> Remote work<p>> Anticipate more mid-size and smaller companies will go back more fully into the office as times get tougher. This will not be one size fits all, but will be an increasing trend.<p>Up to this point in the article, whether you agree or disagree with the points, the author offers some arguments and reasoning supporting each. Here, they simply assert that small and mid-size companies will go into the office, with no supporting argument. Why? Won't many small and mid-size companies have come up under covid and not have an office lease in the liabilities column? Why would they pay (insert large city) rents to save money? How does it help?
When I was running a startup there were lots of times when I felt kind of lost and it's very tempting to listen to things like this because they seem plausible. It's a huge mistake.<p>This kind of generic armchair general "advice"[1] is <i>everywhere</i> when you run a company and is basically completely useless because every company is a complex and unique special case and if you're in charge you don't have to make the decision that would on average be the right decision for companies of your type, you have to make the best decision you can for your specific situation. This goes double for people decisions because they have a huge impact on those affected so it behooves you to take the time to really do your utmost to do it right.<p>[1] By which I mean the kind of phoned-in powerpoint analysis that would be produced by someone with a career at a 2nd tier wannabe McKinsey consultancy
Usually 10~15% are considered as "for redundancy". If you go further than that, you will likely lose continuity on your core business. The risk is just too much to take. Unless there's a good evidence that the business can sustain with 50% or whatever numbers, it'd better be safe.<p>It might true that some companies are extremely bloated and their competitors may be demonstrating a similar level of productivity with 30%~50% of people but different companies have different history and contexts; path dependency is the thing. For that level of productivity loss, the root problem is more likely deeply ingrained in the structure (especially management and decision making) so cutting more and more people usually won't help.
I think if you only need to get rid of say 3%, then you can probably just do a hiring freeze and wait for natural turn over. If you need to get rid of 40%, doing it all at once is probably too much of a shock to the company (too difficult to figure out who to transfer responsibility to). So 10-15% is just right: enough to be worth it, not too much to cause excessive turmoil.
Fortunately I've never had to invoke blanket headcount cuts.<p>But, as an employer, I've been given the advice "cut once, cut deep" many times. The theory (which I understand) is that employees get skittish once you get to a second or third cut.<p>The author suggests some companies could stand a 50% cut if that is what is needed.<p>This month though we've seen twitter cull 50% and twitter users, and customers (advertisers) became equally skittish.<p>Do twitter employees feel safe? Does the "cut once, cut deep" have the desired effect here? Are customers reassured [1]?<p>Maybe twitter is a unique case because of other factors - Elon? The fact that people can make their opinions heard on, well, twitter? The fact that other media are reliant on twitter traffic and buzz?<p>My guess is that employ confidence after a round of layoffs is dependant on their faith in management to begin with, and the clarity of communication between management and staff. Perhaps a transparent financial reality helps employees understand that what they do affects the bottom line, and that line pays their salaries.
Is going back to the office such a huge thing in other countries? Here in Germany almost nothings changed from the main COVID time in terms of home office.<p>It seems like our standard of working has transformed and will not revert back.
I always assumed it was a ritual sacrifice to telegraph a message to investors that a company is reducing operating costs to pollish the annual report.<p>This is also why employees should be nervous about firms that sync a hiring cycle with Q2/May.<p>In the US, a CEO must make the profitable decision, or face direct legal peril. It often has nothing to do with the character of those on the board. ;)
I just survived a round of layoffs at someplace mentioned.<p>I think this is overthinking it or looking for a conspiracy theory. Layoffs aren't deeply calculated or hand-wrung over in advance. They're somewhat arbitrary and ambiguous but purposeful: to stop the hemorrhaging of cash. There's no clean or perfect way to do a layoff precisely in limited time, so they happen in discrete units of reduction in particular areas. They're rarely pleasant and never perfect.
Decimation is a concept going back to ancient times. The Romans would punish units by having every 10th soldier killed by his fellow legionnaires.<p>It’s a number big enough to reduce cost and create fear but not enough to cause panic.
10–15% is about the maximum amount of dead-weight employees (the kind who don't have the skills to perform the job-role they're hired for, who were hired due to favoritism, bribes, blackmail, or pure hiring-process "throw a dart" laziness) you can have on a corporate balance sheet before the aggregate lack of expected productivity per OpEx dollar starts to be suspicious. The further below this limit a company is operating at, the 'safer' hiring managers can feel in making arbitrary/capricious decisions without being called out on them.<p>And so — presuming at least some hiring managers in each bigcorp are unethical and lazy or able to be manipulated — 10–15% dead-weight becomes an equilibrium point: the number of dead-weight employees asymptotically approaches 10–15%, where firing one means being able to hire one more, and hiring one means being unable to hire one more.<p>(Which isn't to suggest that there's top-down awareness in all these companies of these employees <i>being</i> dead-weight; rather the opposite — they survive because the structure of these companies has no continuous visibility into employee productivity. But when they consider layoffs, that's the time to do a point-in-time productivity audit... and that's when they find that this dead-weight has been accruing, and set out to burn it off. And, if they're smart, to also "burn off" the people who were willing to commit malfeasance by hiring/endorsing them.)
Interesting, but I think they're over-thinking it. A lot.<p>At any given moment, most companies can probably justify cutting 10-15% of dead weight. But when you cross that line, that's a much different smell. The most talented get a whiff, update their CVs and head for the door.<p>The goal is to cut the bottom and leave the top. Take off too much bottom and your top will leave "voluntarily".
If 10-15% of employees are "low performers" for their roles, you'd expect 10-15% of CEOs to themselves be low-performers for the CEO role. And so, in 10-15% of these layoffs you'd expect to see the CEO get replaced.
I think Scott Adams figured this out in 2005: <a href="https://dilbert.com/strip/2005-06-11" rel="nofollow">https://dilbert.com/strip/2005-06-11</a>
No, the reason is<p><a href="https://en.wikipedia.org/wiki/Vitality_curve" rel="nofollow">https://en.wikipedia.org/wiki/Vitality_curve</a><p>> The vitality model of former General Electric chairman and CEO Jack Welch has been described as a "20-70-10" system. The "top 20" percent of the workforce is most productive, and 70% (the "vital 70") work adequately. The other 10% ("bottom 10") are nonproducers and should be fired.<p>10% layoff means you are being ranked.
10% comes from the ancient Roman tradition of Decimation <a href="https://en.wikipedia.org/wiki/Decimation_(punishment)" rel="nofollow">https://en.wikipedia.org/wiki/Decimation_(punishment)</a><p>>> The dual purpose intended was to stiffen discipline amongst the army at large and to demoralise the enemy
It's simple: There's federal law governing mass layoffs: <a href="https://www.dol.gov/agencies/eta/layoffs/warn" rel="nofollow">https://www.dol.gov/agencies/eta/layoffs/warn</a>
It is 10-15% because that's how the HR do their incremental grading of their employees across performance scale.<p>And it is easier for corporations to discharge the bottom feeders if and when they need to improve their bottom line.
It's pretty ingrained in management culture whether they know it or not - <a href="https://en.wikipedia.org/wiki/Vitality_curve" rel="nofollow">https://en.wikipedia.org/wiki/Vitality_curve</a>
> One venture firm I know is encouraging companies to assume they should cut 50% and then use financial modeling to prove otherwise.<p>Is there any common tooling to do that kind of financial modeling other than spreadsheets?
Because to investors, 10-16% shows you’re cutting fat. 25% or more shows you’re cutting off limbs and the firm is in distress. If I owned the second I would probably look to sell it.
> many companies have had their mission drift during the Trump years and COVID. Rather than founder-led customer-centric mission orientation, companies drifted into a number of other arenas often driven by a small proportion of their most vocal activist employees.<p>What does this even mean? How would "activist" employees change the company directions and its finances?
"Now is a time for CEOs and their teams to give themselves permission to toss out old assumptions about their company, mode of operating, growth targets, team, culture and mission. There will be few opportunities to make big changes like in the current environment."<p>Good luck. If you think CEO's give a damn about success you really don't know what the job of executives is for.