Stock is up over 45 now . . .
Getting rid of dead wood is a great idea. Tons of middle management there, just sitting for years and causing obstructive damage.
Getting rid of dead wood is a great idea. Tons of middle management there, just sitting for years and causing obstructive damage.
He explained that any company who could shed a massive amount of its workforce within a year, or all at once, is a red flag for massive internal problems. At the time we had this discussion, he was the CFO of a company that had over 30,000 employees globally.
His thinking was that the same principals that small companies use (not hiring too quickly, etc.) should be scaled up regardless of the company size. You either need people or you don't. You don't hire too fast simply because you are experiencing rapid revenue growth, because revenues do not grow unabated. You hire as slowly as you can, so that when recessions hit or market forces change, you don't suddenly have 3 or 4 times the staff you need. His thinking (which I agree with) is that since those people worked extra hard to cover the work when times were booming, you don't turn around and lay them off just because things slow for a couple of years.
Those people worked hard for the company because they are good employees; he saw it as more important to have good employees on hand when things ramped up again rather than just cut them loose and hope he could get more good employees later.
Since that discussion, he's gone on to two more companies, leading one through an IPO as the CEO. All of his companies have operated like gangbusters - he comes in, revenues go through the roof, debt gets paid down and he's NEVER LAID ANYONE OFF. In the meantime, in his work history, he's been through 3 IPOS (two as CFO, one as CEO) and I don't know how much he made personally on each I do know that he cleared $41 million in a single day on one of them.
This is in complete opposition to what I've heard from several other CEOs, who tell me 'labor is your most controllable expense'. Yet, none of their companies (some also on the NYSE or NASDAQ) have performed anywhere near what my friend's has.
I think he's right. Wall Street is full of guys who have no actual experience running a business. They see layoffs as 'cleaning house' and 'cutting expenses' but the reality is that while that can be true, it more often is a harbinger that the company is not well run.
Counter Nadella's communications over the last few weeks with what Larry Page said/wrote when he took over from Eric Schmidt. Even though Google pursues hundreds of interesting initiatives of varying revenue importance, it appears they have a coherent strategy (internally, at least) and have been making appropriate decisions to further it, even when those decisions are sometimes indecipherable to external viewers.
While it sounds like your friend definitely knows how to run a real business, he/you may want to re-asses Wall Street's real business: it isn't "running companies", it isn't "building value" and it sure isn't "giving away solid analysis for free".
They make money off trade-activity that generates short-term returns.
The sell trades, not stocks. Not unlike eBay. They can and do profit from irrational/emotional behavior and they have no qualms about designing their business to fuel and leverage those behaviors for increased returns.
If 2007 taught us anything, it should be that Wall Street is more than happy to tell you whatever you need to hear to generate predictable trades -- more than happy to tell business news channels whatever will generate predictable trades -- even those they know those trades to be bad and foolish to the extent that they personally bet against them.
Regarding the "tons of middle managers" (another dehumanizing expression imo.) - I haven't met anyone just "sitting for years" and happily "causing obstructive damage" yet. I have however met quite a few where it took me some time to appreciate their work (looked like nothing/trivial from the outside) and realize their failed struggle with organizatorial constraints on their work.
Apologies if I am reading too much into your post. However, there seems to be pervasive contempt for the people affected by layoffs in threads like these that's unnecessary and unwarranted.
- There is dead wood. People who do negative work, or who do not add value, only process, to shipping products
- There are toxic middle-to-upper level managers. These people exist; I have personal experience with one who I believe is an actual psychopath
- There are many partner-level people who have essentially reduced their careers to manipulation of other people's careers, by canceling products, or getting people canned or quashing promotions, or backing poor promotions.
I don't think it's hyperbole to say that middle management at Microsoft is riddled with "dead wood".
I had a guy under me laid off, and I resigned on the spot -- because his being laid off meant the company was giving up on a core capability that was the main reason I wanted to be at the company. A friend of mine was working at a large software company that laid off "dead wood" (according to management) including key engineers, which literally led to all the other experienced engineers on his team leaving.
how do you know it's middle management?
> Getting rid of dead wood
That's such a despicable way to talk about human beings,but not surprising here,unfortunatly.
Nobody is implying the people who hold those jobs have any personal failings or aren't capable of doing productive work, but the jobs themselves are not helping the business.
"We need to cascade memos about our holistic logistical matrix approaches."
In every post about this story, right near the top have been dreamy posts about "dead weight" and "middle management" being cut, as if all of Microsoft's prior executive bungles are suddenly being resolved (with most of the same executives, as an aside). Yet the bulk of the layoffs come from Nokia (man, Finland is going to be pissed), people whose only mistake was following a leader who was widely considered a trojan horse.
Elop keeps his job. Those people lose theirs.
And how ridiculous prejudicial for all of these people whose only mistake was being in a company that main horrendous strategy decisions time and time again -- having people title you "dead wood".