Layoffs: How Companies Decide Whose Job Is Cut | WSJ Your Money Briefing
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- čas přidán 2. 05. 2024
- Companies typically carry out layoffs to reduce costs, but compiling the list of workers to be let go is often less simple, and can involve weeks of debate.
WSJ’s Chip Cutter joins host J.R. Whalen with more.
Photo illustration: Emil Lendof/The Wall Street Journal
0:00 Factors that go into a series of layoffs
0:52 How the job cut process often works
1:41 How seniority or length of service affects your employment
2:13 Does HR have a say in which employees are let go during layoffs?
3:42 How business software company Okta decided who to cut during layoffs
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#Layoffs #Employees #WSJ
Chip Cutter explaing the job cut. Great.
Right 😂
😂😂😂😂😂
When the "Chips" are down, "Cutter" is at work
I know a guy that was let go recently in one of the restructuring processes in a big tech company. He had a very specialized skillset that nobody else in his branch of the organization had, was performing well, had a good relationship with the boss and rest of the team... but had been hired half a year prior to the restructuring and was making a pretty high salary.
That "one by one assessment" sounds unlikely to me. It's more about tenure and cost reduction.
Yeah money is always the name of the layoff game.
They don't layoff top management who cause most of the problems.
I always find it weird it is execs and seniors leaders that make the business decisions that may result in a failed program or massive loss but it is the workers who get laid off so the decision makers are never accountable for their decisions
Good point 👍
@@AskAnAsianGuy You only hear about the occasional losses of these execs lol, not their multi-billion dollar deals & wins that they bring the company in any other context. The reason big execs are kept on whilst unskilled laborers get cut is simple cost/benefit analysis.
Not accurate. The is a board of directors at large companies that can and do recommend personnel changes be made at the top levels.
depends on the industry, in some fields they do wipe out laggard mgmt
Cost cutting but somehow financial need never includes reducing executive pay.
EZ 👏: CEO sets targets, mid level managers fire low performers and people who threaten their positions.
Very accurate assessment based on my experience in high tech. It used to be that HR would handle notifications, but with HR getting cut to the bone, it became the managers responsibility, a very difficult thing for me to do.
Lol hr is just pretty girls
With gender studies degrees
I was layed off 8 months ago. Company lost a huge product and only had 2 years finance left. Cut 50%. Got 2 month severance. In those 2 months got an even better job and fully remote! At 28 went from 100k to 112k+ and way better work life balance. Talk to old coworkers who didn't get layed off and they hated it and many left or or still trying to leave.
Are you in a big state like CA or NY?
@@XerxesGammon200 i am. CA. I work fully remote so can leave. All my family is here though.
@@djm2189 Good for you. If I were you I'd move to a small state like ID, MT or ND. You'd save a fortune in rent money or even mortgage.
I work in banking and have mentally prepared myself for a lay off because it’s not so bad. In the past my company has given generous severance packages and were given a time limit when they got notice so it bought them some time to find another job before officially getting the can. There is always a silver lining to life we just have to prepare, accept and keep going.
@@XerxesGammon200 i definitely hear you, could be a future plan but for now gonna stay put. Grew up over here and family is very very important. I'm hoping to break into the market. I should be able to make more money in a couple of years since I'm only 28. Push comes to shove, i know I have state options with my career. We shall see! Thank you!
it's pretty simple actually if you're in a salary job and your manager doesn't like you you're gone.
Couldn’t have thought of a better name for a workplace reporter. Nice one Chip Cutter 😅😁👌🏾
The man's whole family tree is built to be a machinist
The process described in the video seems antiquated. Recent layoffs have been letting go entire teams regardless of individual performance. High performed can either be hired later from the external pool or if necessary, rehired from the layoff pool.
Tech is laying off high paying employees to reduce tech salaries
recent pay transparency laws may play into this
@@manonamission2000doubt this
Correct! They're trying to take the power away from us. It's an employers market..... For now.
Some managers choose who’s their favorite
True, though sometimes that’s based on merit. Other times it’s just politics and self promotion.
Usually chicks got manager favour
*all
I thought chip cutter was a job title
In my opinion, the recruiters are the most vulnerable. A company is either growing or it isn’t. No need for recruiters on the down end
In my country, 70% of the population lost their jobs
I'm surprised so many ppl in the comments buy that there is a distinct and thought out strategy/process. Other than HR/Legal checking that their biases aren't evident in who they are laying off, and the execs, c-suite passing down the edict to layoff and allowing the department leads to decide with their direct reports, layoffs are often just a game of "who do I like best" played by the decision makers. That's especially so in departments where everyone is performing at a high or at the very least an equitable level. The head is going to save their favorite(s) and find a way to justify it one way or another. Pay does play a part, but honestly if your manager has it out for you, doesn't matter how great you are performing, or even how specialized you are. I have seen dept heads cut specialized workers and hand over their job to someone who has zero experience at it, and call it a "growth opportunity" and pour resources into training them.
It happens to minority women the most, who are shunned from social dynamics in the workplace (consciously or unconsciously) and then an easy target when layoff time comes around.
Exactly. These companies and puff pieces can describe the process of layoffs formally all they want. But in the end people with unstable, petty emotions run the place, and they will be vindictive.
You can unboss yourself at anytime and without giving a two weeks notice. At will baby, works both ways.
It was 12 people in my department two years ago now it's 6 of us i survived the lay off but for how long now half of us is working part time.
Sounds like time to go on a job hunt.
@@damnjustassignmeone Oh believe me i know I've been filling out applications got three job interviews next week
What is your work field??
@@jathebest2835 hospitality
How much of an impact do recent laws governing pay transparency play a role in these layoffs?
South Africa. Brilliant work!
So it depends, wasted 5 minutes...
thanks for saving my time
thanks man
My boss gave me a heads up about layoffs next week, I am lucky we had that conversation because now I know I’m not in that list 😂
Yet!
How you doing?
I was laid off a week ago. It was my first time, but also I was hired at a premium rate for a company that wasn't known in paying premium. I'm okay with the outcome. I paid so much in taxes due to my earnings that I'm planning on taking off the next 3 months. This job markets was never this.... a roller coaster ride.
Put all the employees through Squid Games, those who survive retain their jobs.
Boils now to who they like and who they can replace cheaper. All this jive about ratings is a cover.
Chip cutter is an expert in cutting...he explains..
"Project Falcon", got it
My large Co sent an email to everyone offering an early retirement to those 50 or over with a certain No of years with the company. I’m mid fifties and not ready to retire yet. But if I don’t take it I’m wondering if I’ll be laid off down the road. I make only $60,000. Not sure what to do. I’d get another job if I took it but I don’t want to look for something else
What is on the way?
I never understood why companies announce layoffs well ahead of time. It makes for such an unbelievably toxic atmosphere- everyone is on the bubble and anxious. Excellent employees often feel as at-risk as subpar ones and may go ahead and leave to be proactive about their careers. Bottom line is, when eveyone knows that layoffs are coming, everyone is miserable.
I'd appreciate the heads up. I've seen a law firm and a co-working company do Friday evening layoffs. The misery, anger, denial, and hostility of the employees... Some stated they'd recently turned down other job offers and bought homes. Nah. I'd prefer advance notice.
You're forgetting the shareholders/owners who'd like to know sth is being done to improve profitability...not to mention the nice bump. Also sends the desired signal to the fed these days
The law says they have to in a lot of places...
Lets not forget... politics. Sadly, it often comes down to who you know, not what you know.
Watch them fire all the productive employees but retain, perhaps even expand, their DEI & ESG staff.
This happened at my former employer, they fired their internal IT infrastructure team and replaced it with an offshore vendor. Those who got rehired to be on site to handle issues that couldn't be handled off shore are now seeing the company push more DEI garbage.
It translates to short selling opportunities in the stock market
Anyone else see the iron in a guy called “Cutter” talking about how companies let staff go, or cut them. I am starting to think they come up with Pseudonyms for their guest for contentious topics.
“Can ChatGPT do this job?”
A third of the time if it's coding and if you write really clear programming specifications.
"Can ChatGPT do the job of the offshore staff, but better?"
chances are, many times yes
Next day:
Cutter loses job as reporter at WSJ
I've seen some very good employees let go--some who have been there a long time.
My company used an objective method so would not have to worry about lawsuits about favoritism, discrimination, etc.
After begging the employees to come back to the office, they measured teleworking vs in-office days since the announcement, put names in order and cut those who had the lowest % of in-office attendance till they got the dollars saved needed. Names and stats for each employee were published so everyone knew it was fair.
That's far from objective. People who are WFH are more likely to be those with families (childcare/elder-care), older employees, or those with chronic illnesses. Covid concerns would also likely figure in, especially with the latter two groups. Also some roles are just more conducive to WFH, like IT & sales.
It sounds like they just cut whomever they wanted, and put up a fig leaf of objectivity.
That disproportionately impacts people who live far from the office, people who have children, elderly, or dependents. Depending on the company's openness about disabilities or support for people with disabilities - it could also disproportionately impact caregivers or people with disabilities.
Honestly, sounds more like your company is trying to use soft methods to encourage attrition.
I was reading an article about how with the downturn, some companies want to avoid the issues that come with layoffs (costs, legal ramifications, brand damage).
Return to office is an easy one. It's a perk employees like and would be willing to leave for. The work can be done anywhere - so there's no reason for it to be used as a measure other than to encourage attrition. And your company didn't measure based on productivity or rating but on % in the office. I also have a suspicion that those it disproportionately impacted may have been older, more expensive white-collar colleagues (which may have been who they wanted to cull)
Not isolated right now and not new. Amazon for instance is using "return to office" and "worse than average" performance reviews company-wide to encourage people to resign vs having to lay them off.
Also, been happening forever.
IBM for instance increased the quota for the percentage of people who got the "lowest" rating before their mass layoffs in 2016.
They also used a technique where told people "you can keep your job If you move across the country to this office within n days" - to older workers who often had children, homes, or who were close to retirement. Often disproportionately in locations where there had once been an office and these workers had been virtual for years (in the case of my dad 17 years virtual - closest office was 1-hour drive away - they told him to report to an office 3 states away... after 17 years virtual...).
Any of these can be seen as "valid reasons" if you phrase them that way. And as US is at will employment , as long as they aren't obvious about culling more expensive people - they can give any reason. (and for brand damage reasons they'd want to seem "fair")
Wow what a brilliant system, I’m sure this company is thriving thanks to such careful strategy.
@@pectenmaximus231 Lol, honestly in all the case studies I've read - it typically IS the shitty companies that use such systems.
Amazon, IBM, a couple smaller local companies. The one thing they all have in common are that employees say they're terrible places to work, and they have super high turnover rates for talent.
@@JT-hq2cc You're right about it not being new. My late hubby was part of a corporate culling in 2014 that turned out to focus on IT support staff who didn't have degrees. That tended to equal older workers whose careers pre-dated dedicated IT Support degrees, and those whose family situation or economic background precluded finishing a degree.
(LH quit his EE degree in the 90s after 2.5yrs and never quite went back. He got purged early-on, just enough weeks after returning from FMLA leave to avoid legal repercussions.)
None of the staff recognized the pattern until after the low-key layoff was over, nearly a year after it started. It can be hard to see the forest fire when you're stuck in the undergrowth.
In my country, 70% of the population lost their jobs
It’s like bingo
WSJ this is very lazy reporting. He’s conflating mass layoffs with someone getting fired. I’ve seen many talented ppl who were exceptionally talented at their job and had great review get let go.
[Q] Is "Chip Cutter" his REAL name or ALIAS..
Or maybe his parents have good sense of humor?)))
Chip Cutter
Several finance organizations manage their human resources based on the weakest link principle. Each year, all the managers must identify the weakest member of his staff and fire him, regardless of his work performance.
For Many of the Tech layoffs recently, high performers were laid off
It’s called culling. Usually it’s coupled with policies saying managers have to give a certain % of employees bad evals. Microsoft and other companies used to do it too, but it’s rarer than it used to be. It creates a zero sum culture where others looking good means a loss of stature for you. Creates a toxic environment.
Yeah, this concept has been around a long time, going back to Enron. It leads to a massive backstabbing culture. Yet somehow companies still perpetuate it. Another variation is “only one or two people in each department may be rated excellent on their performance review.” So the upper managers hoard all the excellent ratings.
The weakest link principle is an IT concept oriented around info-security, it has nothing to do with finance employment lol. You just made that up. That said, the weakest members of teams in Finance do get fired; but this is just the average process of an organization cutting out the low performers (performance is what designates 'weakness'), this applies across all practical organizations. No successful enterprise wins by rewarding failure and punishing success lol, weaklings being removed is the most natural process of any organization with a goal.
@@KevinJohnson-cv2no In finance the manager has to fire the weakest link, regardless of work performance.
An important caveat: The decision of what constitute a low performer rest in the hand of the department manager. Managers are not always nice and honest person. If the manager does not like your face, your are a low performer!
Reduce people getting excess salary and also people with low performance.
I call BS on this video. The main criteria for letting ppl go is cost to the company, and that includes salary, benefits, health insurance costs (aka age). Nobody looks at "performance", since it's such a vague and imperfect measure and almost impossible to translate into money (especially for lower level employees). And money is all that matters.
But ... what other than company BS can you expect from a propaganda organ like WSJ.
Remember all those mon and Fridays you took off? Those were the first ones I fired before I retired.
Peter, it's sad you got bullied in your childhood
layoffs are necessary otherwise you end up like USPS IT workforce
Ffb
Jobs cuts discussion from chip cutter.. you can't make this up.
Pandemic got me a better job after layoff.
Neo feudalism 😢
DEI jobs should be the first one to let go.
Only Americans will suffer from layoffs .but in spite of layoffs plenty of jobs are available for Indian techies and professionals in USA due to superior talents knowledge capabilities and skills .
Ha ha, give me a break.
They can pay them WAY less too.
Suuuuuuuuure
You in your right mind buddy?