End of fiscal year, companies will sometimes do a round of layoffs to juice reports (e.g. lower ongoing costs expected for the next year). Some industries also ditch older (read: more highly paid) employees for a new batch of interns to keep average salaries down.
The CEO that managed to take GE from being the single most valuable technology company and turn it into a poorly performing stagnant mess popularized the idea of survival of the fittest within companies. He asserted that by cutting the bottom performers and even whole divisions regularly that it would leave a stronger, better company. He set targets to lay off the bottom 10% every year regardless of whether it was financially necessary.
In the short term, this strategy makes efficiency metrics look really good, and with good looking metrics, the stock goes up temporarily. However, there are major costs to layoffs that take months, years, and decades to materialize. Eventually, forced churn ruins the best of companies, from GE to IBM. Unfortunately, this management style is still incredibly popular amongst publicly traded companies. Most of the investors are willing to accept the eventual demise of a company if it means a decade of really good returns in the meantime.
In addition to what you said, laying off the bottom 10% performers gives your employees a conflict of interest. Now it’s better for them if their coworkers perform worse, and worse performing coworkers hurts the company. This may crop up in workers not helping each other out, or deliberately writing bad documentation.
It’s absolutely insane how big and important a company GE used to be compared to how trash they are now. Same with IBM, HP, Xerox, all those old tech companies. They didn’t fall to pieces because the new generation were just better, they were killed from within.
GE, for example, built a bunch of our early nuclear reactors.
They weren’t just great at technology, they were great to work for. My father worked for IBM in the 80’s and again in the 2000’s after they acquired the company he was working for. He said it was like two entirely different companies. The 80’s IBM cared about family, work/life balance, generous healthcare, had a pension. They were an engineering company that could solve any technical problem their customers could come up with. By the 2000’s IBM had become a sales and management company. They had software to give employees the bare minimum pay and benefits tailored to their zip code. They were succesfully sued for age discrimination. They successfully convinced my father that he had absolutely maxed out on salary amd would never make any more. His raises didn’t even match 3% inflation. He was laid off in the 2010’s after a decade and a half of exemplary performance.
Five years later his salary had doubled and he was loving working on novel projects again. It was wild too see how the corporate gaslighting had convinced him he didn’t deserve any better and was just lucky to have his job when in reality he was majorly underpaid and had very valuable and unique hardware design expertise. Getting laid off sucked but turned out to be one of the best things that could have happened to him.
My uncle worked at HP for the majority of his career and watched a very similar decline.
If the suits take over your engineering company, it’s time to start asking colleagues if their company is still engineering focused. Don’t stick around for the decline.
I think that’s a virtual “season”, more like time period until market stabilizes enough not to throw away people just in order to show pretty graphs to shareholders
It is 100% a real thing. American tech companies go through this cycle where they over-hire (on purpose) and then later on they lay a bunch of people off to “cut costs” and appear “financially responsible”. This is also easier to manage (if you’re a lazy dipshit) because you don’t need to worry about your exact headcount so much, you can adjust later if you have too many or too few people. (It also gives a good excuse to get rid of people you don’t like but who would otherwise be very hard to fire.)
Investors eat that shit up.
Since companies tend to report earnings and things around the same time, companies engaging in this strategy all tend to lay people off at the same time.
All these companies playing the layoff game at the same time, destabilizing the lives of million of people and their family. Is there any report on the damage to the economy at a whole?
This is unthinkable in the EU. If a company isn’t sure about the needed force, they need to hire temps.
If you don’t have a technical or economical reason, you are not even allowed to lay off an employee.
And you have to give notice for a period, which is proportional to the time you worked for the company, or you have to pay this fully as severance and this can be more than a year.
Protected employees (voted as union representatives) are even harder to fire.
This does come with the downside that some, almost not productive, colleagues never get fired. But I guess it beats the alternative of having almost no protection.
The US companies claim they have economic reasons but really this is just part of a cycle that shareholders understand but companies hope employees will not.
They claim they’re fixing problems by firing people, but for the most part these are companies that are more profitable than ever.
There’s much less worker protection in the US, though. A lot of these companies have EU branches and I bet those EU branches are mostly left alone during these layoffs for that reason.
My largish company has had layoffs at roughly the same time of year for the past few years. I think of it as a season. I think when it happens depends on upper management/board at each company.
Not in most of Europe, because we have worker protection laws in place that disincentivize this type of behaviour (sometimes so much so, that critics say it makes the job market too “rigid”).
Da fuck is layoff season? Is that a real thing?
As an American I have not heard of it either
First time I’m hearing of it and apparently I’ve already been infected.
End of fiscal year, companies will sometimes do a round of layoffs to juice reports (e.g. lower ongoing costs expected for the next year). Some industries also ditch older (read: more highly paid) employees for a new batch of interns to keep average salaries down.
https://www.npr.org/2022/06/01/1101505691/short-term-profits-and-long-term-consequences-did-jack-welch-break-capitalism
The CEO that managed to take GE from being the single most valuable technology company and turn it into a poorly performing stagnant mess popularized the idea of survival of the fittest within companies. He asserted that by cutting the bottom performers and even whole divisions regularly that it would leave a stronger, better company. He set targets to lay off the bottom 10% every year regardless of whether it was financially necessary.
In the short term, this strategy makes efficiency metrics look really good, and with good looking metrics, the stock goes up temporarily. However, there are major costs to layoffs that take months, years, and decades to materialize. Eventually, forced churn ruins the best of companies, from GE to IBM. Unfortunately, this management style is still incredibly popular amongst publicly traded companies. Most of the investors are willing to accept the eventual demise of a company if it means a decade of really good returns in the meantime.
In addition to what you said, laying off the bottom 10% performers gives your employees a conflict of interest. Now it’s better for them if their coworkers perform worse, and worse performing coworkers hurts the company. This may crop up in workers not helping each other out, or deliberately writing bad documentation.
It’s absolutely insane how big and important a company GE used to be compared to how trash they are now. Same with IBM, HP, Xerox, all those old tech companies. They didn’t fall to pieces because the new generation were just better, they were killed from within.
GE, for example, built a bunch of our early nuclear reactors.
They weren’t just great at technology, they were great to work for. My father worked for IBM in the 80’s and again in the 2000’s after they acquired the company he was working for. He said it was like two entirely different companies. The 80’s IBM cared about family, work/life balance, generous healthcare, had a pension. They were an engineering company that could solve any technical problem their customers could come up with. By the 2000’s IBM had become a sales and management company. They had software to give employees the bare minimum pay and benefits tailored to their zip code. They were succesfully sued for age discrimination. They successfully convinced my father that he had absolutely maxed out on salary amd would never make any more. His raises didn’t even match 3% inflation. He was laid off in the 2010’s after a decade and a half of exemplary performance.
Five years later his salary had doubled and he was loving working on novel projects again. It was wild too see how the corporate gaslighting had convinced him he didn’t deserve any better and was just lucky to have his job when in reality he was majorly underpaid and had very valuable and unique hardware design expertise. Getting laid off sucked but turned out to be one of the best things that could have happened to him.
My uncle worked at HP for the majority of his career and watched a very similar decline.
If the suits take over your engineering company, it’s time to start asking colleagues if their company is still engineering focused. Don’t stick around for the decline.
Man, i remember back when we called Google “the engineering company”. Not anymore…
So a form of Enshittification
I think that’s a virtual “season”, more like time period until market stabilizes enough not to throw away people just in order to show pretty graphs to shareholders
It is 100% a real thing. American tech companies go through this cycle where they over-hire (on purpose) and then later on they lay a bunch of people off to “cut costs” and appear “financially responsible”. This is also easier to manage (if you’re a lazy dipshit) because you don’t need to worry about your exact headcount so much, you can adjust later if you have too many or too few people. (It also gives a good excuse to get rid of people you don’t like but who would otherwise be very hard to fire.)
Investors eat that shit up.
Since companies tend to report earnings and things around the same time, companies engaging in this strategy all tend to lay people off at the same time.
Here’s a page tracking this phenomenon.
All these companies playing the layoff game at the same time, destabilizing the lives of million of people and their family. Is there any report on the damage to the economy at a whole?
Of course not, inconvenient things like that don’t get investigated in the first place.
This is unthinkable in the EU. If a company isn’t sure about the needed force, they need to hire temps.
If you don’t have a technical or economical reason, you are not even allowed to lay off an employee.
And you have to give notice for a period, which is proportional to the time you worked for the company, or you have to pay this fully as severance and this can be more than a year.
Protected employees (voted as union representatives) are even harder to fire.
This does come with the downside that some, almost not productive, colleagues never get fired. But I guess it beats the alternative of having almost no protection.
The US companies claim they have economic reasons but really this is just part of a cycle that shareholders understand but companies hope employees will not.
They claim they’re fixing problems by firing people, but for the most part these are companies that are more profitable than ever.
There’s much less worker protection in the US, though. A lot of these companies have EU branches and I bet those EU branches are mostly left alone during these layoffs for that reason.
It’s also an election year, gotta keep everyone one their toes during our quadrennial Giant Douche vs Turd Sandwich festival.
My largish company has had layoffs at roughly the same time of year for the past few years. I think of it as a season. I think when it happens depends on upper management/board at each company.
Not in most of Europe, because we have worker protection laws in place that disincentivize this type of behaviour (sometimes so much so, that critics say it makes the job market too “rigid”).
Depends on the countries, in France yeah, in the Netherlands I saw almost yearly layoffs at the tech companies I worked at.