Lest people think I'm singling out Microsoft specifically, this same problem is present at Google as well, but is less of a problem because Google has not been around long enough to pick up the same amount of dead weight personnel.
The first generation of people at a company were fighting for market, and they rose due to their ability to deliver value to colleagues and customers. But when a company becomes successful, the resources available to teams within the company becomes somewhat decoupled from company revenue. Soon, political skill becomes as important or more important than impacting the company's bottom line.
Microsoft and Intel alumni in the late 90s used to tell me that they knew managers whose main goal was to grow the headcount under them, in order to grow their own prestige.
Today at Google you can see some of this same behavior in its nascency. Most of the deadweight is outside Engineering teams because its hard to bullshit when you have to deliver a product. Still, there are peripheral functions like business development, marketing, intellectual property, privacy, policy, etc., where you can always find a few deadbeats that talk slick, but don't seem to have much to show for their time except hiring more people and making a few high impact appearances at meetings. You can go a long way if you can talk the talk, look the part, and kiss the right asses.
Microsoft has been picking up useless deadbeats for nigh on 25 years now. They really need to shed these people.
One company you have to admire is Facebook. I don't know if its true, but I'm told you basically get fired at Facebook in the first year if you don't know how to deliver something of tangible value within that time. That is hardcore.
If that metric was applied at Microsoft and Intel, you'd see the companies shedding 25% of their workforce immediately.
I suspect even Google would shed 10-15% of its people.
And man, it gets cut-throat. You know, when I traded, I used to think that was the most cut-throat work environment. Then the firm I was trading for got acquired by a bigger (much bigger) "traditional" bank. I quickly realized the trading floor was a picnic compared to mid-level management (at a bank they are called VP's) politics. At least a trader, you know the score. Make a profit you win. Don't you leave. Working at this bank; I had to learn to watch my back.
It was at that point I decided to leave banking, and NYC.
It also applies to countries. Look at the increasing resources that go to people who produce little or nothing of value to others eg lawyers, lobbyists, politicians, financial engineers, LBO operators etc. Not to mention many of the people on welfare.
Spoken like someone that has never used welfare, doesn't know anyone on welfare, and gets all their ideas from talk radio and Fox News.
Woah, slow down tiger :)
More seriously, please elaborate. Or maybe I am just a bleeding heart.
Looking at the state of many governments around the world he's probably being kind in his characterization.
You are right, hiring and firing is a political process, and so you are right, its vulnerable to manipulation by the shrewdest political players.
My assumption, however, is that the layoffs are managed by senior management, who are the shrewdest of all the political players. If they do layoffs right, they put the power of firing into the hands of people in a separate power structure. I mean people like external consultants, or a special committee.
If that isn't the case; and if mid-level management is providing the data to direct layoffs, then yes, its a colossal disaster.
I am incredibly skeptical, however, that any round of layoffs attempting to get rid of these people will have a good hit rate. Plenty of really talented engineers and engineering managers will end up losing their jobs too.
I a lot of my older peers from university went to work for IBM for a couple years right after school, where layoffs occurred pretty regularly. The culture they've described to me, that was present as a result of constant layoffs, isn't something I think many current Microsoft employees will want to be a part of.
The reason engineers and other tech staff will lose their jobs is because 1) politics above them, 2) lack of adequate technical understanding amongst mgmt to recognize how to usefully allocate technical staff, and 3) lack of political capital amongst the technical staff themselves.
Considering the author, it's amusing that this blew up in my face at Google. Facts were irrelevant there, only status, and this was pointedly explained to me in an effort to get me to conform. So as a powerless new senior engineer blind allocated into something random and unsuitable, I found someone at another company with similar goals and jumped ship shortly after starting when it became clear that was my only other option.
In retrospect, had I endured the tedium of my initial assignment, everything I was saying ended up relevant once they hired people with status making use of my skillset to improve search.
In the process, most people think performance is the key to decide who stays and who leaves. While the fact is first ones to go are political enemies, followed by people who pose threat to the middle management(Kind of people who managers think will eventually take their job, if they stay) these kind of people are worst sufferers, because they would have performed well only to be perceived as threats. Next come people who don't fit well in the organization's pay parity. The last one's if they ever go are weak people who can be sacrificed to save manager's yes men and manger's inner circle.
What generally remains are people who are yes men, political alliances and generally people and partners needed to keep political cartels running.
Which is why if a company is laying off people, its generally an indication they will perform worse in the time to come. Because a round of good people have been laid off, many good ones are leaving. And worst stay on, and are more entrenched in the new set up.
Prepare three envelopes...
In those kind of schemes, you must ask who wants to leave, give them a package, avoid those with children, the older ones go last, etc. So I doubt they'd let go of the worst people first.
I'm yet to be convinced of how this economy can thrive in the first place. I'm persuaded most French people work in really Dilbertesque comapnies with unpassionnate workmates because of those rules, which correlates with the fact that French people are the first consumers of anti-depressants in the world . I'm not saying it's linked for everyone.
It's a job. See this agency, at random: . My godfather was a HR manager specialized in "plans sociaux" (=closing factories when famous tech brands moved to Asia), and his job was pretty much explaining CEO of other continents that they have to put money on the table to be allowed to dump a whole factory, which they couldn't really get, obviously. The mother company has to help refurbish the local economy so workers find new jobs, or hire a job agency to find jobs and prove workers aren't just ditched. When the job is done, he writes the last two resignations: his, and the local director. The length of the process is around 2 years for 500 people. Needless to say, mafia jobs are probably safer.
 See "New procedures for implementing mass lay-offs" in http://www.proskauer.com/publications/client-alert/new-labor...
Also while I doubt I will ever have to, I wouldn't start a business in France under those rules.
As it stands the military actually has great difficulty retaining people past 10 years. Many military communities are chronically undermanned at the senior enlisted and officer leadership levels.
So while it's fair to say that the military has held onto lower-skilled workers, it's not exactly the case that it's leading to a glut of excess deadweight just hanging on. Rather, we use the "idiots" to fill the desks that would simply be left empty were it not for these guys biding their time to 20 years.
Whether that's a net positive or not depends on the given billet being filled, but we'd have to do away with billet-based manpower and fine-tuned "year group" tracking entirely in order to truly see benefit from dropping deadweight in the 10-18 YOS ranks. But the way it stands now, many billets require a certain rank or grade to fill them, no matter what the skill level might be of excess junior (or senior) personnel.
It always seemed like the Navy was doing its best to get rid of skilled workers.
I've always thought the Army needed a job training problem (maybe through the VA, if nothing else) where you could "un-learn" your military skills in favor of civilian skills.
We have been surprised to see that some of the skills making these young people successful while serving have almost no translation into the civilian world, outside of being able to follow orders really, really well.
It's easy to forget that many members of the services do jobs that don't exist in the civilian world. It's easy to forget that many returning vets enlisted at 18 and have had no practical training to ease their transition back to civilian life.
Most requests for our returning vets come from transportation and trade (we're a river town relatively close to major north/south and east/west highways and a major railway line). The largest portion of our returning vets were in the army or army national guard, in the local transportation groups. We don't have infantry in our area, we have truck drivers and mechanics. Anyway, the requests and the expertise seemed a custom fit - the soldiers ran big trucks and trains, and there is no better organization than the United States Army when it comes to large-scale logistics.
Our returning vets, though, are unable to branch outside of their assigned mode of operation.
The mechanics are able to work on, say, heavy machines and diesel engines so they're able to work on the trains and barges really well, but are unable to translate those skills to tractor trailers or small(ish) engines like pick-ups or delivery vans.
The Army transport drivers are able to drive tractor trailers or operate barges. BUT, they do not have the certifications necessary to legally do that work stateside, AND they lack skills in the classroom to be able to sit and pass the test for the licenses. Usually it's because they have never been able to do math well, and are unable to pass a college level mathematics course (it's applied math, so it has practical applications in their jobs - not college algebra or statistics or anything like that). Along with that, they're unable to translate their existing skills into heavy machinery for construction, demolition or excavation.
The leaders/officers are unable to transition out of the military 'because I said so' mentality and into the corporate 'because it's in your best interest' mentality. Our retraining in this area has been the biggest failure; they don't see the need to change their mode of people management, and we don't have a reason for them to either (other than long-term employment).
The paperwork individuals, like you use in your example, transition easily. If the person worked in an office, they will come back and find employment almost immediately.
This could all be helped if the military provided training ON THEIR END before they come back to the world. Believe it or not, the transition from the military to a college environment is incredibly difficult for most folks.
The first is nuclear power. A lot of the people working in the control rooms are from the military, and it is a very high paying and comfy job for someone without a college degree. The other is high skill technician and assemblers in manufacturing.
The things these jobs have in common is they need a strict adherence to rules and procedures, which is something military training makes people well suited to.
Even being good at following orders isn't going to help you get your civilian SRO license, but sailors who have been trained on the Navy's various reactor types have easily-transferable knowledge for civilian PWR and BWR plants, and so they get picked up quite easily in the civilian sector.
British Army has various qualifications of its own some of which can be 'mapped' over to civilian equivalents. Mainly technical areas plus management/supervisory. I can't find a clear single source of information but I know from ex-students that the process exists.
Nothing similar in US? Is this not one for the military to consider in terms of recruitment?
(Weirdly, I just got a job notice from my employer about an EOD position. Not it!)
But I'm not sure how well it helps in practice, nor on whether other U.S. armed services have something similar.
Or if there was less of a jump at 20.
I believe that Microsoft has more contractors than it does employees. That is just crazy.
Also, it's nearly impossible to fire even the most grossly incompetent people. One person I worked with was a utter flatline and doing negative work (very bad Q/A, argumentative, and the most useless person I have ever had as a coworker. It took six months to fire the guy, and it was no secret to the third and fourth layer management that the guy was a huge mistake.
MS needs to get rid of the right people.
No, that's smart business if you can do it. You basically remove the burden of tax-minimization and continuity of employment for these people from the corporation. Overall cost might be slightly higher in cashflow terms, but it removes a lot of risk and liabilities.
From a worker-rights perspective it's terrible behaviour (back to the XIX century, choo-choo!), but it can be a very good strategy for a company.
You know the government does this all the time. Congress mandates a department cuts their budget. So ok.. fine, the director lays off the IT department. Then all the "deferred" IT folk go to work at"some consulting company" who get the contract to provide IT services to the department. At twice the price the original payroll was.
it happens all the time in government. And not just in IT.
If the stock rises, that's magnified, but even while relatively static, RSUs count up.
Unless they're independent contractors, I've never understood how this can be true. Sure, the company paying the contracting company doesn't have to directly pay for that kind of thing, but the contracting company does, and on top of that, has to earn a profit, and that should all be included in the billing rate.
Microsoft probably keeps good records and actually has good HR staff.
A lot of subcontractors don't keep very good records, outsource their HR staff to India and aren't against closing up shop and reincorporating with a new name.
Edit: Out of 5 of these companies that I actually needed employment verification from after leaving, only 1 of them could actually locate a record saying I worked from them. I always have to go to pay stubs.
I have contracted with IBM many times over my career, and when the project goes belly-up, the company reorganizes, the division you were working in disappears, and employment contracts aren't renewed. No muss, no fuss, no layoffs.
Don't know where you get that idea from. I have a lot of anecdotal evidence to the contrary.
I heard less and less about this policy over my time in the company - it was stated explicitly my first few perf cycles in 2009/2010, but I don't think I could recall it ever being mentioned after around 2012. And it was always very sporadically enforced; the longest-serving level 4 I knew had been with the company for 11 years.
Isn't the key reason for these layoffs the recent acquisition of Nokia operations ? If that is, the layoff is just about eliminating redundancy post acquisition, and not addressing the deadweight problem.
You have a tree full of monkeys. So you shake the hell out of the tree to get the monkeys out of hit. How many monkeys do you have in the tree after your done? The same number, they are just in different branches.
Perhaps 7,000 to 7,300 employees (assuming some pickup the last quarter or two), and $8.9 billion in sales.
Microsoft by comparison had roughly 15,000 employees when they had that level of revenue (adjusting for inflation), circa 1993 / 1994.
Let's extrapolate that to Facebook vs Microsoft and basically Facebook would have to have $89 billion in sales or alternatively have 70,000 employees.
This is of course rubbish but illustrates the point that you can't compare revenues from 20 years in absolute terms like there is no such thing as inflation and time value of money.
It's the most realistic way a profitably franchise can avoid taking in the political rent seekers. What you spend more on profit share you probably make back on cost savings, and at the very least it buys you a more happy, productive workforce.
they have a fiduciary responsibility to return their
profits to shareholders and not employees
The issue with the up-or-out at Microsoft was that it was incredibly hard to hire better devs than the ones being forced out (counter-argument- you are supposed to be hiring on future potential). This was seriously compounded by the amount of legacy code- new hires either wanted nothing to do with it, or wanted to replace it en-masse without understanding the requirements.
The up or out became yet another puzzle piece during the review cycle- if you did not give someone a promo then you would be pressured to cut them loose.
I think that 'up or out' is slightly different than 'deliver something of tangible value.' It's possible to keep delivering value without wanting to be promoted into (e.g.) management.
Enron collapsed under massive fraud and GE would have been bankrupt if they had to mark-to-market their debt during the financial crisis.
Banks have to 'mark-to-market' their debt periodically, but since GE wasn't a bank, they didn't abide by the same regulations. Say there were two identical houses on a street with $500k mortgages, but the market crashed, the houses are worth less, and only 1/2 of the mortgages will be repaid. If Bank of America owned the first house, the mortgage asset (it's an asset to the bank) would be marked-to-market and what was formerly a $500k asset would now be worth $250k, and the bank would show a loss of $250k.
GE doesn't have to do this and could carry assets at their previous value (and didn't have to mark down bad debt either). To simplify the story, during the GFC, GE had that one mortgage "worth" $500k and debts worth $400k. If they were a bank, they would have had to admit that the mortgage was really worth $250k, and they would've gone into receivership.
If not for that accounting quirk and the massive amount of bailout cash they took from the Federal Reserve / FDIC, they would have actually had to declare bankruptcy. Ironically enough, the FDIC program and Federal Reserve are to shore up banks and GE was explicitly not a bank per the above few paragraphs. So make sense of how they got access to bailout money solely authorized to bail out banks..
 - $45B in losses buried on GE's balance sheet: http://www.businessinsider.com/henry-blodget-living-on-plane...
 - GE borrowed $16B from Federal Reserve: http://www.propublica.org/article/general-electric-tapped-fe...
 - FDIC to back $139B in GE Capital Debt: http://dealbook.nytimes.com/2008/11/12/fdic-to-back-139-bill...
 - GE Borrows $59.3B from FDIC program: http://www.bloomberg.com/news/2010-12-01/ge-borrowed-16-bill...
No you aren't. It just means you have a negative net worth.
insolvent - unable to pay debts owed.
Think of people instead of companies. I suspect a majority of people in America have a negative net worth. That doesn't make them insolvent. It just means they have lots of college loans and they are working to pay them back.
A situation where the value of a company's liabilities exceeds its assets. Accounting insolvency looks only at the firm's balance sheet, deeming a company "insolvent on the books" when its net worth appears negative.
The housing crisis is a perfect example of this. It only became a problem for people who bought more house than they could afford with hopes of selling at a moments notice. My house was as much as 50k underwater (going based on foreclosure sales of identical townhouses) during the crisis. Fortunately, I didn't buy more house than I could afford. I could easily continue to pay my mortgage each month and was never anywhere near bankrupt. I sold the house recently for closer to 10k loss. Was I insolvent when the house was down 50k? No.
Cash flow insolvency involves a lack of liquidity to pay debts as they fall due. Balance sheet insolvency involves having negative net assets—where liabilities exceed assets. Insolvency is not a synonym for bankruptcy, which is a determination of insolvency made by a court of law with resulting legal orders intended to resolve the insolvency.
> If your assets are worth less than your liabilities, you're technically insolvent.
Which you disagreed with. It's a literal, factual statement though.
> Yes you can call them insolvent if you want to, but it doesn't mean anything if they can still pay their debts.
It actually does mean something in corporate finance.
> Was I insolvent when the house was down 50k? No.
Stop comparing corporate finance to personal finance, they aren't remotely similar. The only reason that the phrase "Technical Insolvency" exists is because there are consequences if companies breach that threshold.
From the Title 11 of the US Bankruptcy Code:
The term “insolvent” means—
(A) with reference to an entity other than a partnership and a
municipality, financial condition such that the sum of such
entity’s debts is greater than all of such entity’s property,
at a fair valuation
If a loan covenant is breached, the debt-holder can demand additional collateral and in some cases, they can demand full repayment of their outstanding debt. At the time, GE had ~$90B in cash/investments and over $300B in current debt. A fire-sale on those assets to pay off that debt load would have killed GE.
 - http://www.law.cornell.edu/uscode/text/11/101
The world of corporate accounting is very literal. 'Technical insolvency' is a synonym for balance sheet insolvency, while the inability to pay a debt is 'cash-flow insolvency'. You can have either type, both, or neither depending on circumstances.
GE at the time would've still been cash-flow solvent, however they had tens of billions of dollars in debt coming due that likely would've forced them into cash-flow insolvency without taxpayer money.
Instead of restructuring, the Fed and FASB decided to blow more bubbles in 2009:
I will say though that when companies lay off competent people one thing I see time and time again the competent people that survived (who probably are better at the politics) always abandon ship. Its very demoralizing watching the kick ass coder you work with go and Joe Slick that never checked in one line of code stay.
So its really not in a companies interest to get rid of those that can do their jobs well even if they are not wise on the politics.
Great teams are quite rare and short-lived. One specific version of a software product can be fantastic due to the short-lived team that designed and built that one release. You see this clearly with hardware, e.g. the 2012 version of device model XYZ earns a higher price in the resale market. It would be great if the teams building these positive exceptions could be recognized, as they scatter and reform across companies.
The second one was "You need to observe people's actions and understand why they do things" repeated for 20 minutes.
Those are both very helpful points but I think people would be better served with some advice or techniques.
For example: Discuss your plans with each person one by one before a big meeting so that everyone will be more likely to see it your way in the big meeting.
One needs to understand offense in order to play defense. Here are some books with timeless techniques for those with ethical intentions:
1) Herb Cohen, You can Negotiate Anything (general)
2) Chris Malburg, How to Fire Your Boss (labor)
3) Robert P. Smith, Riches Among the Ruins (sales)
Re: big meetings. Herb Cohen points out that most meetings are the end of the negotiation, not the beginning :)
If you want to read more, get a copy of How to Make Friends and Influence People, or 40 Laws of Power (depending on how evil you are okay with being).
Michael O. Church wrote more about this in a recent blog post:
Layoffs are generally associated with reduced mission scope, even if its not a reduction in named product lines (it can, e.g., involve reduction in supported platforms for the same area of named products.)
Still, reducing products or otherwise reducing mission scope on its own doesn't save money, you still have to cut people. Especially if the scope reduction doesn't neatly follow organizational lines, there may be no direct mapping between scope reduction and which positions get eliminated, and even if there is, if you have good and meaningful performance metrics and similar skill requirements across the parts of the mission that are preserved and those that are retained, not simply mapping from the functions reduced to the people let go makes sound business sense.
In most areas at Microsoft above level 65 it is all politics.
1) Financing, staffing and governance of short-lived organizations which perform complex tasks then disband, e.g. film production, election campaigns, bi-annual sporting events, disaster relief, NGO coalitions. How are institutional identity and knowledge preserved when developed within temporary contexts?
2) What organizational scenarios have been proposed by scifi/fantasy writers for worlds where humans or other lifeforms are immortal? Do those scenarios suggest areas for research or innovation in modern corporations? Olaf Stapledon, A. E. Van Vogt, C.S. Lewis, R.A. Lafferty, Walter Jon Williams, etc.
3) Historically, business has been run by families with inter-generational inheritance. Some public and many private companies still operate this way. There is a body of literature on family-based governance and succession planning. Is that literature relevant to public companies like Facebook and Google where the founders have inheritable shares with unique voting rights on corporate futures? Will other corps seek superpowered share classes? Will consumers seek out B corps, public corps, private corps or hybrids?
Garther Morgan's "Images of Organization" provides food for thought: http://www.ribbonfarm.com/2010/07/13/the-eight-metaphors-of-...
So you can BS your way in many functions.
It's not about safety. It's about checking of a box and satisfying a process.