I’ve spoken to a lot of CEOs this week who are going through layoffs or who are thinking of going through going through layoffs. The list of those who’ve pulled the trigger gets longer every day, and the unparty seems to just be getting started based on the email flow that we’re seeing.
Why are companies doing this now? Based on the CEOs I’ve spoken with, it isn’t just about cutting costs in preparation for a downturn. Some CEOs see this as a once-in-a-startup opportunity to get rid of the deadwood in the company.
These companies see the Wall Street meltdown and a string of very public statements by venture capitalists like Sequoia Capital, Benchmark Capital and Ron Conway as a way to avoid the negative press and attention around letting employees go.
Back in the 90s and before companies could shed workers without any real fear of publicity unless they were large companies making large cuts. A young startup letting a third of employees go wouldn’t get much - or any - press at all. But in the age of everyone-is-a-publisher it takes just a second after someone is walked out the door for them to post about it on Twitter or their blog, and it spreads from there.
A company that has made layoffs is branded a loser, and it becomes very hard to get positive press, recruit new talent and close new rounds of financing. Until now that is. Companies that have made layoffs in the last week are generally being given a pat on the back for being financially prudent.
When we heard that MySpace, for example, was laying off 5% of staff in July, the companies COO spent a great deal of time explaining to me that it wasn’t a sign of financial weakness. Rather, they just wanted to fire the 5% of staff that weren’t really pulling their weight or putting in the effort.
Now companies don’t have to go to the trouble of explaining themselves when they shed workers. They just get lumped in with the others who are also “thinking ahead.”
Clearly not all, or even most, of the layoffs are hidden terminations of non-performing employees. But many of them are, CEOs are telling me off record. It’s not like the names are being drawn out of a hat at random. The superstars tend to stay.
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Makes good business sense to me, fortunately we don’t have any employees to lay off
I don’t see the harm in using the financial downturn to trim the fat even if the fat needn’t be trimmed. I admire a company more when they fire the dead weight and improve productivity. More profits equals the higher the stock shall rise.
It was true in my experince that people work “just hard enough not to get fired.” So raising the bar for keeping your job my firing the poor performers makes the whole company preform better. Often times, sections of a company are loyal to one Executive or you may have factions in the company that disagree. Using the downturn to redirect the path of a company is not a bad thing at all. Personally, I think that a few people in the Valley, are over paid, under delivering, entitled and frankly, need to be fired. The are CEO’s out there that may have come in after the company was founded. I am behind any CEO that uses this chance to right the ship, steady the curse and make some changes. Fire people, become more lean, and mean, the valley exists between feast and famine, during the famine the strong survive and the weak get laid off. Start running better business’ too much depends on imagination, as yoda says, Trying is lying, DO or do not!
I still find it ironic that a small startup would have hired 1/3 or (anything more than 1/10) that later recognized to be bad hires or as you put it “deadwood”. I guess a pat on the back is better than a kick in the ass when realize made a mistake early on and correct course fast.
Companies should hire carefully and let go of underperformers as soon as they’re recognized, regardless of economic conditions. Then they become a haven for talent and never need layoffs.
someone, i forgot who, once told me “you can never someone fire too quickly”
Seems like an opportunity for someone to create a web site that would: cross check when employees lists as their end date, versus when companies were letting go their “underperformers”
For example, would you hire someone from MySpace that listed July as their end date?
The thing is how do you know those who were let go were really underperformers. What if the manager is really the underperformer instead.
A current employee told me their myspace data warehouse manager is not allowing some of her employees to work on many tasks (therefore they are not performing, you see) because she likes fun employees and those who can make her laugh…
Very ridiculous how this myspace DW manager is undermining the company and victimize the employees…
How did you get to keep your job then?
If a 1/3 of your work force is non-performing in less than 1 month time period, you had to do a lot of bad hires in hoping to find 1 or few person(s).
“Superstars” as the article said, are they NOT the start up’s Founders?
Last question/issue, what happened to “The worst employee should be the CEO?”
frank dont be such a plank. what happened if they happened to resign at that time. or what if they didnt like the job or were not suited for the position, would they be recognised for what they’re good at rather than what they’re not good at.
You plank
IIRC, there was a list of business rules published by the original leader of Mindspring (pre-Earthlink) in an old Boardwatch article that said something to the effect of [hire slowly and fire quickly] — and it’s often seen elsewhere as “hire slow / fire fast”.
Frank: That suggestion is ridiculous. Just because a person isn’t a good fit for a particular company doesn’t mean he wouldn’t be better in a different position at a different company. Are you telling me you’ve never had a job you hated, and couldn’t muster that 120% effort the company expected of you?
But, it has been my experience that upper management rarely want to admit they made a bad decision, and leaves people in positions too long in order to protect their decsions… If someone hires a bad employee, it reflects bad on the person who hired them, and they may not like that negative attention… just a thought…
Sounds like a Trump-ism: Hire slowly, fire quickly.
Doesn’t hiring deadbeats make you a bad CEO or leader?
No anybody can bullshit and make themselves look like an over achiever, it takes a good CEO or Leader recognize they don’t perform and cut the cord quickly.
Bull sh#!, a Bull Sh!#er can always “Bull Sh!#” a Bull Sh!#er, just as talent can always recognize talent. If your Chief executive officer of Bull Sh!#t you deserive to be publicly ridiculed for sitting on top of a pile of shi!#.
Lots of people have no clue how to properly screen a candidate. To compound the problem, many start-ups are too desperate for “a body” in the early days. Once the company gets past that initial phase and has some cash in their pockets, they can become more choosy. This may be the “out” to clean out these people who don’t fit the mold in “stage 2″.
I’m loosely connected with one of the companies that has let people go this last few weeks - and it is basically this scenario that caused the company to have dipshits employed in the first place - they were so desperate for growth they hired poorly and also some of the employees took advantage of funding and demanded ridiculous salaries off the back of the influx of new cash.
What if the CEO is the deadbeat?
i guess it makes sense, but what does that say about those CEO who need a international financial crisis to have “an excuse” to let go of underperforming employees…. seems kind of lame and cowardly approach
I agree it is cowardly and sounds like spin control. Talk about kicking someone when they are down.
“Hey buddy the stock market is crap. Everyone else is laying of people, here is your pink slip, I will tell people how wonderful you are and then tell Mike you were crap… burger king is hiring.”
I am waiting for someone to go postal at one of these companies.
Everything is about spin control (actually, technically it’s just ’spin’ if you’re miss directing). Startups are not vehnicals for gainful employment, they’re supposed to be money making enterprises.
The fact they create jobs is a by-product. Of course you’re going to spin when you have to announce negative news about a by-product of your company (jobs going)
Agreed that a CEO shouldn’t need an external layoff excuse…they need a solidly defined performance culture. If they have strongly defined performance criteria, they often will not have the same hiring issues, as spikes and results are clearly defined before the hire is made.
Both GE and McKinsey are great examples of strong performance cultures where its clear if you’re succeeding or not a fit. And in many cases, “fit” is the bigger issue than raw talent.
Oh yeah, and fire the managers who hired the deadwood and never got rid of it before now.
It’s hard to keep “manual” tracker like that because u never know when or how many people exactly got layed off. If I layoff 200 people probably 50 of them are going to get position within company yet considered as layoff for some people…or HR…
It’s great list u put there… maybe somebody should do web app for layoffs?
that was basic common sense that some of those getting laid off wasnt pulling their weight so it was more of a chance to fired them.
its times like these you grow to respect markus of plenty of fish a one man show.
makes sense and its nothing new for big companies to do that. happened a lot in late 90s. but thse cuts are significant percentage wise … 30%, 40%. tahts where it gets odd. nearly half the team is dead weight?!
I’m with Jim. I worked 13+ years for a national/international corporation that was bought and sold 4 times. Each time the new CEO’s took obscene amounts of $ and cut more core people, “for the shareholders”. They also began systematically funneling the work to India, as they cut out US workers. I don’t call this culling the deadwood. Certainly there are always levels of performance. But cheap labor always trumps, often no matter the quality. The stock was at one point $80 a share. I believe it is now 95 cents. There was tons of insider trading. The longer you work for a company like this, the more privy you become to the internal shenanigans. It is cheaper to hire new people at reduced salaries with reduced benefits than to keep the reliable and informed “deadwood”. I feel the original article makes several assumptions that seem arrogant and naive. In my humble opinion.
What’s so difficult - have some kind of metric system for grading employee performance…and if they fall below it, on more than one occasion, use that as an excuse to let them go
the management doesn’t have the balls to do that, and just uses this downturn as an excuse instead?
lol - must be a personality thing, or some other questionable trait that you hate about them , but can’t lay them off because of just that - otherwise it’d be illegal
Companies do have a metric system. Laying off people isn’t as easy as following the metric system. Sometimes you let good employees with high salaries go, in favor of lesser ones with much less salary.
Good post. btw - MocoSpace is hiring in Boston.
why is it only in an economic downturn are startups thinking about how to be frugal. duhhh! that’s how i got my startup to be cash flow positive and only spend after i take in.
Good point.
When one considers the brisk competition for job openings from many with the same qualifications, if employees are not performing up to standards - why would they have been kept in the first place, when their are so many optional candidates,
Not everyone can be a superstar - and superstars are usually ambitions. They will be tempted by offers from powerful firms who can afford to only hire superstars.
Those companies may have internal and structural problems that they are blaming on their employees to save face.
Our firm actually increases its business during a recession.
Wow. Finally a post with some insight!
My company takes forever to hire someone because they won’t do it unless it’s right. Most of the people we hire are star performers. But I’ve also had many uninspired, not engaged and unmotivated employees that are a result of working for a few years under a poor manager.
The smart ones leave early. The rest of us stay and hope our stock is worth something. We also stay for each other.
But when we say “underperformers” let’s not only speak of that person on the bottom. A great company is made up of great managers, starting at the top and all the way to the bottom.
“I’ve also had many uninspired, not engaged and unmotivated employees that are a result of working for a few years under a poor manager”
–Agreed! An underperforming employee could be the result of an underperforming manager.
Even more ridiculous, myspace data warehouse manager doesn’t allow some of her employees to perform! Simply because the employees might just not be her type or make her laugh.
She’d watch closely to make sure these employees don’t get star projects and tried to string them along in low profile, trivial tasks. Completely ignoring the benefits of the company by wasting company money and resource for her personal enjoyment.
Hope the myspace executives will find it out soon…that to improve the company don’t just believe the performance reviews as they could be false reviews made by the managers. When a manager is underperforming, it will be the whole team not performing at its best (and don’t just look at what they’ve done; pay attention that they could have done a lot more) and laying off individual employees won’t have the quadruple effect as laying off a bad manager…
MySpace Data Warehouse video:
http://www.youtube.com/watch?v.....annel_page
Great post Mike. Glad someone is pointing out the obvious before it got out of hand.
Our young company –only 6 months old, profitable from day one, has seven employees, five independent part-timers one web designer, one in charge of content, two pr/sales one accountant and my partner and myself, who rotate/share the *important* titles, CEO, Chairman, COO, etc. Whatever.
To keep up with the times and not appear like freaks in the Valley, the CEO and the COO decided on Tuesday to fire each other [allowed by our bylaws] right after we got to the office –around 10:30 AM.
Made a lot of noise, slammed a few binders on one desk, kicked [and disconnected] the router… and left the office in a huff.
I don’t know about my partner –I think that in an act of desperation, he agreed to go shopping with his new girlfriend. As for myself, had a great lunch at Gino’s and then went to my place and took the best nap ever!
On Wednesday, we all met back at the office early afternoon and the top guys hired each other, reviewed the new vision for the company and some details about the new customers’ contracts –Then, couldn’t help it, opened a few bottles of good bubbly… ate stale cookies and celebrated like the nuts we are…
Now, back to work!
[Mike, you know one of the *top* execs very well.]
Dude, what the heck are you talking about?
you took the words right out of my mouth.
@EH & Lawrence –Sorry guys, obviously this is not for everyone. If you don’t get it, you don’t get it…
ahahahaha
I think this is the funniest thing I’ve read all weekend.
Something to think about though, these people that are being let go during a layoff is usually good for those getting laid off, not just those doing the laying off.
Think about it, wouldn’t you rather tell people that you got laid off due to the market meltdown or because someone thought you were a non performer and so you were fired?
hear of google laying off too? 70% decrease in shares really hurt.
I did. I hear they’re laying off 33.3333333% of the workforce.
Not 100% of course, just 1/3 are deadbeats.
This is a very good post Michael.
I think about half of the “layoffs” are people that are good, but not essential or performing or fit right. That makes sense. In an up market, talent is harder to find, so you hire the best you can, and some don’t fit or aren’t right, or your company is not right for them.
I do think at least half of the other people are being let go because last downturn, most companies did not make it. Better to get a leaner company NOW, just in case. Some of this is panic, and some will create lower revenue or even a death spriral- the one you did not mention is the 3rd kind - where the cuts lower revenue and then you are really dead fastest.
The valley is smarter, but also faster to react. This is not all bad. It is not fair to say the top talent is not being fired- the top “fit” talent is not being fired. Every company is different and if it is not a perfect fit, it is time to leave or be let go.
I would think every company should be doing a 30% cut, and you should only really call it out if it is much more >50% or less < 20% as those companies ar either delusional, or have cash reserves or better models.
In my experience, anytime anyone does something across the board, 5% here, 10% here, etc., it is not based on prudent judgment or getting rid of dead wood. Prudent judgment (ie firing) is done on a regular basis without severance.
An across-the-board cut means one of the following:
* upper management doesn’t appreciate the value of its workers (pretty scary if you have less than 100 employees from my experience)
* upper management has hired poorly (pretty scary if you have 100 people and 1/3 are worth getting rid of)
* the company is responding to pressure from investors (the VCs) and sacrificing 5-30%. (most likely)
This is either a sign that they were foolish to hire the people in the first place or they are now foolish to let so many people go. Time will tell.
hear hear!
I have 35 employees and had never downsized or outsourced. Instead, I hired carefully over the years. I don’t hire ahead of profit/revenue, ever. Most startups are not real companies that will last the test of time because they don’t have real business plans and don’t understand how to hire.
Agreed. Hiring needs to be done very carefully. As they say, almost every firing decision is the result of a bad hiring decision. And, second rate managers, hire third rate subordinates.
what don’t kill you ..makes you stronger…good luck for layoff guys!
Of course the other great financial advantage of laying off “dead wood” (ever notice how little dead wood there seems to be in management?) is that you can turn around and tell the remaining employees that they can forget about raises because they should just be grateful they still have a job!
now thats funny nickname!
You just know all of the companies that are laying off folk are soon to be going to be proud, solid, profitable institutions very soon. “Well, lets see we’ve got huge opportunities to get revenue from A-D-V-E-R-T-I-S-I-N-G” Yeah right.
CEOs will say lots of things to make their companies look good, but surely not lie about the need for layoffs, surely not.
The truth is that most managers don’t have the ba*ls to lay people off when times are good. When they do drop the hammer, its often those with dissenting views (i.e. they’re probably being a pain in the ass) that get the boot first. The unproductive a*s kissers are the last ones left to turn off the lights.
One word sums it all: sleazeballs.
I see several comments here questioning management and their ability to hire quality people. Let me say this from years of experience and having hired many hundreds of people and having fired many hundreds of people. You have no idea what you are really going to get when you hire someone. People can train to do well in interviews. Resumes can be “dressed up” and references are almost worthless because most companies wont say anything bad about a former employee for fear of getting sued. Also, there is the environment. I had had people that flourished in one environment and failed horribly in another even in the exact same position. I agree that holding on to someone too long is a problem, but a good manager will always do everything they can so that all of their employees succeed. Sometimes pulling the trigger to quickly is bad too.
With that said, it is one thing to have 1 or 2 questionable employees per every 25 employees or so. It is quite another to have 1 out of 3 employees be questionable or “dead wood”. It should never get to that point.
If interviews are designed to actually *test* a candidate, make them think through problems their resume claims they can solve, it’s easy to tell who’s good. At the same time, the pressure of being tested will reveal the psychos up front. After hundreds of interviews as data points, 95% of the time we can tell within 30 minutes whether someone is a fit.
Also, good managers will attract good employees.
But let’s face it - the software world is rampant with obtuse, technically weak managers who fail upward because there’s such a shortage of them. Too many are incapable of simply putting themselves in the employee’s shoes, let alone structuring an environment to help them succeed. The sad part is that layoffs usually hit line employees before their managers, when often some of the managers should be replaced first.
Congratulations. You would make a great Gestapo officer. Thinking of humans as disposable resources will not get you very far in the management chain.
As a CEO, Instead of hiring to get rich, you should think about why this person wants to invest their time to help you out. Give any person a chance and they will impress you. This is a fact.
Tony,
It’s true that interviews are not the best way to screen people.
Next time, why don’t you test them for intelligence, personality and professional skills before you hire them?
check out clrapps.com for an online tool that will enable you to do just that.
Arik
Most common mistake I see in the valley:
Good engineer means good manager.
Time and time again I come across mediocre managers that are good engineers.
Tony C. Hall: excellent.
good post Mike
A Layoff, is a Layoff, is a Layoff. If these execs are saying otherwise, is absolutely ridiculous. Layoffs should not be part of a “deadwood” strategy. Layoffs in any company need to be looked at as negative. People need to question the real root causes.
Right now, One Million Workers Running Out of Federal Jobless Benefits. And Congress are taking there vacation until November. No one really realizes what being unemployed is like until it happens to them.
These freshly minted & funded tech companies should NOT be laying off, unless they are really, truly, strapped. Otherwise, they need to be innovating & investing in their people through training. I really believe that the start-ups companies laying off now, won’t survive past 2010, maybe even earlier than that.
You all don’t realize, that, yeah, they may layoff now. But ya know, in only a few months is a new fiscal calendar, which follows their new bonuses for the year. So, yeah a few savings off the bottom line here & there, only benefits who? The people at the top, not the people that go them there. The execs of these companies should step to the plate and take paycuts, and forego their bonuses as well. Share in the pain.
No one really realizes the true effect of a layoff and being unemployed until it happens to them. But check this video how our own Government really feels about people who have been laid off: http://thinkprogress.org/2008/.....mployment/ Then note, who was bailed out & note how Bush cared more about an overseas negotiation that has done nothing for workers here in the U.S. I’m telling ya people, we are all screwed….except online businesses where the individual owns and has the power.
You’re focused exclusively on the perspective of the workers. I used to do that until I started a company. Once you do that and are fighting to survive at all you realize that an exclusively employee-focused perspective will often result in the death of the company, where everyone gets laid off. I suppose that achieves equality…
No. It’s not about the workers. It’s about improving & instituting change in a economy that is focused on nothing else.
There are companies that are going to still INNOVATE & train their workers and then grow. A company is not going to just grow based off simply net profits alone. That’s only one factor. My point that we live in a culture that is “FOLLOW THE LEADER” & Monkey See Monkey Do. Just look at how everyone just follows the lead of Layoffs. I am only questioning the point, & asking “Do they really need layoffs” in a time like this? Obviously, we wont know cause we haven’t seen the books. However, why not a different approach, just has training, or innovation?
It was Warren Buffet who took the chance on a company in depressed times that was innovative & kept on trucking. He did in the beginning with Berkshire.
Believe it or not, I bet that Goldman Sachs was going to go under as well. Buffet did just opposite of what others weren’t willing to do right away, fueling the fire.
So, rather than all these companies follow the leader, why not take a different approach. Their are more lines on financial statements than heads.
And again, I’m not focusing on just the workers. I’m focused on what the workers provide — either the product or your service. If your product or service is not improving, advancing or anything else, you will be stagnant. And that other younger, or newly minted competitor is waiting for this kind of opportunity, because it will be out barriers to entry & speed to market.
That’s why I really feel it’s about innovation & training in times like these.
Some of these posts are just silly. Combine the laws of supply and demand for labor with the imperfection of the hiring process and you get opportunities to upgrade and improve your workforce. My company has 10 people and we had to beg/borrow/steal to get some of our Ruby developers over the past year. Despite a 3-month trial in which he really impressed us, one turned out to be a chronic underperformer (who still produced at 75%), and we finally feel like we can find a replacement without harming our growth path (75% better than 0%). The downturn and subsequent softening of the market made this much less expensive and risky for us. No scumbags, incompetents or other name-calling needed - this is just the way the labor market works.
A person produced at 75% ? HairBallTamer, please go back to your dungeon.
Please explain yourself?
The hiring process is not perfect because people do not make it perfect.
It can be perfect if we really wanted too, but we don’t take the time to 1.) Fix it, and 2.) put in the right processes to ensure that it’s a functioning operation. How many companies actually use Performance Reviews in a qualitative & quantitative way? How many people are true to doing a quality performance review? How many people actually care about their employees? How are you quantifying performance?
@Hairball — I’ve seen it all, from the Big 4 performance reviews where you are reviewed on every consulting project for how many hours you billed, to the reviews of McKinsey & BCG, where its just about how much you did better than your peers. At the end of the day, none of it matters at companies like this, because, it’s about percentages & numbers. And the future workers at companies don’t care, as long as they got in, got the name on their resume & move on to bigger & better things. I think not only companies but also people have lost focus. We always talk about “hiring the best”. But at the end of the day, the best will never be good enough. That’s how we are.
But what if, we could live with what we got, and get people to a level we or they “want to be”? Or you’d rather just WATCH a person stay at 75% rather than challenging the opportunity to get to 90%…..
@Dez –You live in a fantasy world. A socialist fantasy world. Try decaf sometime…
America is a free market capitalist country. When a company needs workers, it hires them. When economic situation changes, it has to let go some workers. In free market, everything is expendable. If you want permanent employment, create your own company. But then your own company is subjected to economic forces. That’s the real world. Stop your fantasy!
That’s absolutely not true. Look at Japan. Japan is still to this day known for their workers, working for lifetime in great jobs. They go through ups & downs, but they are still a super power in developing & innovating new products & services.
In all honesty, take a look back over the history of Japan. Name situations during their economic crisis or market forces where they just had mass layoffs or high unemployment.
The closest to layoff you will ever probably here, will be Japans very own…..McDonalds, KFC & TacoBell.
No-layoff policy is rapidly fading in Japan. Besides, Japanese companies only protect the “employees” but they hire massive amount of temp staffs, whom they cut like a cheesecake. That’s how they combat a weak economy.
@Dez –Again. You live in a Japanese fantasy world. A socialist Japanese fantasy world. You sound like a b-school student.
Reality is waiting for your ass. Good luck.
Try decaf sometime…
So who is the “deadwood”? Failed CEOs or employees? Good Leader/manager always motivates employees and takes responsibilities for their failures.
CEOs need to understand that people spend over 33% of their lives working for you, just like you they have families and financial responsibilities. Termination should be the last option … only if the employee intentionally damages the company or the company has to shut down.
Future employees should stay away from such companies who simply are panicking or finding excuses in this current economic climate. They layoff 1/3 of their staff but continue to spend money on parties and conferences.
Several top tier VCs (are they?) funded companies are run by selfish people who are not protecting human capital .. …..Seesmic, Jaxtr ……. feel free to add names here ….
Another closet socialist.
Successful companies are in the business of making money. Even Chinese [communists] companies understand this.
Go back to your padded room.
Successful companies take care of their people. Period. Those that don’t are doomed to failure.
Calling everything you disagree with socialist is an easy out for the feeble minded.
One might argue that taking care of your employees is good business and leads to higher productivity and higher profits.
MySpace data warehouse manager has laid off her employees every time there is a company wide performance wise layoff.
The question would be, why her employees are always not performing well…there is probably something wrong with the head: this manager.
“Good Leader/manager always motivates employees and takes responsibilities for their failures” –That is exactly the definition of leader but not manager; MySpace’s current data warehouse manager only cares about what she can get from her employees rather than develop the best out of the team.
Should the exectuives realize such individual management issues, they could do much better with or without laying off employees…
Are you trying to put a positive spin on someone’s efforts to cover up their lousy hiring practice?
Someone works for you for 3 months on a trial and they’re a top performer and everyone is impressed and wants to work with the guy. You hire him and his performance immediately drops noticeably. You spend the next 4 months talking to him, asking what would give him more satisfaction at work, what sorts of projects will get him excited again, trying everything you and your experienced team can think of. His performance and demeanor are a weight on the whole team. Maybe I missed something but if you think I’m guilty of ‘lousy hiring practices’ because one of my 10 acted this way (the rest are stars I will do anything to keep) then I’d love to learn how you manage to achieve absolute perfection in your hiring practices? In fact, I’m sure there’s a lot of money in your publishing a book on the subject. Do tell…
” You spend the next 4 months talking to him, asking what would give him more satisfaction at work, what sorts of projects will get him excited again, trying everything you and your experienced team can think of.”
hahhahahaha yeah right. As much as companies like to talk this talk, they never walk this walk. I’ve NEVER seen this happen. Typically, you are hired for a certain role or you get pigeonholed into a certain role. When times comes that you want to do something else that doesn’t fit in the organization of things, the answer will be “no” or “later.” Of course “later” never comes. Plus you fill a certain role and there would be a cost to put someone else in that role (they don’t know it as well as you and you have to train them and the transition costs).
Boo Hoo! Poor me!
Stop whining and start your own company.
But, wait! That would require cojones. Obviously you don’t have them…
Ummm… that’s exactly what we did. He was quite the rock star when we trialed him before paying a lot for a visa to bring him here. Then it was a different world and we wanted the guy we’d hired back, and tried everything to get him. No luck.
You’ve made it clear you’re not the sort of fellow I’d ever want working in my company. Good luck finding a gratifying job somewhere.
@Nick - “If interviews are designed to actually *test* a candidate, make them think through problems their resume claims they can solve, it’s easy to tell who’s good.”
A “test” doesn’t tell you much about a person. It doesn’t show whether someone is a team player, whether they work well without supervision, or whether they spend half their day reading Techcrunch
I’ve seen companies who interview for hours and even get prospective hires to spend a day with the team. They still end up hiring the occasional person who doesn’t work out.
If it’s really a question of conserving cash, then it’s logical and necessary to reduce the payroll. OTOH, if the CEO has been knowingly carrying 20-30% deadwood and then needs a pretext for making the firing decision, then the CEO should be the first one fired - for weak leadership.
HairBallTamer - just put him on notice, that should fix it (it’s a bit like probation).
I’m so glad I’ve never moved to the Valley to join a startup, people are treated like cattle there, what a bunch of cowboys! LOL
And another thing: I am 12 and live with my mom. Got a problem with that???
Economy downside so even any start up not easy.
http://www.oxyshopping.com
Another spectacular string of layoffs, unbelievable. At least we always have hard hitting youtube videos to laugh at… http://www.rawhidenation.com
Michael,
Maybe some or many of these companies do not have a viable business model? It’s easier to say that business is “slow” due to the economy as opposed to acknowledging that their “business” is in fact not a business at all.
Alan Levy
Founder
http://www.blogtalkradio.com
Tom Siebel was well-known for that approach in the 90’s. From Answers.com
“Siebel’s success was largely attributed to his intense focus on sales-based performance and solicitous customer service. He applied firsthand the CRM principles that he sold. Siebel contracted third-party research firms to assess the satisfaction levels of his clients. The reports were used to award bonuses and incentives to employees. Siebel also conducted semiannual performance reviews that resulted in the summary firing of employees ranked in the bottom 5 percent.”
Well-known strategy. Jack Welch did the same, reportedly 10% annually.
Sounds like spin (or low-quality senior management) to me. It’s nonsense to pretend a company can’t fire people without being branded a “loser”. Any good company *has* to fire employees that don’t perform, after said people have been given some chances to improve their performance. It’s an unpleasant thing to do, but an employee that is not delivering will drag down any team that they’re part of. You can’t not fire an under-performer because you’re scared of what they might say. This is especially true for start-ups.
That’s a different process from a large-scale lay-off, which tends to get political very quickly i.e. the wrong people get let go. Because of that, the truth is: companies almost always make bad decisions when it comes to who they lay off in such a process; and as soon as a company makes a bad decision in terms of lay-offs, then they should expect their superstars to walk. Superstars don’t like it when they observe their senior management making dumb decisions. After a year or two, what you’re left with is a company without any superstars left (because once one or two superstars go, the rest are quick to follow).
Small companies can’t execute their plans effectively without their superstars. That’s why small companies that have made big rounds of lay-offs tend to get branded get branded as losers; because that’s why they often turn into.
I’ll give Steve Harris credit for bringing this up in a previous day’s thread that can be found at http://www.techcrunch.com/2008.....f-tracker/
Look at the first nest, second comment.
Is this article meant to be “positive spin” in reaction to some negative feedback on Techcrunch’s prior article about the layoff tracker?
I personally think the layoffs are an important trend that needs to be reported even though some people want to bury their heads in the sand. It is to everyone’s benefit to be aware of emerging trends, even if you don’t like the trend. If you’re aware of reality you can make better decisions.
Yes, superstars tend to stay but superstars also get let go. CEOs making phukin tough gut wrenching decisions every day. When it’s time to downsize, you aren’t just letting go of the bottom 10%. If you did that every few months, you’d drive morale through the floor. CEOs and CFOs get ride of superstars in order to continue to laser focus the company on its core competencies and in order to hunker down. If you recruit and retain the best, as every CEO endevours to do, then you have no choice but to cut deep when things are tough…this includes bouncing your high IQ and high performing employees.
Finally a more truthful comment, I am here at the “Z” during one right now. This is exactly what has happened. Sadly many amazing and talented people were let go last week.
I find it interesting how many people assume that there could be 30% deadweight in a startup. There is little patience for someone who can’t perform in such fast paced and high stakes environment. These “deadweights” either move on to easy grazing or they get pushed out.
So please people, get a life (20-30 deadweight – how ridicules)
They won’t get any salory from the company again.
A company in china called “bokee.com” has laid off 120 staff, those do not want to go can’t get any salory.
Intel used to be notorious for having manager layoff the bottom 1-2% of their worst performing employees each year. Of course Intel never acknowledged this, but I believe it was a method put into place under Andy Groves reign.
You simply cannot claim that 30% of your staff were gold bricking, fat heads just waiting around to be cut. The common illusion is that these acts can be spun as a “positive” step toward a more accountable, profitable enterprise. But let’s get real - can you REALLY explain how / why you hired 40 consecutive, under performing idiots? Yet now, when things look desperate for Sr. Mangers b/c of their own lack of focus and potential investor fraud, they proudly swing the axe in an effort look like a decisive, ruthless cost-cutter. You know — the guy that can make those painfully hard, emotionally-impervious decisive acts to save investors’ precious life blood?
Oh Please. This is the Valley for god’s sake. I have never in my 20 years found a young company staffed with large swaths of truly lame, unqualified, unteachable, uncoachable staffers. The work pace is too fast, too hard. Self selection is usually the means for elimination — at least w/in small, highly performing teams. The expectations are UNREASONABLE to start with. Anyone in their right mind would avoid the sham bargain at the outset. Let’s see: You work 90+ hours a week, I pay you for 40. I give you the OPTION to buy MY STOCK at X price. You get the POSSIBILITY of gain. And the POSSIBILITY of AMT that could bankrupt you. Statistically, you will make $0.00. You will have lost 4-5 years of your life, delivering a product that no one needed, wanted or will remember. You will have ZERO relevant domain experience and your resume will be riddled with failure after anonymous failure.
Sound like a fair trade? No. But the HYPE engine keeps spitting out false dreams about Google lottery winners and all the wonderfully ego-driven orgies that startup lotto winners get to have w/ their ill gotten gains. And YOU TOO will be the next in line to win BIG — if you only sign your life away to the thing called a VC-backed start up…
So what happens when employees find that the emperors have no clothes? That the board is asleep at the switch or totally snowed by a charismatic psychopathic lying douche bag for a CEO? What if the staff find that the company has no real chance for success, but they are too personally invested to turn back now? Might that cause discontent among the ranks? Could that be cause for people losing faith in the mgt team, the space, the investors, etc? And could that be how some of the more organizationally competent, mentally healthy staffers end up bailing out? Would you call these people THE FAT?
That is not to say that companies don’t get saddled with disgruntled, upset, intransigent employees. But to classify layoffs as “trimming the fat” is perpetrating a fraud. These aren’t 10,000 person orgs. We are talking about companies usually under 100 employees where a 20 person RIF is a big deal.
Start ups are like families, rife with petty psychodramas and personal baggage, etc. However, start up staffer are under the totalitarian thumbs of their messianic visionary “founders.” And the reason that this is allowed and acutally encourages is that the Valley as a whole is led by legions of Asperger’s Syndrome suffering venture capitalist and Messianic CalTech/MIT/Stanford CS drones who all think that their pathetic, arcane, under-informed wildly innovative go-nowhere idea is going to “change the world” into a fantasy playground of their making. Soon scores of ego-driven megalomaniacs unite with narrow minded, anti-vision finance jocks to concoct their Machiavellian schemes to become billionaires — often on the backs of their late arriving H1 Visa and Infosys employees. Sadly, when REALITY smacks them in the face, they too often turn on their own staffs as the reason for their failure. Desperate to save face and their chance at the economic stratosphere, these pathetic weasels point to the problem as one of improper staffing.
The line about the “superstars” tending to stick around, neglects the context under which that employee is being classified as a super star. I argue that we should be suspicious of these designations. Often, ones that supported the self delusions of their leaders tend to stick around. Bush Administration anyone? These individuals’ superior skill set may be more about survival and perception than true innovation. Often the context of the organization manufactures its “super stars” and in turn “its gold bricking malcontents.” As a manager you have not to create self fulfilling prophecies.
How many companies currently in the dead pool can honestly say, “gosh, if we’d only fired xyz sooner, we’d have uncovered a sustainable competitive advantage, our one true business model AND delivered a fully functioning product the market actually wanted and needed — ON TIME and UNDER BUDGET!”
Answer - never.
What the heck is wrong with this moron?
Go get your hemorrhoids fixed, then try decaf when you go back to your f****g cave!!!
“20 years in the Valley?” –Yeah. Washing cars… you idiot.
Chill out Alex, no need for that.
chill.
Looks like he hit a nerve.
Nice analysis Start It Up. I think the motivation for these cuts is often misguided and the practical outcome negligible - at least at larger companies. At my own company a recent round of layoffs appears to have primarily targetted new employees on the lowest rungs. The principle seems to be *last on, first off* with the main intention of impressing the investors. If it were truly a cost cutting measure they could have gotten rid of some unnecessary middle management positions and saved some real money. Essentially it was a cosmetic move.
Agreed! Definitely a good reason. But technically, because dead wood employees still need to be canned.