<story><title>“Copycat” layoffs won’t help tech companies or their employees</title><url>https://www.gsb.stanford.edu/insights/why-copycat-layoffs-wont-help-tech-companies-or-their-employees</url></story><parent_chain><item><author>idopmstuff</author><text>I think the problem with this strategy is that it causes the wrong people to leave. If you&amp;#x27;re a top performer, you&amp;#x27;re going to feel like a 10% pay cut is very unfair, and you&amp;#x27;re going to be able to get another job elsewhere fairly easily, even in this environment. If you&amp;#x27;re not performing particularly well, it probably doesn&amp;#x27;t feel as unreasonable, and even if you don&amp;#x27;t like it, it&amp;#x27;s tough to leave.&lt;p&gt;When done correctly, layoffs give 100% of the pain to 10% (or whatever) of the people, but you get to select the worst-performing people. Spreading the pain equally is much more liable to cost you your best-performing people.&lt;p&gt;I do think the one important thing to note is that the reference you quoted is to a manufacturer, where you&amp;#x27;ve probably got more consistent performance across a given type of employee as compared to software developers.</text></item><item><author>tarr11</author><text>The professor recommends across the board pay cuts as an alternative to layoffs.&lt;p&gt;&amp;gt; One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain.&lt;p&gt;Curious if there is research here on how this impacts the company?  Seems like it would also increase stress and encourage top performers to seek new opportunities.&lt;p&gt;He also recommends hiring during a recession:&lt;p&gt;&amp;gt; He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating.&lt;p&gt;I suppose this works when it works, and then fails completely when it doesn’t.  In essence, this increases the risk profile on the company which seems problematic too.  Would be curious if there are studies that show the outcomes of these strategies.&lt;p&gt;Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.</text></item></parent_chain><comment><author>blagie</author><text>Having seen both, I&amp;#x27;m much more likely to leave &amp;#x2F;after&amp;#x2F; a layoff than after a 10% paycut.&lt;p&gt;In abstract, if there were a way to rank employees by ROI and contribution perfectly fairly, I might not worry about layoffs personally. However:&lt;p&gt;1) In my career, I&amp;#x27;ve never seen layoffs which were at all good at selecting the bottom 10%. Who gets dropped is pretty random.&lt;p&gt;2) I care about other people I work with. A 10% layoff means a few of my friends were hurt.&lt;p&gt;When I had a 10% paycut because the business needed it, it felt a little unfair, but I didn&amp;#x27;t leave. That same business raised my salary back up a year or two later. I&amp;#x27;m still there, actually, and many people spend entire careers here.&lt;p&gt;I spend most of my hours working, and above some point, I care about having a humane employer, meaningful work, and a decent work environment much more than I do about salary.&lt;p&gt;Job stability also allows me to focus on my work over signalling. That works well if I value and enjoy my work (which I do).</text></comment>
<story><title>“Copycat” layoffs won’t help tech companies or their employees</title><url>https://www.gsb.stanford.edu/insights/why-copycat-layoffs-wont-help-tech-companies-or-their-employees</url></story><parent_chain><item><author>idopmstuff</author><text>I think the problem with this strategy is that it causes the wrong people to leave. If you&amp;#x27;re a top performer, you&amp;#x27;re going to feel like a 10% pay cut is very unfair, and you&amp;#x27;re going to be able to get another job elsewhere fairly easily, even in this environment. If you&amp;#x27;re not performing particularly well, it probably doesn&amp;#x27;t feel as unreasonable, and even if you don&amp;#x27;t like it, it&amp;#x27;s tough to leave.&lt;p&gt;When done correctly, layoffs give 100% of the pain to 10% (or whatever) of the people, but you get to select the worst-performing people. Spreading the pain equally is much more liable to cost you your best-performing people.&lt;p&gt;I do think the one important thing to note is that the reference you quoted is to a manufacturer, where you&amp;#x27;ve probably got more consistent performance across a given type of employee as compared to software developers.</text></item><item><author>tarr11</author><text>The professor recommends across the board pay cuts as an alternative to layoffs.&lt;p&gt;&amp;gt; One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain.&lt;p&gt;Curious if there is research here on how this impacts the company?  Seems like it would also increase stress and encourage top performers to seek new opportunities.&lt;p&gt;He also recommends hiring during a recession:&lt;p&gt;&amp;gt; He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating.&lt;p&gt;I suppose this works when it works, and then fails completely when it doesn’t.  In essence, this increases the risk profile on the company which seems problematic too.  Would be curious if there are studies that show the outcomes of these strategies.&lt;p&gt;Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.</text></item></parent_chain><comment><author>msbarnett</author><text>If you’re a top performer you bail as soon as there are layoffs anyways. I certainly do. It’s rarely a sign that anything good is in your future, they’re often performed poorly, and the work environment post-layoffs is incredibly bleak and disheartening.&lt;p&gt;If you have options there’s no good reason to stay.</text></comment>