Ask HN: Could layoffs be companies firing deadweight?

One of my reports was laid off from Google. He was a solid performer with an upwards trajectory who had impact beyond the expectations for his level. He was absolutely not dead weight. In fact, if I had to choose the lowest performing person on my team it would not be this person.

It may be done differently elsewhere, but at least in this case it was clearly not dead weight.

I believe that layoffs are happening for the following reason: the major tech companies do not see VC-backed startups as a large threat to their ability to hire in a world where cash is more expensive. The big tech companies are also concerned about the high cost of labor and rising compensation.

They now have an opportunity to lay off a relatively small portion of the workforce, flood the market with people looking for work, and reduce the average value of compensation packages offered to new hires, without causing some existential threat to their ability to hire when they want to. Because pay is based on a comparison to the broader market, this new norm can be used to depress raises and stock refreshes for everybody. We haven't seen what comp looks like for next year at Google yet, but I fully expect the numbers to be pretty dismal compared to last year.

In tech I think there has been a social expectation to appear like you are growing over all else.

Low performers weren’t fired, product lines that weren’t successful weren’t shuttered, etc all because one of the goals was to have a line going up and to the right on the growth slide because market sentiment demanded it. The CEO wants to talk about 3x-ing the company at the annual meeting.

Now that investors don’t have as much cash to burn, market sentiment demands the shuttering of unprofitable business plays and a narrative around a more rational headcount.

So we are seeing both. A manager who grew their team 3x during the pandemic is just dumping their mishires that were difficult to fire in the we must grow above all else meta. In other cases companies are shutting down entire business lines and laying off both high and low performers in a mass cull (some places transfer out the high performers before the layoff others just shutter the division).

"it is a great excuse to lay off the low performers"

It is a great excuse to get rid anyone who disagreed with corporate changes or mangage to anger anyone in the management chain. Most big companies just put you on 'special' projects, then if you don't get the hint to leave, bundle you into the layoff pool.

You’re right. It’s all part of the natural business cycle, it seems.

As the power shifts to the employees, it becomes possible for employees to reduce output with impunity. Employers don’t have much choice, since you can barely fill the positions you have. It’s more expensive to replace a low performer than to just keep them.

But if some employers are forced to do layoffs, citing the economy, other employers definitely can seize this opportunity to embrace the power pendulum swinging back.

As some anecdata for seasoning, some of the higher ups at Salesforce told me they were pretty ticked off about how the employees seemed to have declined in engagement and productivity. So I bet this is a joyous occasion to let the bottom rung go and move the power pendulum back to the employer. You drop the bottom and expect more from those left. Double win.

They don't necessarily have to be low performers for this to basically work. I think the purpose is much more around reasserting owner power vs workers, with a small amount of it being it's socially acceptable to jump into the firing people trend right now.

There really is just no other reason I find convincing for why such a huge number of CEOs apparently all sat down and independently arrived at the conclusion they needed to fire precisely 5-8% of their staff.

Maybe. I think the main driver is more boring. It's yet another opportunity for investors to make a bunch of money with yet another short-sighted play that throws actual workers under the bus.

Whether or not fat is trimmed like you say feels more like a side effect of a classic Silicon Valley cash grab. Investors don't give a shit who has to go, they tell their VPs to tell directors to tell managers "pick 4 to keep, the rest have to go" and that is what they do.

I have spoken with owners and business leaders who used the covid crisis and other events to do a 'no fault' layoff - they cut their low performers regardless of whether they financially speaking had to. They felt that doing layoffs in this way was less likely to impact overall morale.

The other thing to think about is that firms also have to signal to their investors. If all my competitors are laying off, but I don't, it might signal that I'm not carefully managing my investor's dollars. Investors might then punish the stock.

Me personally, I've been trying to get managers to be more thoughtful about who they want on their teams, being more careful in the hiring process, coaching those who aren't up to snuff, and letting go of people who are underperforming. Doing that on a regular basis instead of playing layoff games seems to make for a stronger culture overall.

This happened at my company. We offered our US based QA Engs a chance to upskill and become SWEs to backfill some open reqs. The QAs that didn't ended up being let go even though EngManagement gave MULTIPLE warnings that the writing is on the wall if you didn't upskill. We had a 60-40 backfill-fire rate.

Some of them maybe. That doesn't explain Google crushing the Fuchsia team. It sounds like you haven't investigated the issue in much depth.

The issue with layoffs is that it's not just the low performers being fired. Typically managers are given a preference or salary amount that has to be cut. Inevitably the low performers are the first to be out on the list, but often times they'll also cut some of the high projects because they're making too much money. This even assumes that it's the managers making the decisions. If not, what happens is that layoffs are random message by someone outside the department and you can get stuck with low performers

I reckon the chances of actually hitting all the low performers is exceptionally low in a corporate context.

Much more likely outcome is you drop a normal distribution of them - some good, some bad, most avg.

Those CEOs seem to have the opposite impression from what I've seen "on the ground":

- Layoffs do a far better job of destroying morale and filling employees with fear for their own jobs than any sort of at-cause termination. Layoffs should also be filling shareholders with fear for the soundness of their investments, but apparently "profit line go up" is all that matters.

- Not-tiny corporations are perfectly happy to terminate even adequate employees (let alone "underperforming but not a total disaster"). They have a much easier time replacing workers than smaller businesses do; their obstacles come less from an unwillingness to terminate and more from an aversion to risk - namely, risk of a wrongful termination claim, which they mitigate through formalities like performance reviews and PIPs.

In short, by the time layoffs are on the table, a large company has likely already culled whatever it considers "dead weight". Businesses would also vastly prefer terminations to be for-cause rather than a formal layoff for the simple reason that firing someone typically makes it easier to wriggle out of being on the hook for unemployment than laying someone off.

Not these recent rounds, no. I don't like companies subtly pushing this either as way to keep remaining employees motivated and less scared.

I think to some extent there is some truth to this. In some states it is easier and less complicated to let people go under the guise of a layoff then it is individually. Having said that, most companies are not going to hold on to low performers waiting for a market downtown.

I think right now a single small RIF is not viewed particularly negatively by staff as it is happening across most companies. What is more problematic are companies that are laying off 10% every 3 months each time telling staff that they are now on the right track!

I think the real answer is that previously the market was pushing and rewarding companies for revenue growth at all costs (lead to excessive hiring of surplus elites), and now the markets are punishing companies that don’t optimize for profit maximization (hence firing of deadweight surplus elites). CEOs usually respond to market signals rather quickly or else themselves join the ranks of the army of unemployed surplus elites.

Yes but keep in mind a business sees "deadweight" differently than what an employee may see. So deadweight is not necessarily low-performer, high-performer, etc. If anything your last sentence best explains, a great excuse.

>destroys morale and fills employees with fear for their own jobs

I'm not sure layoffs prevent this