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Microsoft Looks to Cut Up to 18,000 Jobs (recode.net)
338 points by whiteacid on July 17, 2014 | hide | past | web | favorite | 324 comments

So MS Bought Nokia and ~30k employees for ~$7.2 billion last April.

3 months later, MS may now be firing ~half of the Nokia group. The executives who drove that catastrophic deal stay.

What a testament to how disastrous big M&A really is. Is there any large acquisition that succeeded in the last 10 years? I'd feel sorry if I was a Nokia guy there, they pulled out the best non-Apple phone hardware in the last years.

Probably also a good reminder for Blackberry - dont sell yourself and die trying, it actually can't get worse.

>'So MS Bought Nokia and ~30k employees for ~$7.2 billion last April. 3 months later, MS may now be firing ~half of the Nokia group. The executives who drove that catastrophic deal stay.'

My understanding, primarily from friends at Cisco which has its own history of acquisitions and layoffs is that this is roughly standard procedure, catastrophe or not.

Basically, there's always going to be a lot of overlap when acquiring another large company. Loads of people are made completely redundant and things that didn't come out via diligence are discovered.

There's a wait and see period where some people leave, followed by jockeying for position and finally layoffs of people who remain redundant and/or lacked the awareness to pursue either of the former two options.

Obviously, a merger which doesn't pan out would amplify the effect.

What I wonder is how much such a process actually affects the success of these mergers? Do the consultants and banks who assist in these sort of things have a variable to account the back-biting scramble that will take place in each first year?

By the way, survey of mergers found that while most mergers fail, Cisco is an outlier making successful mergers one after another. It is said that Cisco analyzed successful and unsuccessful mergers and does data-driven, evidence-based decision making.



'Cisco figured out that mergers between similar sized companies rarely work, as there are frequently struggles about which team will control the combined entity.'

I recall asking people there about why they didn't acquire certain companies that I thought would make a lot of sense from a technical / product perspective.

The typical answer was right in line with that quote - that Cisco stays away bigger companies that others might try to swallow at high cost.

That they look for logical acquisitions of specific products in the few hundred million dollar range, not billions.

So, we should let the comcast/time warner cable deal go through because there's a good chance they'll implode?

I would say they're already imploded and will become an even worse oligopoly. One of the companies will come on top in that struggle.

That's not really true. They bought SourceFire last year for a few billion.

>'That's not really true.'

Sure it is, there just happen to be exceptions.

Of the 21 years and 136 Cisco acquisitions with prices on Wikipedia, 14 come in over $1B. The average price overall is $530M, and the average price excluding >$1B deals with $178M.

SourceFire is a really small company by comparison to Cisco.

Cisco does buy a lot of companies, but only about as many as google has bought. Though Cisco has has more billion $ or higher deals.



Cisco has a very different M&A strategy than Google. They add product lines through acquisition, in preference to building internally (if you're on a Cisco team and you're ever given an MRD for a product, the joke goes, quit and start a company to do it instead). As often as not, Google acquires companies to absorb the people. Google typically buys much smaller companies, and more selectively.

I would be very surprised to discover that Google has acquired close to as many headcount as Cisco has. But I don't want to do the research work either. :)

"I would be very surprised to discover that Google has acquired close to as many headcount as Cisco has. But I don't want to do the research work either. :)"

In 2012 Google acquired Motorola Mobility with it's 20,000 employees.


I would argue that Google and Motorola never "merged".

Google just bought out the patents of Motorola and dumped the company away to Lenovo afterwards. There was no merging, no redundant employee elimination process, like in other mergers.

Plus, this number is obviously a large outlier. An actual stats person would just go calculate the figures with the outlier removed- Cisco probably made much larger acquisitions, employee count-wise, than Google in that case.

What does "MRD" stand for? I've been searching for a definition but I can't seem to find any, that makes sense in this context.

Given the context, I guess it's some kind of product development order?

Market Research (or Requirements) Document

It's a document that's usually produced by a product management group in a company that outlines (very vague, almost laughably so) the "market requirements" - what users will want/need - for a given feature or set of features.

This is usually handed to developers/designers to come up with a "High Level Design" (HLD) that gives the "how" to the MRD's "what".

It's usually only seen in larger software companies.

It'd be more accurate to say that MRDs are an artifact of waterfall design. Waterfall is out of fashion, and so small companies tend not to use it, but if you're shipping hardware (like Cisco does) it's often more natural than agile.

Marketing requirements document; the set of features for the next release of a product.

Disclaimer: I have worked for Cisco, and no longer do so.

Cisco is an engine for buying up small companies, digesting them, and extracting value from their products. It does not really do engineering or create its own product lines. As a result, it has polished the process of buying up companies, and progressively shutting them down while extracting the maximum sales value from the products that company has developed.

The key thing is that this is the core model of Cisco's entire business. It's actually not too rough on the people involved - the profits of the milking machine are shared fairly generously with the people being milked - but it is all about purchasing products with "potential future value" and converting it into cash, not creating new value.

Further, people within the controlling interest tend to prefer dealing with those they know.

Even if you are a high performer, being part of the now-controlled interest deals you something of the short stick, as they say.

If your company is acquired, be prepared to move on. Regardless of personal performance, they may give you no choice.

Usually one of the main reasons you do M&A is that there are redundancies between the organizations. Therefore, being able to lay people off while maintaining the same output is one of the goals of the deal, not a sign of failure.

Ah, perhaps if you're the MBA bean counter type. In reality, you should grow the business, because now you have much better back-office capabilities to support a more distributed, more diverse workforce. Don't be afraid of having lots of people, be afraid of not managing (supporting) them well, causing inefficiency.

You cannot merge 2 huge companies without significant layoffs; there are way too many overlapping job-responsibilities and it's impractical to somehow make that work. Maybe some kind of rare exception is a job that depends on physical location. If I already own a fleet ice-cream trunks in USA and I buy a company in Paris, I'm probably not going to layoff the paris ice-cream truck drivers...

There is a whole lot of overlapping administravia, you don't need 2 full sized legal departments, finance groups, HR group, marketing groups, sales groups and so on. Some layoffs will happen.

Is there any large acquisition that succeeded in the last 10 years?

You might have the wrong criteria for acquisition success. I'm sure both Nokia and MS knew these layoffs would come before they agreed to the purchase.

I'm sure Nokia itself knew these layoffs were likely-to-inevitable whether that deal happened or not.

If that was the case, do you think most of the Nokia employees were actively looking for another job and were just riding the gravy train until it finally pulled into the station?

I would think if I worked at Nokia and we were acquired by Microsoft, I'd probably be looking for another job fairly quickly. Considering the writing was on the wall for a while even before they were acquired by MS.

That will largely depend on the severance packages.

Those who stuck around through the merger and take take the first-round cuts offer will likely make out pretty well. Unfortunately for Microsoft, this means that they're largely paying for people with good strategic skills and a high capacity to find work elsewhere to leave.

It's the ones who stay put, largely out of lack of strategic skills and/or alternative options, who are going to be less valuable to the company. There may be further incentives but they're likely to not be as generous.

Or so say the rational expectations theorists.

If they weren't before, they will be now that Microsoft's layoffs over the next six months hang over everyone's heads. Microsoft should have ripped the bandaid off in one quick move so other employees will feel secure.

Did MS? Including the cost of the lay off ($1.6b says Recode), Nokia price was actually $8.8b. What was their business case that was so easily scrapped just months into the purchase?

It may be successful on a tax/accounting perspective since the purchase was made in € with cash that couldn't be brought to the US.

Yet this does look like a gigantic waste of assets. Warren Buffett says that a successful business is all about mindfully allocating its resources. This looks like the oppsite - no wonder that Nadella has a hard time explaining what happens in simple words.

Adding layoff costs to the purchase price doesn't seem right. Severance is the bulk of it, and that's money you would have paid anyway if you had kept the employees on.

There's no evidence that the initial case for the acquisition was scrapped. On the contrary, it's almost a given that MS was aware of the post-deal costs. This is all quite normal for M&A deals.

Don't underestimate the value of the Nokia brand. Until recently, IIRC, Nokia was the world's largest seller of mobile phones. That brand image is worth a ton to help MS sell its phones.

Right up until they went windows phone only. The result is nokia's sales dropping, not windows phone sales increasing.

Coincided with yes, but saying it was the result of is making a fault with logic as I am sure you are aware.

Microsoft only has license to the Nokia brand through the end of 2015 (Nokia is still a separate company).

It can be argued that their patent portfolio was worth about that much.

Except that Microsoft didn't get the Nokia patents, merely a license to use them.


Success is highly subjective. Perhaps you mean different?

> Is there any large acquisition that succeeded in the last 10 years?

Yes, many. Think of the Lenovo-IBM deal -- massive success. The Facebook-Whatsapp deal is 2.5x bigger than this acquisition, we'll see how that works out (financially). Google-Youtube is a big one that can be considered as a big success as well. Ebay-Paypal. FB-Instagram.

Facebook-Whatsapp are you serious?

One of these things is not like the others.

It does seem less likely for an acquisition of a large company to be successful than a small one.

The last three you mentioned are all tiny companies acquired for huge amounts of money.

YouTube had something like 60 people at acquisition -- definitely under 100. Instgram had under 20 I believe. Not sure about Paypal but I'm sure it was dwarfed by Ebay.

There is something to that. I think a smaller number of people can be integrated into a larger one, but when two massive companies like Microsoft and Nokia come together, there is bound to be friction.

Not sure what happened with Google and Motorola, but the companies were I think wisely kept separate, whereas it sounds like Nadella wants more "integration synergies".

That wasn't a merger that was IBM dumping a low margin business unit.

These Uber mergers never seem to create any lasting value

the Google-Youtube, FB-Instagram and FB-Whatsapp are clearly not in the same category of merger & aquisition as MS & Nokia.

Bigger in terms of inflated stock prices, but not by head count. Lenovo has taken the Thinkpad line down the toilet, not that IBM wouldn't have.

> Lenovo has taken the Thinkpad line down the toilet

I think you're overstating things tremendously here. ThinkPad is alive, and from the reviews I've seen, doing well. http://www.engadget.com/2014/03/28/lenovo-thinkpad-x1-carbon.... Many buyouts end with entire products being canned.

I still have an IBM ThinkPad. They were good quality back then, but I really think the standard-bearer today is MacBook.

I don't think madengr is saying that the thinkpad line is not successful. Rather, I bet he means that the modern thinkpads do not fit in with the "thinkpad spirit".

New thinkpads are just like every other manufacturer's laptops, even the X line.

Many of your examples are super-valued acquisitions, paid mostly with stock funny-money, and that employ a few hundred employees at best, which makes them irrelevant to the case here, where Microsoft got 30,000 employees from Nokia.

Google bought DoubleClick in 2008 for $3 billion.

> Is there any large acquisition that succeeded in the last 10 years?

Lots. Of course, success is relative to for whom -- many of them work out well for shareholders of the acquired firm, many work out okay for shareholders of the acquiring firm, and the executives on both sides usually do well.

Of course, part of how it works out for those groups is that it, by design, doesn't work out well for the "human resources" that are production inputs.

Your logic and worldview are all inverted.

You buy ailing companies and then cut fat. That's the plan, not evidence of a bad decision.

What was happening to Nokia WITHOUT getting bought and gutted? They were in a tailspin and had major internal friction issues getting good tech to the top of the consumer heap. They would be another Blackberry...

Oh wait, you also suggest Blackberry fight it out with their wet noodle of a product line?

As an employee, when you are acquired, you either are indispensable (and will not be made redundant) or you should probably head for the door so you aren't competing with your coworkers for spots when a flood of you are dumped into the market.

Microsoft got the products, IP, licensing deals and will be keeping a block of very productive employees. This is an obvious move and good for MS, MS shareholders, and, indirectly, consumers.

While I am no fan of the deal (to say the least), Nokia would have had to make these deep cuts independently based on the continued inability of Windows Phone to sell enough to support a company of Nokia's size.

I think the best way to say the above is not that "Microsoft lays off half of Nokia group."

It should instead be "Microsoft saves half of Nokia's employees jobs."

Depends on the viewpoint: When you acquire a company, are the employees assets or liabilities?

Who? The engineers? Clearly many of them would be liabilities as their product lost. Some visionaries are needed, some business people, some engineering leaders, some bright engineers, etc.

Unfortunately, some acquisitions are for talent, others for revenue, others for customers, others for technology, or a mix, and the talent here may be a mix bag.

You seem to not understand how mergers and acquisitions work. There are generally large redundancies which is part of the reason for the deal. Get rid of payroll while maintaining the same total output. Also, a major reason for buying Nokia had to be it's IP. I don't think this is any way a sign the deal failed, and I'm sure it was expected by all of the executives and most of the employees.

The situation is almost reverse in smaller scale companies. It is not unusual for a mid-sized company to acquire another mid-sized or small company, keep the factory workers, engineering, R&D and lay off all mid and senior management (though with pretty good severance usually) to install their own people.

It can get worse. MS could be firing the whole team and not just 50%. This is the reality that Blackberry faces.

It doesn't make sense for a company that's trying to sell itself to also start making large cuts - it may drive your own price down by signaling that your businesses lack potential. The acquiring company will calculate in the cost (and savings) from the cuts ("synergies", to use the banking term) and just roll them into the purchase price.

So if you're the selling CEO / board, you get to claim you sold the company whole, and if you're the buyer, you just blame the cuts on the increased efficiencies to be gained from combining the companies - it's a sign that the deal is "successful" and you're achieving the synergies you modeled before the purchase.

I think that "we can run this unprofitable business with half its current headcount, thus turning it into a profitable business" is hardly an indication of failure.

You're assuming the unprofitable business will become profitable.

Businesses are never unprofitable because they have too many employees.

Businesses are unprofitable when management lacks the skills, the foresight, or the vision to make those employees profitable.

Edit: If this isn't obvious consider what a world-class entrepreneur could do with 12,000 experienced employees, a couple of billion in severance savings, and a kick-ass idea.

What can you do with 12,000 employees with minimal experience and skills who have been working on a long-standing but now obsolete product line that was manpower intensive, when your business is being completely realigned around other product lines that still make a profit but rely on small numbers of highly experienced staff?

This is not a random question; this company exists.

Very strange comment, I'm sure execs expected all of this when the deal was done. Their expected outcome probably does not look "catastrophic" to them.

Actually, I would say that by the time the deal rolled around the catastrophe had already played itself out at Nokia. It's sad what happened to Nokia, but the acquisition is the least of it.

The whole point of M&A is too eliminate redundancies in the acquired company, so you can drive the same aggregate revenue with lower aggregate costs. Layoffs are not a sign of M&A failure, they are at least neutral, and might be a sign of success.

edit: clarifying language

I hope the ex-Nokia people start a phone company.

>> I'd feel sorry if I was a Nokia guy there, they pulled out the best non-Apple phone hardware in the last years.

They have almost no marketshare in the US. So is it really the best non-Apple hardware, or does being the best not really even matter?

That could be changing and the US is not the only market that matters. There is a reason Google, Tinder and other companies deny perfectly working apps on the Windows ecosystem and its not because Windows phone is irrelevant.

    Subject: Starting to Evolve Our Organization and Culture

    Body: Last week in my email to you I synthesized our strategic direction ...

Instead of writing "Christ", you should consider posting an email as if you were the one newly responsible for a $364B company and a reduction in 18,000 jobs.

I'd be curious to see other people's management style from their armchair.

I would spontaneously combust if I were responsible for a $364B company on a good day, never mind deciding how layoffs should be done. It's just surprising that parody-level corporate-speak still gets used despite having being derided for years in mainstream press and conversation.

A few people may express derision for the political apparatus, but the reality remains that this type of language is extremely effective.

I used to believe that if one were selective, he could find discerning groups of people where political shenanigans were of minimal effect. I've since learned that no matter what, politics is a matter of survival in any group of 5+ people, especially in cultural circumstances that emphasize individual independence and freedom.

We can't fault a corporate CEO for donning highly-sanitized corporate political speech. Like it or not, executives would be dead meat without it.

Political tap-dancing has been parodied for generations and that still happens.

Heck, Cheney all but quoted Reagan's "I don't recall"-defense as a 20th anniversary tribute and that had been lampooned specifically.

Or, for balance, Obama saying "I am acting alone on the border" and then at the border "Congress does not do its job."

That's not really "being political" since both statements are true. Congress didn't act on the immigration problem, so he acted on his own with the limited power of the Executive. This isn't a good example.

Well, one could argue "he is not acting" since thousands of kids keep flowing in, and one could argue "it's not the job of Congress to act."

Lies don't have to "sound political" to be untrue.

People are downvoting you because this quickly became blatantly off-topic and distracting from the subject at hand, not because of your political views.

/s/corporate\ speak/lawyer\ speak

Why do you feel the need to escape spaces?

Subject: Important Company-wide Announcement

Dear Employees,

For our business to continue running, we must reduce the number of staff. This is an unfortunate but also inevitable reality.

[insert details of layoff here]

[insert honest platitudes]

Senior management wishes all of you the best of luck, and has every confidence that you will be even more successful at your next job.

The only bit I would disagree with is, "For our business to continue running..."

Last year, Microsoft made over $20 billion profit on almost $80 billion in revenue. The truth is that Microsoft has accumulated many useless employees over the years, and they could be even more profitable by laying off those people.

"In order to maximize shareholder value in the long term..." I would hate to be fired, no matter the phrasing, but kudos to a CEO brave enough to say things just how they are.

Not bad for a corpse, seven years later: http://paulgraham.com/microsoft.html

"For our business to remain competitive... "

"For your convenience, 15% of positions will be removed."

Yes, but at that point it's not a "running business" but a charity.

Pruning all the carefully hidden useless employees is a massive effort, getting rid of a department that is longer relevant is a minor effort. Expecting them to undertake the massive effort for the appearance of fairness is unrealistic.

I don't know if you guys read the email in question - http://www.microsoft.com/en-us/news/press/2014/jul14/07-17an...

it seems fine to me?


Subject: good news and bad news

Hey team, got some good news and bad news. The bad news is not everyone can be part of some of the current transitions, you're more than welcome to re-apply to new positions that will be evolving in the future, for those of you who are still relevant. The good news is that for those of you who are staying - Microsoft is now a mobile-first company! We're making the productivity equivalent of Angry Birds. Also, we're keeping xbox, you guys are cool.

Peace yo.

Except, they're not laying off most of the staff. This email is, with 85% confidence, going to staff members who will not be fired.

This is a notification that it's happening, that you're not going to be affected, and that they're doing it because they think it will help the company grow and adapt.

Yup, in this day and age simplicity and clarity stand out and are appreciated by most people.

A great blog post on this topic:


Though it's advice aimed at much much smaller companies than Microsoft it still resonates. Also I bet HN readers are much more likely to have to one day lay off 18 people than 18,000.

In my opinion, this is a pretty good critique of his writing style along with some constructive suggestions on how to improve it:


I agree (and even added some of my own commentary at http://www.mimiran.com/proposals/the-importance-of-writing-w...). Nadella is not yet at the level of Ballmer, but he's working on it. Which is too bad, they are both really smart guys running a really important company. I'd like to think that if they had a clear direction that they could communicate clearly, they would be more successful.

> you should consider posting an email as if you were the one newly responsible

For starters, I would not use the word "synthesized" in my email.

That's a thinly-veiled appeal to authority.

Here's my attempt at removing some of the worst fluff from the email:

Last week in my email to you I outlined our direction as a productivity and platform company. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments. The first step to building the right organization is to make changes to our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration.

First, we will simplify the way we work to drive greater accountability and move faster. We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. Our business processes and support models will be more lean and efficient with greater trust between teams. These changes will affect both the Microsoft workforce and our vendor staff.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft, completing the acquisition announced last September. To win in the higher price tiers with our first-party phone portfolio, we will focus on design and technical innovation. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind.

Thanks, that was great. Your version is clear and to the point without losing anything. It really makes me wonder why corporate messages are so often written in such a strange style. It clearly isn't necessary, and often ticks people off.

I think fuzzy communication is a sign of fuzzy thinking.

That may generally be true, but people capable of becoming CEOs of big companies are almost certainly not a fuzzy thinkers, which suggests to me that there is something else going on. Maybe this sort of corporate-speak, while being a negative signal to the set of people I'm more familiar with, is a positive signal to different and more important sets of people, like other executives, business media, and investors.

Making the public earnings call the centerpiece seems like a real bad morale move. If I were a 'Softie it would be a strong signal where the leadership's priorities lie (stock price). It gives the talk of "lean" and "accountability" a decidedly negative undertone IMO.

I do like the line about "the respect they deserve" without qualifier. It adds a bit of humanity to the whole thing.

But not enough overall IMO. It really leaves me with the impression that this is just typical corporate speak trying to put the stock price ahead of the mentions of "design and technical innovation".

well, his duty is to the shareholders so having that as a priority sounds like a good thing to me. Yes treating your employees well is a good thing, and it's necessary for a successful business, but that doesn't mean you should keep people who aren't needed or aren't performing.

With an acquisition of this size there are going to be redundant people, and as Nokia was headed towards going out of business, everyone would have lost their job instead of just half.

> well, his duty is to the shareholders so having that as a priority sounds like a good thing to me.

I think it's pretty tone deaf in a letter to employees. But tomato/tomato I guess.

I didn't say anything about keeping redundant positions, just that he wants to raise the bar for results, and I feel like this release only hurts that effort.

I'm not aware of any great turnarounds that began with "look, we're here for the share-holders". (I'm sure for good or ill they're out there, but they haven't come to my attention for whatever reason).

It's just about the exact opposite of other famous turnarounds based on the "it's the product stupid".

I don't know... I just feel like there's a lost opportunity here. Morale is going to suffer regardless. That doesn't mean you have to make it worse by being tone-deaf.

I was just thinking of doing this yesterday, you should email it to him! Could be fun to try to do this for all overly wordy corporate email/announcements.

When you fire that many people, then this is the tone you use, unfortunately. It's not specific (so people won't be able to argue that they're really needed, etc.), it does not have any negative statements (no blame on people who're let go), it not personal (Nadella cannot and should not express any strong positive or negative personal feelings about the event).

It can be a disgusting read, but everybody does that in a situation like this -- with a reason.

Everyone talks like 'Last week in my email to you I synthesized our strategic direction'?

This guy is trying too hard to sound smart. Everything that's written by him reads like a try-hard freshman English major.

> Everyone talks like 'Last week in my email to you I synthesized our strategic direction'?

Its a way of softening the blow for the people being laid off. I mean, sure, you are losing your job, on the other hand, do you really want to work for someone whose brain works in a way that would let them write "Last week in my email to you I synthesized our strategic direction"?

It's just typical big-company-CEO babble, which I think they must teach you when you do an MBA. (And yes, Satya Nadella has an MBA.)

It's funny, I'm doing my MBA right now and many of our profs specifically warn us against using "MBA speak" or "MBA jargon" in presentations and assignments.

It's much easier to retreat behind MBA speak, especially when you don't have a clear grasp of what you're trying to communicate or are saying things you don't want to be heard saying. "If you can't dazzle them with brilliance, baffle them with bullshit".

It CAN be a useful tool to deflect and confuse, but sadly I think 99% of the time it's not used intentionally. It's simply much, much harder to communicate complex ideas in a simple and clear way - it takes a lot more effort and deeper understanding, and many people are simply incapable.

Can HN lay off the MBA hate? It's getting really old. It's abundantly clear that no-one even knows what an MBA is.

You should write a post on this, I'd be interested to hear the MBA's perspective. Like the OP, I'm jaded towards MBAs due to my personal experience, but I recognize that's limited experience. I'm genuinely interested in the benefits a company gets from hiring an MBA, especially an early to mid-stage start-up company.

Choosing among various projects to pursue at a large company requires understanding of market trends, financial projections and assumptions behind them, as well as various human resource management issues. Clearly, a very smart person could pick that up on their own - but you can also study from a body of knowledge of how to do this effectively. In some ways, picking up CS is much easier on your own than knowledge you get from getting an MBA

I don't have an MBA. I've just worked with people who were both gifted and in possession of an MBA. The presumption that people won't 'get it' because they have an MBA is laughable.

It's a social indicator, not a definitive attribute. I've known several MBAs personally and only one was legitimately intelligent -- the rest were sales guys who thought their MBA entitled them to make big decisions with perilously little background or knowledge of much of anything related to the situation.

I know an MBA right now who is pursuing a business wherein he offers wifi hotspots to small businesses. His literature claims that renting one of his hotspots will make the business "PCI compliant". I've personally advised him on multiple occasions (gently at first, growing more stern over time) that this claim is patently ridiculous and only displays his incompetence to anyone knowledgeable in IT, but he refuses to amend his materials or statements. Just the tip of the iceberg with him.

Granted these are anecdotes, but I think they embody the anti-MBA ethos. Qualified persons strongly dislike MBAs because MBAs often feel their MBA grants them immunity from doing things incorrectly, and that they are instantly authorities on everything without requiring any experience or research.

I swear they have to explicitly teach that in business school, like: "Now, this degree grants you the magic power of never needing advice, information, or training, and you will always be right, and normal people won't understand that because they didn't go to business school... but remember, business school is the only school that matters. No one would have money without us! Just tell the nerds to shove it if they try to tell you anything else." It's far too universal a feeling among MBAs to be coincidental.

I know a guy with an MBA who runs a successful interactive agency thats had 100% revenue growth year over year. His MBA has better trained him to handle the operations, accounting and marketing side of his business, since up to the point of starting his company he'd only worked as a software engineer.


Indeed -- as I conceded in my original comment, some MBAs are smart and my experiences are anecdotes. Conflicting anecdotes certainly exist. However, the person I replied to stated that he/she did not understand why it was common to dislike MBAs, and I shared what I think is the primary reason.

Fully agree that YMMV, but generalizations are useful tools as long as we don't take them as absolutes.

> The presumption that people won't 'get it' because they have an MBA is laughable.

Uhh... who said that MBAs didn't "get it"? The original accusation was that MBAs sometimes employed a particularly objectionable type of vapid and duplicitous speech, not that MBAs were lacking in any particular mental department.

I see several people trying to extend an olive branch ("my personal experience coincides with the stereotype BUT I know my experience is limited, please fill in the gaps"). Instead of filling in the gaps, which you are presumably able to do

> I've just worked with people who were both gifted and in possession of an MBA.

, you insult the people asking you for information and you ignore their polite request. WTF, mate?

The culture of a place like Hacker News is diametrically opposed to the type of people who would seek out and get an MBA. We're all supposed to be start-up focused entrepreneurs who are waiting for our exit by a corporation, only to also leave and start over. It's a common perception (even if it's wrong) that one of the tenants of an MBA is a communication style like the one used in Nadella's letter.

You basically just said "this perception might be wrong but it's one we criticise anyway", which... yeah.

In any case, MBAs can help start-up focused entrepreneurs. They can be start-up focused entrepreneurs. Your perception that it can't be so is exactly what I'm talking about.

I was intentionally ambiguous. Of course an MBA can do those things, but MBAs don't start in their parents' garage. Steve Jobs didn't have an MBA. Larry Page and Sergey Brin only have honoraries. David Karp of Tumblr didn't get an MBA. The ideas just conflict, so it makes us dismissive for no good reason.

You can't say that the "CEO babble" isn't real and that its natural to associate it with business types.

It's not MBAs per se that get negative attention. It's MBAs with no technical background in the companies they manage, who sound (and act) hopelessly inept(ly), all the while ignoring advice from the technical people inside the business.

One of the most obvious indicators of this is people who retreat behind the bulshit bingo, which is why it is so rightfully disparaged. Seriously, 'synthesized'?? That word doesn't mean what he thinks it does, unless he literally made up their strategic direction on the spot, in that email.

CEOs and other leaders need to consider their audience. Anyone who casts a company-wide memo to a technical audience in such terms comes off as hopelessly out-of-touch, and deserving of scorn.

> Can HN lay off the MBA hate? It's getting really old.

As soon as the majority of MBAs start displaying a moderate amount of domain specific knowledge that makes them look less like complete fools to the petty peasants that work for them, I'm sure the hate will fade.

You are being downvoted, but really should not.

Well unfortunately given his background not surprising shows a cultural cringe and poor leadership by using long 10dollar words where simpler less waffly words would be better.

I could see him being Graded cat 4 "in need of improvement" and put on a PIP in one company for that less than stellar performance.

Maybe they can't write it in a personal way because as long as they treat it as a technical process, they don't feel responsible.

Even CEOs need to feel like a cog in a machine sometimes...

It's the sort of management email that I would read with my internal management spam filter fully engaged. I would probably get to the end and delete it without even taking in what he was saying.

I'm just thankful I don't work at either of those companies. 18,000 is a huge number and a big blow to company morale, but that letter is the icing on the cake. The corporate sleaze speak was extremely thick, and while Nadella did avoid the term "headcount" he never referred to any of those laid off as "people" (only jobs, roles, workers, positions).

At the very least he could've added a thankyou for your hard work, or an apology to those that no longer have a job.

Ok, I don't get it, what am I missing?

Sugarcoating mass layoffs with "evolve", "culture", "synthesized", "strategic direction"...

And no fewer than three "synergies" in there. Impressive.

"Synergy" is code for we have multiple people/teams doing identical things.

"I’ll share further specifics on where we are focusing our innovation investments"

Innovation investments? That's a new one! Made me laugh, but not for the right reason!

Or alternatively explaining the reasoning behind the layoffs. But nah, let's assume they lay off just because they want to.

Surely they have business reasons behind layoffs. But nah, they are not written in that mail and blabling used in that mail is horrible.

I understand now, thanks.

Hemingway App (http://www.hemingwayapp.com/) gives it a medium rating of Grade 12. I would have expected worse. I guess there are no truly awful sentences, and the app doesn't measure its general overuse of big words.


And now, every day for a year, everyone gets to wake up and wonder if this is the day that they will get laid off.

Why can't they wait and make the announcement once they know who they will eliminate and do it in one swift action? Why put people in limbo for a year?

Microsoft employee here: I took this exactly the opposite way. I know I'm valuable, I know many others aren't (sorry: being honest) and this is a good thing from my perspective because at Microsoft we are finally facing reality and getting the right people in place.

My only gripe is that the layoffs are not larger - we need about 20% of the marketing folks and 20% of the program managers that we currently have. I would cut deeply in those disciplines as well and then Page-style cut all of the deadwood non-strategic low-revenue projects (and there are a lot of them).

Laying off Terry Myerson (Windows) and Kevin Turner (chief hacker culture killer) would be a great improvement as well - they are both cancers.

In my experience with our last acquisition some of the best performers ended being cut just because they were in the wrong area. So if MS actually evaluates each employee I would be surprised. It usually just comes down to numbers. We need to save X and that means eliminate Y people. Here's a list.

For example. We got acquired. New companies decides we need to cut some of our staff. They get rid of a co-worker who is solely responsible for training companies to work with our product. His pay was way under market anyway so they didn't save much letting him go. Then he goes and gets a job making double with better benefits doing training. Then a few weeks later our group is scrambling to find someone, anyone, capable of delivering customer training....

MS employee here as well. They both aren't going anywhere, KT more-so; he's well respected among the leadership and SMSG has grown exponentially under his watch.

What's wrong with Terry and Kevin?

Was Terry responsible for the compartmentalisation of Exchange to permit it to spread across different machines, each with different roles? Good idea but I found 2010 bloated compared to 2003, I skipped 2008 (and NOBODY tested 2010 SP2 did they???? That bust everything for me, and on an Exchange instance on one machine only; I can only imagine how it was for spread installations).

Are there really that many little projects? How big is the Office team?

Windows needs better leadership and frankly someone from the outside at this point. Every time I hear Terry speak I have no idea what he is talking about (and I get the sense he doesn't either).

Kevin's management style is to give everyone a scorecard, Walmart Style, on metrics like "top apps achieved" or "total apps achieved" that drives all sorts of terrible behaviors in our field organizations working with developers. This is why we have a Kindle application on Windows Phone that is terrible quality. Nobody has any incentive to help Amazon make it great because its not on the scorecard.

Letting 80% marketing and PM go? Wow. I thought PM are pretty good in Microsoft.

In terms of PM - I think many PMs (the good ones at least) should actually be dev leads. So maybe the right way of saying this is that we should fold them into the dev org as leads where they have the skills to do that.

The rest we should release.

Didn't Ballmer's reorganisation mean that there was a triad of developer, project manager and tester working together? That would mean one project manager for each developer wouldn't it?

Or am I wrong? Has that changed?

We don't have one PM/test per dev, no. My team is currently something like 8 devs, 3 testers, 3 PMs. There was an internal shift to change the test/dev ratio to something like 2/3 or 1/3 (I can't remember exactly) instead of matching it. I don't know of a team in my division that has a 1:1 for PM or test to dev.

Thanks for the info. Very informative, considering I work in a tiny company and we have 3 developers, with 1 (me) working on the bit that people actually use daily (the entire GUI bit on multiple platforms).

I used to work in a larger team in a different company but we only had 1 PM who frustrated us all, sadly. How do they balance 3 PMs? Do they argue between themselves?

I can only speak for my team obviously but our product has quite a bit of complexity from both within (features) and without (partner contracts). There is enough work that the PMs typically own different aspects of the project and don't have many chances to step on each other's toes.

My org merged dev and test. I'd say the jury's still out on the wisdom of that move.

That actually may happen a lot more with this "unified engineering" push from Satya.

The triads are at a higher level. Once you get down to individual contributors there is typically a high ratio of Dev and QA to PM (maybe 1-2 PMs per team of 15), and usually a couple more Devs than QA. I'm not sure how widely those ratios are enforced or how much it varies from team to team.

If 80% of Marketing go, I'll eat my shoe.

Actually, I'll be shocked if 10% of Marketing go.

What you're forgetting is those are the people that are best at justifying their own existence.

Yes, I'm not saying this will happen, just that it should happen.

It's actually an attempt to try to be smart about letting people go.

Sure, yes, they could come up with a master list and just pull the trigger today. But the odds of sweeping up a huge number of "false positives" grow considerably.

The idea behind waiting is that along with these layoffs are a lot of restructuring work - teams get moved around, some people actually get promoted, newly manager-less teams are absorbed by another team, etc.

When that happens, there will be a certain number of people who might have been underperforming that start to thrive, possibly because of having a better manager, or because they're more interested in their new group, etc. Other people who might have been coasting by and taking up space but getting decent reviews might suddenly be under a better manager and have no where to hide.

But basically, you can do layoffs, restructure, and then in 6 months time re-evaluate.

Typically, barring one-off events, they'll do several rounds here, a few months apart. Done properly, it won't be an every day worry, it'll be a concern 2-3 times over the next year.

That's plausible, but also plausible is that the drawn-out process causes the better performers to leave while they can.

It's easy to say from the outside that the layoffs will hit underperformers and people who are just coasting, but the fact is that layoffs of this scale inevitably involve politics. We're talking about an organization that had so much trouble getting the Office people on the same page as the Mobile people that they launched a make-or-break product (Surface) with a buggy beta version of its killer feature (Office). You think that organizational dysfunction won't extend to the restructuring process itself?

At least if you do them and get them done quickly, the people you want to keep know where they stand.

> That's plausible, but if I were at Microsoft I'd be sending out my resume right now.

No -- most people who work at a big company know _exactly_ whether they're in danger or not. We're speaking about 5% of the original (pre-Nokia acquisition) workforce. You must know whether you're in the bottom 5%, or if your product is in the least critical 5%. Of course there are surprises and some good/productive guys will be laid off because of politics (as the process is not completely effective), but in general that's not the case.

I've seen similar things happening inside the financial industry around 2008. Many people left (sometimes much more than 5%), but we could usually guess who's going to be affected (with really high accuracy).

> most people who work at a big company know _exactly_ whether they're in danger or not

Sometimes. I used to work at RIM (BlackBerry) and they announced huge layoffs for August 2012. I knew at that time that my whole team was gone. The rest of the team just talked about how valuable they were and how no one could do the job we were doing. I think they honestly thought that. A lot of people have a tendency to over-value their work and roles.

> A lot of people have a tendency to over-value their work and roles.

I think most people are shitty at it on either side. You can be great at your work and role and still get the axe. Management doesn't often take that into consideration.

In companies and layoffs of this size, it's often not "people" being cut, just teams and divisions and products. In many cases it makes no difference at all who on a given team is and isn't good at their role.

When it's not whole teams, it's generally managers being told they're losing N reports but they can choose which N. Then, effectiveness at one's role is at least part of the equation.

Whether you think you are going to be fired or not, working in a company with that atmosphere is not pleasant. It may not be you, but it could well be those people you like to hang out with in the coffee room.

Generally a company making big layoffs is a sign of a sinking ship. If you are a hot programmer you aren't going to want to hang around waiting for doom. Much better to move to an expanding and thriving company.

People can become illogical when faced with emotional scenarios. "If I loose my job my family/friends will think that I'm a failure". I was at IBM during a similar situations and it was people that were in the top 40%-20% that were the most worried.

Weren't they more worried about not being able to support their family instead of their "image" in the eyes of their family?

Assuming their spouses' incomes wouldn't support their family, I would think so

> or if your product is in the least critical 5%

In the brave new world of "mobile first, cloud first" what's the least critical 5%? In a "mobile first, cloud first" world, somehow the newly-acquired mobile division is getting the brunt of the cuts.

I wouldn't necessarily say that you immediately know whether you're in danger or not. There's no clear statement on how exactly they will "restructure" the company within the next year, this makes it incredible hard to judge whether your department will still be important the next quarter.

I was a Zynga until last June, when the shut down their whole Shared Tech Group (basically the core Tech Support for all Teams / Server Management, Engine Development etc.) overnight, the whole group always had the feeling they would not be in danger because after all, pretty much everyone was dependent upon them. Until management thought otherwise, they announced "some cuts" at the Company Meeting, which was on Friday the next Monday we held the severance agreements in our hands and were instructed to leave the office.

You never really know what management is planning unless you know someone up their or are part of it.

Sure, from the outside it's often not difficult to pick out who's vulnerable and who isn't. However, lots of people really suck at self-assessment, and many don't handle these sort of stresses very well. I've seen this sort of thing 3 times now, and invariably a good portion of your top people immediately leave. It's really easy for them to find new jobs, so they do.

Yes, employees can tell when their project is not a high priority. I don't think they have any visibility to whether they are in the bottom 25% or the bottom 5% though. So that's a quarter of the work force feeling the threat of layoffs.

I think you overlooked his point, which is that corporate politicking inevitably means that it's not just the bottom 5% that will get laid off.

Also, I disagree with your assumption that it's easy to know if you're in the bottom 5% of performers. Of course you will have a general idea of where you stand, but in a company the size of Microsoft with considerable organization dysfunction I really doubt anybody can judge themselves with that sort of granularity.

Layoff decisions are not always so well made, especially in industries were metrics make it harder to tell who the under performers are.

It's even less true when you are talking about merger layoffs. Even if you are good, the Nokia guy might be better.

Seems like this looming threat/uncertainty might also cause people to leave of their own accord. I don't know if that's the strategy, but I could see it being a desirable alternative to actually laying people off.

The downside is that the second this kind of thing gets announced, the good people start to jump ship.

No the good people line up a new job and volunteer to take the redundancy package win win!

> The idea behind waiting is that along with these layoffs are a lot of restructuring work - teams get moved around, some people actually get promoted, newly manager-less teams are absorbed by another team, etc.

or people can get re-hired on as v- contractors or moved to other parts within the company. It's not like other MS employees haven't left and started their own firms using MS technologies.

How do you propose a corporation the size of Microsoft decide who to fire without it leaking internally that layoffs are coming? It would have to be an incredibly coarse-grained and thus terrible decision.

Besides, I fail to the see the logic that advance warning isn't objectively good. If you're going to be laid off it's better to have some additional time on the job before your severance, even if there's uncertainty. And besides, how much peace of mind did employees at Microsoft have anyway? If they were paying any attention at all to how the company is doing everyone at the company had to see that layoffs and restructuring were inevitable sooner or later anyway.

Companies announcing "X" layoffs typically don't need to lay off "X" people, they actually need to lay off "X + N" people; they are counting on attrition following such an announcement to quietly make up the difference. That makes the press (slightly) better, and the people who quit because they sense a sinking ship, etc. won't cost the company in severance packages either.

It's funny to see all those people on HN talking about "redundancy" and "letting people quit on their own", as if people were perfectly fungible - and in a software company!

Yep, I'm sure they'll save a lot in severance when their best people quit.

Some countries' legislation requires a company to express intent to let people go before being able to go ahead with it. Also some of the legalities may make it impossible to know beforehand who specifically will be let go when the time comes.

Look into co-determination in Finland for an example. Finland of course is also a big part of the news from Microsoft today.

I'm assuming that an announcement like this could effect stock prices. I have no knowledge of stock trading at all, but I would assume they would announce something like this if they expected it to have a positive effect.

Stock is up over 45 now . . .

Getting rid of dead wood is a great idea. Tons of middle management there, just sitting for years and causing obstructive damage.

A friend of mine who has been CFO of a couple of Fortune 500 companies once told me that layoffs always drive a stock price up, and that it's also one of the single biggest proofs that Wall Street analysts have no idea how to run a real business.

He explained that any company who could shed a massive amount of its workforce within a year, or all at once, is a red flag for massive internal problems. At the time we had this discussion, he was the CFO of a company that had over 30,000 employees globally.

His thinking was that the same principals that small companies use (not hiring too quickly, etc.) should be scaled up regardless of the company size. You either need people or you don't. You don't hire too fast simply because you are experiencing rapid revenue growth, because revenues do not grow unabated. You hire as slowly as you can, so that when recessions hit or market forces change, you don't suddenly have 3 or 4 times the staff you need. His thinking (which I agree with) is that since those people worked extra hard to cover the work when times were booming, you don't turn around and lay them off just because things slow for a couple of years.

Those people worked hard for the company because they are good employees; he saw it as more important to have good employees on hand when things ramped up again rather than just cut them loose and hope he could get more good employees later.

Since that discussion, he's gone on to two more companies, leading one through an IPO as the CEO. All of his companies have operated like gangbusters - he comes in, revenues go through the roof, debt gets paid down and he's NEVER LAID ANYONE OFF. In the meantime, in his work history, he's been through 3 IPOS (two as CFO, one as CEO) and I don't know how much he made personally on each I do know that he cleared $41 million in a single day on one of them.

This is in complete opposition to what I've heard from several other CEOs, who tell me 'labor is your most controllable expense'. Yet, none of their companies (some also on the NYSE or NASDAQ) have performed anywhere near what my friend's has.

I think he's right. Wall Street is full of guys who have no actual experience running a business. They see layoffs as 'cleaning house' and 'cutting expenses' but the reality is that while that can be true, it more often is a harbinger that the company is not well run.

> "it's also one of the single biggest proofs that Wall Street analysts have no idea how to run a real business."

While it sounds like your friend definitely knows how to run a real business, he/you may want to re-asses Wall Street's real business: it isn't "running companies", it isn't "building value" and it sure isn't "giving away solid analysis for free".

They make money off trade-activity that generates short-term returns.

The sell trades, not stocks. Not unlike eBay. They can and do profit from irrational/emotional behavior and they have no qualms about designing their business to fuel and leverage those behaviors for increased returns.

If 2007 taught us anything, it should be that Wall Street is more than happy to tell you whatever you need to hear to generate predictable trades -- more than happy to tell business news channels whatever will generate predictable trades -- even those they know those trades to be bad and foolish to the extent that they personally bet against them.

Your friend is right, but Wall Street won't listen to him because it means fewer quantifiable metrics for Wall Street to latch onto to evaluate (or pretend to evaluate) how well the company is doing. The analysts would then have to evaluate based upon actually understanding the company in depth, meaning they have to invest more hours into analysis and cover fewer companies, and reduce their own effectiveness/profitability. Not understanding the business at a deep level in this situation is a feature for Wall Street, not a bug. "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

imho, the biggest cause of this kind of thing is lack of sufficient strategic direction, and delegation with accountability to middle management of initiatives that are in line with that direction. When middle/lower managers aren't in lockstep with the CEO's/Board's strategy, confusion, misdirection and unnecessary politics ensue, and the lowest possible level workers suffer most.

Counter Nadella's communications over the last few weeks with what Larry Page said/wrote when he took over from Eric Schmidt. Even though Google pursues hundreds of interesting initiatives of varying revenue importance, it appears they have a coherent strategy (internally, at least) and have been making appropriate decisions to further it, even when those decisions are sometimes indecipherable to external viewers.

Not a big fan of metaphors like "dead wood" to describe employees.

Regarding the "tons of middle managers" (another dehumanizing expression imo.) - I haven't met anyone just "sitting for years" and happily "causing obstructive damage" yet. I have however met quite a few where it took me some time to appreciate their work (looked like nothing/trivial from the outside) and realize their failed struggle with organizatorial constraints on their work.

Apologies if I am reading too much into your post. However, there seems to be pervasive contempt for the people affected by layoffs in threads like these that's unnecessary and unwarranted.

Facts of life at Microsoft:

- There is dead wood. People who do negative work, or who do not add value, only process, to shipping products

- There are toxic middle-to-upper level managers. These people exist; I have personal experience with one who I believe is an actual psychopath

- There are many partner-level people who have essentially reduced their careers to manipulation of other people's careers, by canceling products, or getting people canned or quashing promotions, or backing poor promotions.

I don't think it's hyperbole to say that middle management at Microsoft is riddled with "dead wood".

Very thoughtful, thanks. I too had probably been swept along by the generalisations of people, but they're just that - real people with real problems and situations.

Layoffs almost always improve stock price (literally the first thing "strategy" consultants do when brought in to help "fix" a company is look at an org chart and start hacking bits off). Whether layoffs are actually a good move in the long run doesn't become apparent until much later. (Did you destroy your ability to keep doing business to get a nice bottom line in the short term? Corporate raiders specialize in buying companies with borrowed money, firing a bunch of people, pumping the bottom line, and then selling them before the fact that they're now crippled becomes apparent.)

I had a guy under me laid off, and I resigned on the spot -- because his being laid off meant the company was giving up on a core capability that was the main reason I wanted to be at the company. A friend of mine was working at a large software company that laid off "dead wood" (according to management) including key engineers, which literally led to all the other experienced engineers on his team leaving.

> Tons of middle management there, just sitting for years and causing obstructive damage.

how do you know it's middle management?

> Getting rid of dead wood

That's such a despicable way to talk about human beings,but not surprising here,unfortunatly.

Oh come on. Referring to unproductive jobs as dead wood is a perfectly fine idiom.

Nobody is implying the people who hold those jobs have any personal failings or aren't capable of doing productive work, but the jobs themselves are not helping the business.

Getting rid of the senior management and board members who allowed the Nokia buy to happen in the first place would address the cause. Layoffs are just a symptom of such management failures.

From the content of this email, it's not middle management that's the problem.

Perhaps! It should have read:

"We need to cascade memos about our holistic logistical matrix approaches."

We don't even know who was laid off, so the market isn't judging based upon it being a productive reduction of force -- they're reacting because in the short term, layoffs almost always improve profits, especially for an organization like Microsoft that is coasting on prior wins. It may sacrifice the future, but few of those holders have any commitment to the future.

In every post about this story, right near the top have been dreamy posts about "dead weight" and "middle management" being cut, as if all of Microsoft's prior executive bungles are suddenly being resolved (with most of the same executives, as an aside). Yet the bulk of the layoffs come from Nokia (man, Finland is going to be pissed), people whose only mistake was following a leader who was widely considered a trojan horse.

Elop keeps his job. Those people lose theirs.

And how ridiculous prejudicial for all of these people whose only mistake was being in a company that main horrendous strategy decisions time and time again -- having people title you "dead wood".

Personally I'd much rather hear about a potential layoff far in advance. It would give me a chance to prepare financially and start looking at new jobs.

Generally that's what severance time or packages are for.

I often hear 1-3 months of employment and or pay over the time, giving hopefully adequate time to prepare.

My guess would be that laying off this many is a big hairy job. A lot of people need to be involved. They would all need to know about it.

Keeping it secret is a lost cause. There would be rumors and theories and half truths flying around.

It means less severance packages will have to be paid out because a lot of people won't want to be in limbo and will resign on their own first.

This is where the Bob's come in...

I'd rather know ahead of time so I could start finding a new employer.

Too many words. He needs to drop the self absorbed thought leader babble and communicate in a straight forward manner.

>I synthesized our strategic direction

>focusing our innovation investments

>our work toward synergies and strategic alignment

>Nokia Devices and Services integration synergies and strategic alignment

>simplify the way we work to drive greater accountability, become more agile and move faster

>Thank you for your support as we start to take steps forward in evolving our organization and culture

You can't make this shit up. It's straight out of Dilbert.

Well, it has probably been overseen in case of Copyright infringement. That is why "synergies and strategic alignment" is repeated.

Unbelievable how "We have decided our business requires 18000 less employees than there are now" can be strategically and synergetically rephrased and aligned.

Culture, ah, culture.

Indeed. None of the words in his company wide email meant 18000 job cuts to me. Just a neutral line of babble in that email. Terrible leadership to start with

Uhm, how about

> The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

That says '18000 job cuts' pretty clearly to me.

The rest is general high-level direction because 1. that's probably the only thing they have right now, it takes time to work out detailed restructuring, 2. that's the level at which high level managers operate - fuzzy strategic directives, up to lower-level management to implement them in specific ways.

So, how do you tell a workforce of X people that 18000 jobs are going to be cut?

Sugarcoating layoffs is one thing, and is something just about anyone would do. But sugarcoating it to such a ridiculous extent, while not really saying anything at all, is ridiculous.

He explicitly states that 18000 jobs will be cut in that email. My question still stands, how do you tell a company the size of microsoft that 18000 jobs are going to be cut, while still maintaining a shred of integrity? If you know so much better, please share with us.

It's a GREAT email. Firing 18000 people is a much more complicated process than you can imagine and requires very delicate maneuvering in your communication. He has to craft his message with 18,000 different people and their possible interpretation of every word he writes.

Actually it has to talk to all ~100K of the employees. The 18K are obviously the most hard hit, but being at a place that is laying off, even if you still have a job, is stressful, hard, and not much fun. Keeping morale up during this process will be as hard/important as the actual layoffs (at least from a management point of view, not from an impact on lives basis).

Stephen Elop's email on the same topic, but focused on ex-Nokians:


tl,dr;: - Nokia X is dead - other Devices departments are not affected/the effect is limited

And Elop burns another platform. I've lost count at this point.

This is the THIRD round of major layoffs Nokia has gone through since 2011. I feel bad for my former colleagues.

This is a bit of a bad sign. It means Microsoft won't have their own AOSP-based product. Android apps and ecosystem elements will always be second priority, no matter what any management claims. This makes it less likely that "mobile first, cloud first" actually means something different from "devices and services." If Windows Phone fails to gain altitude, it will drag the rest of the strategy down with it.

It isn't just that Nokia X is dead. This says they're killing of all of what use to be "Smart devices" - which is/was the feature phone division. So that includes the Asha series, etc.

Mobile Phones was the feature phone division. Smart Devices was the smartphone division.

All an academic point since now they're just going to be "the phones division"

Looking forward to the wave of cool startups this will create!

Interesting, especially since a severage package of $30k-$50k or how much ever it is, is basically like a seed funding round for each employee that is let go. Could be interesting...Microsoft Mafia :)

Has anyone been inside the process for determining the number of layoffs in a situation like this? Is the goal to cut payroll to a certain number, or what?

I worked for a time doing "transitional project management" read "once we acquire you, figure out what we are keeping and jettison the rest". For a company that wasn't the size of Microsoft but grew through acquisition to be quite large.

In that particular case, which may or may not have any similarity to this incident, layoffs were determined in 2 ways

A) if you had 2 redundant or similar operational centers you got rid of the most expensive one unless there was some compelling reason not to (huge client demanded they stay, or they were more expensive but dramatically more efficient)

B) technology centers the goal was to integrate what had to be integrated as fast as possible. 80% of the time this meant literally telling people they wouldn't have the same functionality after the acquisition and getting rid of the entire support team. Occasionally, you would find some piece of technology that was great and easily integrated into the rest of the systems and that support team would be given good terms to stay until that was done. Very rarely you would find some piece of technology that was newly vital and hard to integrate, in that case you'd keep a skeleton crew to keep it operational, but you knew that it wasn't going to get any new resources and if it ever become non-vital that team was gone as well.

For point A) above, I've literally seen the decision come down to the cost per square foot of the office space. I've never been in a situation where they had a predetermined number they had to get to though. The number was a natural calculation based on the above.

Some context Microsoft head count: 127k Apple head count: 80k Google head count: 50k Facebook head count: 7k

Apple has 50,250 employees in the US but 26k of them are in retail. Apple is very small for its market cap.


OTOH, Apple has how many indirect employees in China? 100,000+?

Facebook has seven thousand people working on one website? Admittedly a BIG website with many users, but still a staggering amount of people. (I joke only partially)

How much PHP do they need to write each?

They aren't all developers.

"Last week in my email to you I synthesized our strategic direction as a productivity and platform company..."

Good old corporatespeak. Anaesthetize them with tedious bullshit so you never have to say "You're fired."

This is a company with a net profit margin of 27.74% in Q1 2014.

Layoffs aren't always about profit though. In this case, it is more about streamlining and making MS more agile

Does anybody really believe that's going to be the result of this? This is just laying off the people they acquired from that $7.2 billion Nokia acquisition.

The Nokia layoffs are only the first half. One of the last things Steve Ballmer did was restructure the company.


This created a lot of redundant people and groups.

How does laying off 18,000 people make you more "agile" ? Products that sell make you more "agile"... Its more a case of, we bought Nokia for their market, but we don't need their staff!

> Products that sell make you more "agile"

Uh, no, being capable of designing things cooperatively rather than playing political games and supporting status-quo is what makes you agile. Products that sell are the effect, not the cause.

It's much easier with a smaller company, though I doubt that's the primary motivation for the layoffs. More likely, they want to re-evaluate their internal culture, fire people most out of sync with what they'd like the culture to be and hire people that are more similar.

you are caviling over the ninth part of a hair, but yes you are right, products that sell are the effect, not the cause.

you can't tell me there are not some seriously good staff among that 18,000. Microsoft are a huge company, and very few are more successful than them. Microsoft have the environment to allow things to flourish. IMHO Microsoft are still ahead of the curve and agile, especially with Azure. Microsoft are massive ultimately because what they have done to date has been hugely successful. So its really a case of consuming Nokia.

What I mean is fewer layers in the org chart and fewer people to pass decisions through/get approvals from could result in faster product changes. Not necessarily better changes of course, but there is the potential for quicker iteration

Smaller and faster instead of lumbering giant.

I think that's why "agile development" involves the use of small teams instead of giant departments.

Well the Nokia acquisition would've definitely lead to some cross over and duplication in roles, so this seems like a logical move.

I am glad your conscience is clear on this. 18,000 people is a almost 15% of their overall workforce.

MSFT pre-market at $45 at the moment -- higher than anytime in the last decade. There are big expectations towards Nadella -- we need to see groundbreaking strategy changes to justify this. Exciting times.

I'm not sure how this fits into a big strategy change. It mostly seems like really eliminating redundancy, that's why most of the firings are in the Nokia department. They've recently acquired that, so there are bound to be lots of people there that do jobs that were already filled at Microsoft. That would be more than enough to justify it, at least to stockholders.

He's talking about cultural alignment in the mail, and there's no reason to assume that that's not the reasoning behind the Nokia layoffs. Acquisitions and mergers are very difficult to get right, particularly in terms of culture. If there's a cultural gap between the two companies, then the layoffs for the acquirer probably make sense.

This is Mammoth Management - you stomp around looking big and hairy and making trumpeting noises, and then you become extinct.

In startups, you can be gone at any time.

In large company, you can be gone at any time.

So, the lesson here is: prepare to be gone, and be gone before you are gone.

Very wise advice! Keep projects bubbling on the side in case this eventuality hits! And live within your means.

Looks like about 15% of their employees, although 10% will be former Nokia folks.

This has to be part of a multi-year effort to reformat the company. I would expect that there are going to be soft costs that have multi-year impacts. People left behind having to take on more work without necessarily any incentive.

With numbers this high, there will be some degree of randomness in the people selected for the layoff. This will have long-term impacts on morale.

Microsoft has a ton of cash, right? Wouldn't it be smart for them to, once the layoffs are over, incent people to perform in the "new culture"? Give their key people more $, more responsibility, etc.?

Anyone care to bet that within 18 months some Microsoft C-level will be complaining about "lack of company loyalty" over something an employee has done?

"[..] In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. [..]"

At least on concrete and positive note in his email. Wondering if that tripled the initial estimate of 6k cuts.

There was a previous thread on HN where some users were cheering for MS saying,it was just fat trimming or "actually that's good news".

I dont wish it to happen to anyone. Being laid off is never "good news".

It's good news for Microsoft if that person was useless and slowing everything down.

Yikes - "over the next 6 months" => MS will be a disaster area until 2015 as people bicker and fight for a position on top of the human life raft.

That's almost 15% of the company.

Is this going to bloat the Software Engineer market? Do we know what percentage are developers?

From reading the email, I looks like the majority (~12k) of the cuts are in the Nokia division, not sure how many of those are developers but I'd imagine not the majority.

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