking a massive pay cut isn't "virtue", it's a direct and measurable sacrifice. Just because you don't agree with the position or outcome doesn't make it "virtue", I'd wish people stop using that word for things they disagree with.

In this specific case, don't we exactly want the CEO to signal virtue to the company and employees ?

Virtue signaling actually works, people wouldn’t do it otherwise. ;P

In 2021, the average S&P 500 CEO made 324 times what their company's average worker made [0]. The widest gap was at Amazon, with Bezos making over six thousand times as much as the average worker at his company. The report is from a few years ago, since then the gap has increased further. So yes, many companies could trivially retain hundreds if not thousands of workers simply by cutting the CEO's pay.

[0] https://www.businessinsider.com/these-20-companies-have-bigg...

It should be added that layoffs are not commonplace in Japan. What you'll see instead are bonus cuts and salary reductions (at most 20 percent). To do US style layoffs you would need to show that the affected department was directly involved in a line of business the company has abandoned. If this isn't the case the employees stand a good chance of successfully suing the company in court. And then there's the reputational damage which would be considerable in a country where lifetime employment is valued.

In other words this kind of behavior wouldn't be viewed as all that surprising locally.

100% agree, but the opposite is what happens.

Mass layoffs -- unless the company is actually tanking and on its last leg, which isn't the case with any of the tech companies who have been doing this recently -- cause the share price to rise. CEO pay, or at least bonuses, are often tied to the share price.

So a CEO is rewarded instead.

To put salt in the wound, my understanding is the research on elective layoffs (ones that aren't forced by circumstances) indicates the outcomes are mixed at best, leaning negative.

So all this crap is just cargo-culting our current management paradigm, and/or execs cooperating to suppress wages and weaken labor, which had gotten a bit too uppity after Covid (that's one thing waves of layoffs like this do accomplish).

Probably: just leave out the full-of-shit sentence...

There's an Indonesian joke based on the word "responsibility" which is "tanggung jawab". "Tanggung" in this context means to carry the consequences, and "jawab" is to answer. One can say to a friend "We have to share this responsibility. I'll do the answering, and you'll do the carrying of the consequences."

It's simply pointing out that "I take full responsibility" is empty, meaningless rhetoric and serves no real purpose.

It's often offensively insincere.

I think a start would be to stop saying the phrase “I take full responsibility for this decision” if you aren’t also publicly taking a pay cut.

There’s no need for a CEO to bring themselves and their feelings into the conversation. It’s this weird attempt at empathy that fails, because the CEO isn’t making any sacrifices.

Just say that there are layoffs. Most rational people who have been in any business for more than a few years recognize them as an unfortunate part of the business cycle.

Agreed. But just say that. No need to pretend taking responsibility, which is defined as facing consequences when things go bad.

“As CEO, I’m truly sorry to those impacted. But I strongly believe that this change is what is needed now to make sure Dropbox can thrive in the future.”

Makes sense. "I take responsibility" conveys that they will also suffer consequences, which isn't true.

"I'm the sole person who made this decision" is probably closer what they are trying to say.

"Unpopular opinion", sure, how brave of you.

Simple: they sure love to talk a big game about responsibilities and taking responsibilities. Until it's time to actually do it. For the good of the company of course (if the company is in such dire straits, as the most highly paid employee - and probably not the hardest working one - why don't you take a big pay cut? For the good of the company of course).

That's what people don't take well.

It's amazing this still has to be explained.

> It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off.

No - as a consequence of poorly planning cost controls. It's not that the people don't need to be laid off for the health of the company, but that the executives who made the bad decisions don't get the boot along with them, in favor of more cautious or frugal leaders.

> Fire them? Then you would probably get a worse decision maker in the driver seat going forward

Why?

> who also didn't learn from experience of going through layoffs

That's actually a valid point. We don't commonly fire normal employees for mistakes. The counterargument is CEOs aren't normal employees.

Yeah I'm not sure people with compensation well into the millions get to go "haha, sorry, still figuring this out!"

Cool, can we pay you intern wages then?

[EDIT] To make this a bit more substantive: I think this is a sign both that we need to stop with this whole professional-managerial-class horse-shit, promote people who know how to do the actual work of the business, and reduce exec wages because the job's simply not all that damn special and the comp shouldn't be so high that only godlike-perfect performance could possibly justify it, because in truth nobody's that good at it.

Step one of this would be reducing M&A activity (hellooooo antitrust enforcement) and reigning in the power of finance, since letting Wall Street suits put their HBS frat brothers in charge of everything is at the heart of why this stuff's how it is.

Preach! The job is straightforward - lot of these decisions they make are very clearly articulated by LLMs. We need more businesses, more competition, not bigger businesses.

I think it's an outlet for general frustration with the justification for high executive compensation (and returns on capital, for that matter) often being "they have much more responsibility and risk" when the actual downside is typically nonexistent, and even if there are consequences, the outcome is something like "LOL still richer than any ten of you combined will ever be", i.e. the "risk" is all fake.

> "they have much more responsibility and risk"

Perhaps you've misinterpreted that statement? It is the board that takes on greater risk with executives as compared to other employees. The executives are given the keys to the kingdom, which means only an exceedingly small group of trusted individuals can be considered for the job. By the transitive properties of supply and demand, when supply is limited, price goes up.

The thing is, high executives have become a self-perpetuating class entrenched in corporate boards, this is the reason CEOs comoensation keeps skyrocketing, not supply and demand. And this entrenchment obviously also stifles accountability.

How does this self-perpetuating entrenchment not become a factor in what establishes the supply and demand, instead managing to exist as something off to the side?

They say "I take responsibility" and then.. don't take any responsibility. It's insult on injury.

How big of a bonus will this CEO get this year? Last year?

Why do people understand this phrase "taking responsibility" as some kind of admitting of fault? Maybe I'm missing something, but it seems neutral and could even be referring to positive future outcomes for the company.

Because the context is that 20% of their employees are now unemployed. The tone of the letter is also "this is a hard but necessary choice" and not "this is great news for dropbox!"

> As CEO, I take full responsibility for this decision and the circumstances that led to it, and I’m truly sorry to those impacted by this change.

Because that's what it means to take responsibility. You're saying "I did this, and to the extent that it's a bad thing you can blame me".

I think Houston being a cofounder means the financial picture looks different. Last year he made $1.5M in total comp. Which is a lot in absolute terms, but cutting his pay to zero would only allow keeping ~6 of those laid off. OTOH, he owns 25% of a $9B company. His salary is a rounding error compared to the performance of the stock.

Not to be an apologist, but I bet Drew really does feel responsible. He’s not professional management, and he always acted like Dropbox was his kid, at least from what I saw working there. I’m sure this feels shitty to him, though it’s obviously worse for the people laid off.

True - it means he could transfer, say, a billion dollars worth of stock to the affected employees and still be a billionaire. If he actually felt all that bad about it, of course.

You can make money by either reducing head count or coming up with plans that involves generating more money with existing workforce.

Obviously you as a CEO failed at doing second.

Now question is do you fire yourself and try to get a better CEO or you choose to fire 20% and generate more profits.

If it's up to the workforce they probably choose to fire CEO. But if it's upto the CEO he choose to fire the 20%.

The point is words mean nothing from the C-suite, and are just tools to accomplish whatever labor/public relation goals they have.

Why can't the executive taking responsibility also take a pay cut and tighten their belt the way they expect the company to and the people who they've fired do?

Taking a hit on their giant salary seems completely reasonable to me. Having skin in the game makes people perform better in all sorts of cases, and I don't see why a CEO would be different.

Do you also object to sales reps or athletes making less money after a long period of performing poorly?

It's the grey goo of manager-speak. It rides both sides, but never truly picks one.

The other two options: blame employees(someone not you), or take some form of punishment as an individual.

I too do it sometimes, and I feel bad each time. I at least tell people what it is and that it's just the reality of the situation. I'm not gonna commit career suicide and jeopardize my family's livelihood but I also won't blame them. So I follow the meaningless middle road where the status quo mostly stays and we all at least learn from it.

Ah, you're only going to endanger the livelihood of your employees' families, most of whom have substantially less wealth than you. I bet the rest of your employees don't really care that you "feel bad."

At least they learned not to trust you, though.

I'm not responding in the context of layoffs nor have I fired people because of my mistakes luckily. That's a different story, and I was trying to explain to OP my take on it.

I'm glad to hear that, I apologize for misunderstanding.

Yeah that opinion is unpopular because it's deeply stupid.

“you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs” or you would maybe get a better decision maker who didn't have to layoff — or hire unnecessary — workers in the first place? Ridiculous speculation.

Responsibility without consequences just means failing upward. That's why we have a gilded executive class of people who are barely qualified to run a local Taco Bell franchise.

> But what would that even look like? A fine? That would probably make no practical difference, and would discourage them from making changes that need to be made. Fire them? Then you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs.

Well they're the one asking to "take responsibility" here, the fact that they claim responsibility yet nothing happens is exactly why people don't like this phrasing.

Also who the fuck else can be responsible anyways ? The cook ? The guy who mops the fucking floor ?

People come in two flavors: conflict theorists and mistake theorists.

Conflict theorists think that every event is a result of power struggler. So if someone gets hurt, someone must be punished for that.

Mistake theorists think that the world is complex and sometimes bad stuff happens because most people operate with good intentions most of the time. Often, that means no punishment needs to be metted out.

To mistake theorists, conflict theorists look like ideological blood thirsty savages. To conflict theorists, mistake theorists look like enemy troops.

This is a gross oversimplification but it always shocks me to see how much more conflict theorists there are on hn now than before. So many comments here blaming the CEO or capitalism, most of which are going off extremely scant information.

yeah, taking a personal financial hit on this would go some way to at least pretend to actually have tried preventing it. Not sure about this particular CEO's salary, but I wouldn't be surprised if you couldn't finance a few engineers' salaries by cutting the CEO's, without it even hurting very much.

Not saying it's enough, not saying that's the only way, but I find it peculiar that this seems to be unthinkable.

Yes, sometimes reductions are necessary. However, layoffs isn't the only way to reduce variable costs.

A CEO should not be rewarded for recordbreaking layoffs with recordbreaking pay raises.

> It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off

Um... yeah. Yeah, that's pretty much exactly what I want.

I used to work at a Dairy Queen. One dude there had been working there for a couple years. Unfortunately, one shift his drawer came up a dollar short. Our cutoff was 5 cents - a nickel - over or under. He was immediately terminated, of course.

He cost the company one dollar. A Dairy Queen cashier making minimum wage is held to a higher standard of accountability.

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