That said, layoffs are a fact of life in business. It seems to me that this is an obvious case of a layoff for economic reasons. I have no idea what those reasons are.
It would be interesting to know how the culture there evolves after this happens.
Layoffs are crushing regardless. I hope for the best for everyone involved.
When it's internal, the people who aren't the problem are, rightly, pissed. With the kind of employees Valve has, I'd be surprised if they didn't lose 10% anyway, except they'd be losing their best, not the ones they actually want to go on without.
I find this whole thing confusing and shocking. It's really unclear that their strategic goal is.
In a way it's the worst with well-run teams that gel. The ideal situation is that everyone works out what they're good at and develop a bit of a rapport. But then if you fire one of the team members, everyone else on the team has a quite first-hand reason to believe the now-fired person was valuable.
Ultimately, companies have to do this. Businesses can't expand indefinitely and, at some point, contraction becomes part of the process.
The hard part, assuming the best of Valve, is how it will describe what it did to preserve its culture while being respectful of those who are affected.
Acts like these remind me of the old courts held by Kings during the medieval times.
You do want people out of the office once you deliver the news, because even if you fire people fairly, they're not going to be doing useful work. Otherwise, I agree 100%.
Many companies use PIPs instead of severance offers in order to build a "performance"-based case against an employee. (This is sometimes part of a layoff being dressed up as a performance-based cut, and sometimes not.) That works out horribly. It's actually cheaper, considering morale issues, to cut a 3-month severance than to put someone on a 2-month PIP, because most people turn toxic during the "walking dead" period of the PIP. What PIPs are about is externalized costs: the HR office claims it "saved money" on severance payments, but the team and manager have to deal with a walking dead employee for 2 months.
Having a person who knows they will be fired roaming the halls, poorly motivated is an obvious risk for the morale of the remaining employees. And it just drags out the pain of separation, even if the separation is otherwise amicable.
Second, there is some risk, no matter how generous the severance package, that the employee will become disgruntled and desire to harm the company. Even if it's a 1 in 1000 chance, the damage that a disgruntled insider can wreak is enormous. Huge downside, very little upside.
Finally, if they stay, they are now effectively temps. They can't be used in anything but short-term work because you don't know when they'll get the magic offer and be out the door.
A good severance package (say 2 months of salary, plenty of buffer to find a new job) costs just as much as keeping them on for two months after a warning, but has none of the downside risk. The only thing you lose by doing this is the very marginal short-term work you could allocate to them in the interim, which they would be poorly motivated to execute to the top of their ability.
Perhaps more problematic, there's an incentive to try to get yourself into an "indispensable" position that's core to operations. My read of the existing Valve policy is that they wanted you to ignore those kinds of jockeying-for-position considerations and pick something you were passionate about & good at, as long as it was helpful to Valve somehow.
That's why it's imperative that there be only 1 round of layoffs every 5 years or so.
One round = shit happens, this sucks, but it's impersonal, so let's get back to work.
2+ rounds = people get paranoid, and typical corporate politics set in.
Can an open-allocation philosophy really work if you can be fired for choosing an allocation that turns out to be the "wrong" one?
Open allocation doesn't mean "people work on whatever they want". It means they're individually responsible for making their work useful to the company, and choosing projects that have this effect. It shuts down the traditional middle-management extortion of "you work for me or you don't work here" and gives everyone the same "freedom of the castle" in their choice of projects, but it's not a free-for-all.
suddenly people are back to feeling like they have bosses and assignments they need to fulfill to keep their jobs, only it's even worse because those aren't transparent...
Actually, that's a false security, in that you can do all your assignments well and please your boss and still get laid off... I know what you mean, though. I agree with you: it's going to be hard for Valve to preserve its culture. These are the kinds of times that test people.
I've never seen that happen before, but I also mostly have information about more bureaucratic companies (especially my dad working for a top-100 global conglomerate as I was growing up), so Valve might do it right. One reason to think they might is the lack of lots of layers of management: multiple layoff rounds are often due to trying to cut the least possible to fulfill a target, but using the most optimistic assumptions, so finding out a few months later that, surprise, it wasn't enough.
I also agree that one round is pretty much the max you can explain away. Once you've gone to two, nobody believes that this is the last one.