Tech CEOs Should Be Held Accountable, or Even Fired, Amid Layoffs

Regardless of individual opinions on whether CEOs should be terminated for layoffs or not - there&#x27;s a surprising amount of comments here that seem to not understand that growing companies don&#x27;t hire for today, but for where they want to be tomorrow. Where you want to be tomorrow is based on where you and your investors believe the world is going. If the world materially changes enough to shift your expectations about where it&#x27;s going, then you change your plans (and headcount) accordingly.<p>In other words, when COVID hit and tech companies saw large surges because investors and CEOs saw industries leaping 5-10 years into the future overnight, they hired to support that growth. As the market has shifted and inflation combined with an end to the public health emergency has tempered growth expectations, investors and CEOs cut head count to match.<p>It sucks, and I&#x27;m not saying this is how it <i>should</i> be to those people who are impacted. But if you wait until the world is already where you thought it might be before you react and start building for that world, you&#x27;re behind. Whether or not CEOs should be punished for getting the call wrong is what this post is about, but getting the call wrong sometimes is expected&#x2F;necessary if you want to have a chance of getting it right.

My company did a big round of layoffs and it was pretty revealing that not a single director or above were laid off. Despite reduced headcount, the org chart got DEEPER in some cases. For all the talk of bloat in the tech world, nobody wants to point fingers at directors who have little to do but schedule very expensive meetings with the directors under them.

The goal of the CEO of a publicly traded company is to make the shareholders money. As much money as possible. If laying people off is the best way to do that, they&#x27;ll do it.<p>Blaming the CEO for doing the job they were hired to do seems short-sighted. Blame the broken system that incentivizes this, that makes doing it profitable.<p>And then, let&#x27;s change the system.

This is based upon the assumption that layoffs are a failure rather than a feature which, while I find it distasteful using people&#x27;s livelihoods in such a way, doesn&#x27;t actually seem to be the reckoning for a lot of people. When times are good why wouldn&#x27;t you hire to maximize profits and then cut people loose when times are getting bad? If you can ignore the human factor it makes sense.

Am I oversimplifying, or are the layoffs more of a predictable function of correcting for zero interest money without fear of employment lawsuits?<p>Money was free (zero interest) during covid. Most tech companies increased staff to keep pace with each other. A lot of these hires were in support staff and junior positions needed to support low acquisition costs of new customers. Now that interest rates went up and growth stalled, companies are trimming both unprofitable customers and excess staff. Essentially, the CEOs get a free pass to fire people without risk of employment contract lawsuits.<p>From founder friends of private companies, the initial wave of layoffs during early days of covid was a godsend of sorts. It allowed them to fire problematic employees without needing to go through protracted performance reviews. Then they hired new people using cheap loans 6 months later. Now they&#x27;re correcting again with layoffs, keeping top performers, and shifting staff over to high leverage projects like AI.<p>The short of it... did CEOs really make any significant mistakes? Or did they just take advantage of the market conditions in predictable ways? i.e. They did their jobs as it&#x27;s currently incentivized.<p>I&#x27;m not saying it&#x27;s ethical to mass hire and fire. And I certainly empathize with the people who&#x27;ve been laid off. But perhaps it&#x27;s a more accurate depiction to say the current layoffs are part of a larger strategy to reduce staff and increase bottom line in preparation for AI acquisitions. It&#x27;s not a correction but a significant reshaping of tech labor force as a whole.

The US is not a command economy and given the open nature of hiring and firing (few encumbrances) results in firms being able to hire quickly and fire quickly. It allows for a more dynamic economy. Obviously this adds some uncertainty to affected parties (firms and labor). Individual contributors lose their source of income and firms may be less financially stable (may now have financial constraints) on the other hand many people who would have otherwise been unemployed and not benefitted from being a hire, got hired, gained experience and earned income. Firms got to try some things out they might not have otherwise.<p>It looks to me the reporter of this piece is trying to ride an emotional wave for their own benefit and narrative.<p>That said, why aren&#x27;t journalists and journalism firing contributors and editors when they get stories completely wrong for years and are found to be in cahoots with the establishment to carry water for them?

I&#x27;m always surprised to see how many CEOs walk away with millions while running their companies to the ground. The vast majority of the S&amp;P 500 corps are mostly monopolies (Telecommunication, Airlines, Insurance...etc.) and for the most part run themselves yet the CEOs are paid exorbitantly.<p>How much did the CEOs of Circuit City, Blockbuster and so many others made while being completely oblivious to what was happening around them? Even low-level employees probably saw the shift to online&#x2F;Amazon yet CEOs still walked away with millions. The Corp structure&#x2F;model seems to be completely broken and most of them can only survive as monopolies.

When there is strong demand for a product, a company should hire more people so that it can keep up with demand. Likewise, a company should hire when it has short-term capital investment plans that require additional staffing. I don&#x27;t think anyone would argue with that.<p>When demand decreases, or when a capital-intensive buildout is complete, would it be incorrect for the firm to decrease its staffing levels?<p>If leaders expect to be fired if employees are ever laid off, then they will avoid hiring in the first place—with the consequence that fewer opportunities will be pursued and fewer risks taken. Is that what we want?<p>Unemployment today in the US is less than 3.5%! It&#x27;s <i>good</i> for workers—and good for the economy generally—that managers are willing to hire people they may need to fire later on if things don&#x27;t work out. Otherwise, those jobs wouldn&#x27;t even exist in the first place.

I am happy to see the main stream narrative shifting. I have been ranting about this for a long time:<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=33896309" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=33896309</a><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=29781972" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=29781972</a><p>Long story short - leaders are leaders bc they have the most accountability (&#x27;skin-in-the-game&#x27;). When they are the source of good in their group, they get all the perks (resources, money, mates, status, the best meat from the kill, etc); when they are the source of instability, they either relinquish leadership, or they are killed by their own (Revolutions of France and Russia).<p>This is why there was Occupy Wall Street and the modern Tea Party after the great recession - people were fundamentally discontent when wall street execs got bail outs AND record bonuses the next year. This is why you feel angry whenever you read those half-hearted, lawyer-and-hr-drafted canned statements about how the CEO is sooooooo sorry about lying off 10k of their own employees. This is why there is lack of trust in the mainstream media - they can get things wrong (Iraq &#x2F; Afghan &#x2F; Vietnam wars) and there is no <i>accountability</i>.<p>So let us bring back accountability. Apes. Together. Strong.

I&#x27;m surprised that nobody links to the best proposed solution to this problem, so I will:<p><a href="https:&#x2F;&#x2F;mason.gmu.edu&#x2F;~rhanson&#x2F;dumpceo.html" rel="nofollow">https:&#x2F;&#x2F;mason.gmu.edu&#x2F;~rhanson&#x2F;dumpceo.html</a><p>The US could, if it was inclined, legalise prediction markets &amp; investors could subsidise markets for stock price conditional on the CEO stepping down, thus revealing in the strongest possible wisdom-of-the-market sense whether the CEO is going a good job.<p>This would solve the problem modulo short term inneficiencies and be much better than the status quo.

One strength of an economy is the speed with which workers can shift between different jobs&#x2F;tasks&#x2F;roles in response to market changes.<p>Suppose we discover a new gold mine in a rural area. Would it be wrong for a mining company to spin up in that area and start hiring like crazy? When the mine runs out, would it be a mistake for them lay everybody off? I don&#x27;t think so in either case. True even if &quot;gold&quot; turns out to be fools-gold in the end.<p>A lot of CEO&#x27;s would have been punished for not hiring quickly enough during the boom. Similarly during the housing bubble a lot of lenders would be (or were) punished for not loosening lending standards enough. And then blamed later for having too-loose lending standards.

Hate to say it but it seems rational to hire like crazy to hedge against a rocket hot economy increasing demand. Also seems rational to cut back when things cool. I certainly don&#x27;t like it, but I do get it.

Right now, this posting links to…<p><a href="https:&#x2F;&#x2F;www.businessinsider.com&#x2F;tech-ceo-accountable-layoffs-google-apple-intel-2023-2" rel="nofollow">https:&#x2F;&#x2F;www.businessinsider.com&#x2F;tech-ceo-accountable-layoffs...</a><p>… which is kindof a &#x27;weekly roundup&#x27; article. It refers to the actual article, which is at…<p><a href="https:&#x2F;&#x2F;www.businessinsider.com&#x2F;fire-blame-ceo-tech-employee-layoffs-google-facebook-salesforce-amazon-2023-2" rel="nofollow">https:&#x2F;&#x2F;www.businessinsider.com&#x2F;fire-blame-ceo-tech-employee...</a>

The only solution is to form a guild for software engineers.<p>Control access to the guild through credentials and other means. Provide mentorship and apprenticeship opportunities through the guild. Allow the guild to negotiate rates and working conditions with the industry.<p>If actors can do it, why can&#x27;t we? If you want to level the playing field with tech CEOs, that&#x27;s the way to do it.

&gt; Any executive who participates in decision-making that leads to hundreds or thousands of people losing their jobs should be the one leading them out the door<p>But executives that hire hundreds or thousands, regardless of if those jobs were ever needed in the first place deserve praise? Anyone making such an argument is stupid and deserves to be ridiculed, shamed, and insulted for defending it.

Yes but also no.<p>They should be held responsible for the results of their actions.<p>But current firings might not be the result of their actions.<p>So putting boni (which often are a major part of their sallery) in a trust to be payed out years later and which act similar to a security deposit would be a rough idea for a direction this can take.<p>But I think the main problem are not CEOs but how the current form of the stock&#x2F;investment marked is _extremely_ hotly to long term sustainable company management. Stock holders are not seldom the main drive for bad CEO decisions due to a combination of which CEO and how they pressure the CEO (or what they tolerate). It not rare to see major stock holders push knowingly for long term devastating decisions because they short term yield high dividends and stock spikes and when things come crashing down they don&#x27;t hold the stock anymore (quasi&#x2F;oversimplified, to avoid consequences they might use all kinds of tricks to make it look different).

This article is just pandering to workers who have been or fear being laid off. If you fire every tech CEO who overhired during the pandemic boom there wouldn&#x27;t be many left. You also have to consider how their performance would have been viewed if they didn&#x27;t capitalize on the good times. Boards make CEO firing decisions based on who they think is the best candidate to lead the company going forward. Given the incentives of the American economy, most of these CEOs acted rationally with the information they had. We find it distasteful because they make so much money while workers bear the brunt of the pain, but the uncomfortable truth is that CEOs have no more crystal ball than anyone else with regard to macroeconomic conditions, and they are not graded primarily on their ability to maintain stable employment without layoffs.

Hiring at peak market is incredibly stupid. If can&#x27;t reliable predict the future market, hire in down markets and get better people for less money. Some will leave in up markets, but tech work is cumulative. The good foundations that skilled people build will serve you well when you can&#x27;t afford them later.<p>Or you can desperately lower your standards and pay huge TC to the borderline incompetent people you can attract during hot markets, and insult your existing highly skilled employees by paying morons who were just hired more than the people who got you here, and them fire people basically randomly. This what every tech company seems to do.

I like the approach that Intel took, which was to cut back pay, in tiered fashion (i.e., greater cut for higher officers) for high paid employees (above $X, remember what X was exactly at this point) rather than fire a bunch of people at the bottom. (I think they did fire some staff in California, but not at their main base which is in Oregon.<p>Edit: 5% to 15% pay cut, with 15% cut for C-level and 25% cut for CEO

Accountable to whom?<p>For everything within the law, CEOs are only accountable to company owners. That&#x27;s it.<p>CEOs are only managing the company for somebody else -- the owners of the company. That&#x27;s it. That&#x27;s all they do.<p>When the owners don&#x27;t like the CEO they just get a new one, until they find a person that will do their bidding (or at least increase their share value). Trying to change the mind of a CEO makes no sense unless you find a way to convince owners this is in their best interest.<p>The problem is not CEOs. The problem is shareholders &#x2F; owners. The problem is people who don&#x27;t care about other people. And the legislation that allows to exploit employees, chew them out when they are no longer needed while at the same time paying no taxes, not chipping in to improve general wellbeing of the population they earn so much money from.

No. Government officials and politicians should be held accountable.<p>Instead, sadly, I can predict they will become more and more comfortable and untouchable which is exactly what they want. The reason? Social control has become really cheap in the last decade.

A number of people here are somehow defending CEO behavior, and should not be. Notable in this is that Apple CEO took a pay cut and didn&#x27;t layoff, and Intel&#x27;s CEO too a pay cut.<p>I don&#x27;t think termination of a CEO should be a kneejerk to layoffs in the tens of thousands, and neither is a failure to predict the future. However, if the CEO keeps getting raises when the profits don&#x27;t see a likewise boost, there is a disconnect. Google is still seeing rising profits, just not skyrocketing. And while everyone is skittish about interest rates and potential recession, that&#x27;s not a given - unless you layoff enough people.

The free market is a chaotic system. Resources are constantly being reallocated to the most profitable use. This includes the work force. This is also called creative destruction.<p>This is the source of the prosperity from the free market, because market conditions constantly change, and business must adapt. Trying to force things into a steady state will result in inefficiency, stagnation, and will be much worse for everyone.

Perhaps some work is just bursty and companies need to be able to scale up and down to handle these cases, not unlike servers. Of course we are dealing with people not servers, so at the very minimum they need to provide generous severance packages. Even better, if this can be predicted, these employees should be brought in as temporary or contract employees so that there is no misunderstanding.

it only really matters whether the CEO is the right person to lead the company into the future.<p>if shareholders think the CEO &#x2F; board is the right leader for the company, it wouldn’t make sense to fire them.<p>if, on the other hand, they didn’t believe the CEO is the right person to lead the company, it would make sense to fire them. good example is Bob Chapek of Disney who got replaced recently by dormer CEO Iger.

“CEO pay has skyrocketed over the years, but accountability of these top execs hasn&#x27;t kept pace”<p>When has that ever been the case — for any industry?

Why should relatively wealthy tech workers have more rights than everyone else? Get rid of at-will employment for people who sweat for a living before considering punishment for CEOs who consider 3 months severance for unneeded employees something considerably less than an atrocity. A huge percentage of Americans don&#x27;t even have paid sick days.

Holding people accountable implies a moral decision.<p>These matters are purely pragmatic however: a CEO can be terrible but as long as the short term, risk adjusted cost of replacing him is more than the same number for keeping him, he stays.<p>This is why no CEO every lets themselves become replaceable. Or if they do they rapidly stop being a CEO...

Is it the view of the tech CEOs bosses (shareholders) that anything has been done wrong? It seems that they are responsible for their successes and failures both, and layoffs are only seen as failures because CEOs are pitching them as such to sell their layoffs to employees.

All the CEOs are just saying they are taking the full responsibility without any consequences, not even reducing their pay which is hypocratic. At the least, they have to really tell how they are taking the responsibility not just words!

If this was really an issue for workers we would see emigration to places where firing at a whim isn’t possible (like Western Europe).<p>Last time I checked about 10 times more people emigrate from Europe to US than the opposite.

Every company that pays above average needs a good clean out every now and again. People dont want to work hard forever and will start to coast. You need some way to incentivize and&#x2F;or remove them.

You should lose your driver license if you ever have to touch the brakes.

Should have they hired less people? Is that better than a layoff?

The research Adam Grant presented on the subject is also interesting --there are other more stable, more profitable ways to save money other than layoffs.

The ceo-employee compensation disparity hovers around 10 to 15 times in most OECD countries, and corporations in those countries are just as productive.

Since boards of directors and CEOs belong to the same class, there is no accountability; they collude with each other or &#x27;help&#x27; each other.

What&#x27;s so striking about this is that the rest of the US workforce is seeing one of the lowest unemployment rates in history.

Seems to me the accountability should start when the company over-hires. Far too many roles in big tech are boondoggles.

I remember reading in a book called &quot;everything is obvious&quot; that this is a standard thing to attribute (or at least self attribute) success to personal competencie and failures to bad context. In this case I think that they are in fact being held somewhat accountable by their remuneration based mainly on stocks, which values are currently plummeting. With the consideration that we are talking about comp going from $200M to $50M... Your comp might have been divided by 4, but you still earn orders of magnitude more than all of the people you laid off, so I don&#x27;t think there is much accountability in that.<p>Re: overhiring, it&#x27;s been discussed on every layoff thread. The arguments go: they overhired and should be accountable and fix the process OR they overhired consciously but didn&#x27;t care because capitalism OR they didn&#x27;t overhire because there wasn&#x27;t a way they could have known that the situation would turn out as it did OR they may or may not have overhired but that&#x27;s irrelevant, they&#x27;re now laying off to lower the salaries

They get fired and just collect huge pay packages and move on to something else.

Maybe not fire them, but putting them on a PIP might be a good idea.

I think this is somewhat American thing where CEOs are paid hundreds of times more than regular employee. Certainly, you&#x27;d expect the board to fire the CEO who can&#x27;t perform. It&#x27;s just if both the board and the CEO are cozied up together, why should they. And granted, there&#x27;s a global downturn which gives a good excuse to explain the losses.<p>To be frank though, firing the CEO probably wouldn&#x27;t fix anything. You&#x27;d have to fire also other execs, maybe board members as well and you don&#x27;t want to burn bridges with your golf buddies. It seems there&#x27;s just poor accountability in general for management in US, not going to steer this off to politics but there seems to be an upper class which, once you reach, will take care of you if you&#x27;re properly networked. Which is kinda how it goes in other places as well. US just has mastered capitalism in a whole another level.

Real estate tracking site I use deleted all my followed properties when I shared with another email address. Phone update disabled my cellular data. Train carrying chemicals crashes, planes nearly crashing into one-another at airports.<p>Enjoy, folks.

Millennials suddenly wake up one morning and realize that they&#x27;ve been living in a system of capitalism this whole time (once they&#x27;re the ones actually affected by layoffs).

sgtm