Hat tip Sniglet. From Reuters and the Wall Street Journal:
Microsoft Corp. is seriously exploring significant work force reductions that could be announced as early as next week, in a sign that the weak economy is prompting tough decisions even at one of the steadiest ships in the technology industry. According to people familiar with its plans, the Redmond, Wash., giant is considering layoffs across its various divisions, a rare occurrence for the world’s largest software company. However, plans for the cutbacks are still in flux and Microsoft could end up finding alternative methods of reining in costs, one of these people said.
Reuters says Microsoft might announce the job cuts when it reports quarterly earnings next week.
Speaking as a Microsoft stockholder I’m pleased to hear the company talk about cutting costs. All signs point to a global recession which means corporations must control expenses. Microsoft has been growing non-stop for years. Many employees have never experienced any kind of staff reductions throughout their Microsoft careers. Layoffs are a good time to get rid of underperforming employees. Layoffs are typically political. The employees that make their supervisor’s job a daily hell will be second on the list.
I’d like to see Microsoft go on a diet. Let’s ramp up employee productivity and get lean and strong. This is what companies do to survive tough times. Long live Microsoft.
There’s been talk about this for a few weeks on various blogs. I watch this news because many of the neighborhoods I work in are around Microsoft. Tomorrow is supposed to be d-day. Here’s a link to an article published at the end of last year:
http://www.xconomy.com/seattle/2008/12/22/googles-kirkland-site-to-shrink-microsoft-layoffs-may-be-looming/
“What Debra said” though I agree that some house cleaning is likely needed at Microsoft. After the Vista debacle, Zune not supporting “Plays For Sure” DRM, and a host of other missteps, hopefully Windows 7 will be as good as the betas are making it out to be. Sadly, Microsoft has so lowered the bar for themselves over, I don’t know how much that is saying.
Successfully reducing staff at such a large organization is challenging, since the changes need to be made in such a way that processes are simplified so it’s not simply a case where people are let go and other people simply work more to cover for the people that are gone. I really don’t know enough about Microsoft’s internal management and policies to know how successful this would be. At least they are not in a situation like IBM was in the early 90s with 70 layers of management from entry level to the CEO.
While I am not a fan of Microsoft due to past business practices (and the hell they put Web developers through with their browser), I do see some signs that things are getting better which would be very welcome…
funny to hear people in this silly blog of ALL blogs asking for layoffs at microsoft….the only thing holding up the bloated seattle real estate economy is the wage power of microsoft….without microsoft seattle/puget sound would still be a small time fishing village and you and all the other bloggers on this site would be working at grocery stores…..
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Hi MIAYG, I definitely not asking for layoffs. If they must happen in order to make the company lean and strong, I say management is in place to make those tough decisions. Growth and expansion, along with layoffs when sales go down, is part of the business cycle.
In regards to the wage power of Microsoft, I have read studies that suggest that the average wage at MS isn’t as high as we might think. Maybe the sheer number of employees is what you were referring to.
Seattle graduated from a small time fishing village long before Microsoft came to Redmond. 😉
From my perspective, #3 is dead on. Why would we care about “Microsoft” as a Company, to the point of wishing people be put out on the street?
I was surprised by this post as well.
I’d much rather see the wealthiest of top management pumping money into the system, before laying off people at Microsoft. Why feed starving people in other Countries, and create starving families in the Company that provided all those monies aimed at philanthropy?
This may be a “charity begins at home issue”. At any rate, I am worried for the people who rely on Microsoft in many and varied ways. “off with their heads” so the Company can be stronger, is a little too Alice in Wonderland for me.
I too would question any wage effect from Microsoft. When the dot-com bust occurred, the loss of all the option money didn’t seem to have a great effect on prices.
Just increasing the number of employees though has had a positive effect, so laying off some would hurt.
Vulcan announced 50 layoffs today.
Hi Ardell,
“Why would we care about “Microsoft
I for one would rather money go to keep a child from actually starving than to keep a programmer from having to find a new job in a recession, even if the child didn’t have the good fortune to be born here. Comparing dying African children to laid of Microsoftees is ridiculous.
Wow.
This was a very unfortunate blog post. What a terrible choice of words! How insensitive.
Ardell, I really like your analysis. But this guest blogger is underperforming (not the first time, by the way), and as she puts it: “Layoffs are a good time to get rid of underperforming …”
Hi hey you,
Welcome to RCG. Thanks for stopping by. My name is Jillayne, I am a Microsoft stockholder, and I’m not a guest blogger.
Layoffs are always a good time for management to get rid of underperforming employees. This may seem insensitive and unfortunate is if you happen to be one of the underperforming employees.
Step back for a moment and consider the stockholders who invested in Microsoft so that it could grow to 91,000 employees. Without the stockholders, where would MS be today?
At this point, no layoffs have materialized.
Yes it will be challenging and emotional if your number is called or if your friends or family are laid off.
Sometimes layoffs can be a catalyst for great change within a person. A person may realize that a corporation was sucking the life out of them and that they had been missing out other things in their life that mattered. I’ve read about many Microsoft employees who quit their jobs and went on to accomplish great things.
Yes there is sadness, anger and blame. I understand, having been laid off myself many years ago during the banking downturn of the late 1980s.
Looking back it was a fantastic growth experience for me. But it’s hard to see that far out into the future when MS employees are still in limbo with all this.
I wish you well, wherever you may find yourself in all this.
What kind of post is it? Aren’t we drwning in bad news for real estate already?
Do we really need a post like this? Daydreaming about layoffs in Microsoft is as sick as it gets for anybody who depends on real estate in King County. Give us a break!
C’mon. A Microsoft stockholder??! Yeah, yeah, just like all Microsoft employees. And you want people to not laugh when you argue that’s exactly what qualifies you to make such unfortunate comments. Get serious!
I hope you get really rich with the rebound in stock value coming out of this!
Jillayne and I have had several emails back and forth on this.
Jillayne, there’s going to be a whole lot of hurt, there already has been in many, many ways. I have never met an “underperforming” Microsoft employee. They work like dogs! Day and night, and often through the weekend.
Think Depression:
1) Recently, a man I know had all of his jobs cancelled, lost his house that he was lease purchasing, was getting food from the food banks and had to farm out his two children to two different friend’s homes. He had no idea where he himself was going to live.
2) A woman I know called as she was siphoning out her lawn mower to get enough gas for the car so she could get to work…she is losing her home. She is in a job that pays a lot less than when she purchased the house.
Every day there are more stories about people in dire straits, and there will be more and more.
I remember the last recession vivdly and witnessed firsthand the many people damaged in the mass layoffs. Not just the people who were laid off, but the people who weren’t. Like I said, a whole lot of hurt.
I saw a grown man, well respected professional, walk into a meeting in his jockey shorts. The stress sent him over the edge. When we took him over to the hospital, there were three other employees at the hospital with stress disorders…we had no idea until we saw them there in the waiting room.
Then we learned of another of our co-workers found dead in a dumpster on the freeway. He left work and went over the bar…we’re still not sure what happened to him. He obviously got drunk and they never found out how he ended up dead in the dumpster.
I saw many, many lives ruined. With so many layoffs…people finding new jobs will not be easy. Families will suffer, people will suffer, they already are.
This is a time for compassion on a massive scale, and it will get much worse before it gets better. Many people got rich at Microsoft on the backs of many workers who deserve at the very LEAST our compassion in this situation.
I can’t imagine anyone being “pleased to hear” about this.
Cautious Buyer,
I spent a good many years managing many Private Foundations and giving money away for a living, back in the seventies and early eighties. There are always tough choices and there is never enough money to go around.
This Country is going to be in a world of hurt, as I said above it already is in many ways. It’s a time for people to pull together, not to shrug their shoulders and make judgements about other peoples pain.
I would guess that given the nature of MSFT’s business (they’re not making tangible products–they develop things), that any layoffs would be the result of cancellation of a product, such as something like the Zune (I’m not saying that would be the product–just an example). Microsoft is about development of products more than the production of products.
The financial crisis has been been tough on companies that develop tech products, but MSFT is not a borrower, so I don’t see why the economy would effect their hiring. (Although saying that I realize I haven’t looked at one of their financial statements for years and don’t know what their typical cash flow looks like.)
As to the original piece, I think Jillayne is probably a bit overoptimistic thinking that layoffs would be first about productivity and second about politics.
Hi Kary,
The MS products may be produced elsewhere but they still produce products.
I just bought an XBox 360 for my daughters for Christmas, all three of our laptops are running Windows Vista (even though the girls begged for Apple laptpps) and my phone runs on Windows Mobile.
I don’t know who actually manufactures the XBox, or the MSFT mice, or who even manufactures the DVDs that the various products come on. I remember years ago MSFT sold off it’s division that produced the floppy drive versions of their software, so I’d guess they don’t currently actually produce the CDs & DVDs that their products come on. And obviously the new products (computers, phones, etc.) usually don’t require any MSFT manufacturing–the manufacturers just copy the software onto their products.
I guess we’ll just have to wait and see if there are any layoffs, and if so, what divisions they are in. My point is mainly that MSFT makes money largely by developing products for sale 2-3 years down the road, so to the extent they cut back there they will be harming the company, not making it leaner and meaner.
Hi Ardell “I can’t imagine anyone being “pleased to hear
Jillayne,
“A corporation has one goal: to maximize profits for shareholders within the bounds of the law. ”
Well, I run a small corporation, and that is not our one goal. I think it is thinking like that that is a big part of the reason that we’re in this financial mess/recession/depression. Too many companies, and individuals, looking at short term gain rather than longer term issues.
Perhaps if more businesses also looked at the social and environmental impacts of their business, and not just the economic ones (especially short term), we might not be in the situation we are now…
Gene
Ardell,
Just because people are “working a lot of hours” does not mean they are doing their job well. If people are working nights/weekends/etc. regularly then either they, or their managers (or their managers managers) are doing a pretty POOR job. Yes, the occasional “extra time to meet a project deadline or fix a critical issue” happens – but when that becomes common place, then there is something VERY wrong. Often it’s not the fault of the people in the trenches – but sometimes it is.
Having said that, if people are working that hard and not working effectively, their managers should be finding ways for them to work more effectively. There are just times that people don’t fit in the organization where they are currently working.
I’m sorry if you (or anyone else here) find it insensitive if someone speaks the plain truth (or at least what they feel is the truth) – but I personally prefer to have very honest, open discourse.
Gene
Hi Julie,
“What kind of post is it? Aren’t we drwning in bad news for real estate already?”
This is a post where we can talk about what MS layoffs might mean, since they haven’t materialized yet. Yes, we’re totally drowning in bad news for real estate. I don’t believe this is a bad news post regarding real estate. In fact, maybe this news will prompt homeowners on the eastside to begin lowering their prices instead of holding on to pie-in-the sky fantasies about the value of their home. When prices start to fall, then buyers will finally get off the fence. I was at Microsoft this past summer and met many homebuyers who were sitting on the sidelines waiting to buy because they felt home values were still too high on the eastside and they felt like they couldn’t afford to purchase a home at those high values.
“Do we really need a post like this? Daydreaming about layoffs in Microsoft is as sick as it gets for anybody who depends on real estate in King County. Give us a break!”
Well I’m not daydreaming and I don’t feel ill. Reuters and WSJ are pretty credible sources. I depend on the real estate industry in King County and believe that this may actually help get the market moving on the eastside.
“C’mon. A Microsoft stockholder??! Yeah, yeah, just like all Microsoft employees. And you want people to not laugh when you argue that’s exactly what qualifies you to make such unfortunate comments. Get serious!”
Actually, I have an M.A. in Psych and spent three years studying philosophy, business ethics, corporate law and corporate ethics. There’s a great book called Ethical Theory and Business by Beauchamp and Bowie that lays out the whole stockholder (Friedman) and Stakeholder (Freeman) theory.
Ardell is arguing from the stakeholder position and I’m arguing from the stockholder position. We’re having a conversation about possible MS layoffs here on RCG….hundreds and hundreds of message boards are already doing just that.
From personal experience, people who are going to be laid off typically “know” internally that it might be them, and this actually gives that person time to prepare. With large labor unions, there are laws that require employees be given a set period of time before the layoffs. In fact, in Washington State, we have labor laws that address this as well.
“I hope you get really rich with the rebound in stock value coming out of this!”
Thanks. I hope MS employees holding stock also prosper.
I’m sure that any minor bump in stock value won’t hold. It will be a long time before the stock market climbs back up to anywhere near where it was.
Hi Gene,
Thanks for stopping by RCG. A publicly traded company has to work for it’s stockholders. A privately held company can make decisions that might not lead to immediate profits but may lead to future profit.
A good example of this is Homestreet Bank. When subprime loans came out, (they’re privately held) they made a decision NOT to offer these loans to their bank customers for now obvious reasons. Instead, they offered those customers FHA loans and last time I checked, Homestreet is doing just fine. Let me find that article. Here it is:
http://www.ethix.org/article.php3?id=396
I agree with you that a corporation that *only* exists to maximize immediate profits for stockholders may make some unfortunate decisions.
In terms of a corporation looking at social justice issues, yes, this can also be true of a mature corporation such as Starbucks with their “fair trade” coffee. This is more difficult for a new corporation. It can also be said that without profits, a corporation would not be in a position to offer any “social justice.”
In terms of being a corporation that expouses “green” benefits, I would argue that if the decisions leading to the “green” activities of the corporation do not lead to profits for the stockholders, there would be no “green” movement unless we are talking about a non-profit corporation or a corporation that exists for reasons other than profitability…..or soon to be government supported jobs.
There are corporations that are built on the foundations OF social justice such as Muhammad Yunus’ Grameen Bank and people who invest in those corporations are doing so for reasons other than a monetary return on investment such as for reasons of virtue.
For the record, I am extremely pro microlending not only in developing nations but also for here in the U.S.
I can see what Kary means. The bulk of Microsoft’s work is developing products, not building or delivering them. At a manufacturer layoffs would mean building fewer things right now, while at Microsoft they would mean less development work for new games, Window’s versions, ect., several years in the future. I would think that would decrease the wisdom of layoffs since they could reduce Microsoft’s ability to deliver after the recession is over.
That said, over a million people a year die from malaria. That is over 10 times the entire worldwide headcount at Microsoft. I wouldn’t have the Gates foundation give up on fighting malaria to keep layoffs from happening at Microsoft.
That’s pretty much it CB. If they have under-productive employees the solution for that would be replacing them, not just laying them off.
And that course of action has another advantage. Pure layoffs makes the entire workforce less productive, due to the stress and uncertainty caused. Replacing people would make the workforce more productive, for fear of being replaced. What would happen to any individual would be dependent on their own actions, not corporate actions.
Somewhat related to that, back in college I worked for United Parcel in their warehouse. They purposefully hired college students because they wanted a lot of turnover. There were three main job categories, unloader, loader and sorter, the the promotions coming in that order. People would work hard to be selected to become a sorter, and their willingness to do that was dependent on sorters quitting. College students eventually graduate and then quit. Competition among the loaders made for a more productive workforce. BTW, I don’t remember the minimum performance numbers for the other positions, but sorters had to sort at least 1,500 boxes an hour. That’s a fairly productive workforce.
Jillayne,
I don’t think the issues really have much to do with “new” vs. “mature” companies – unless you mean “mature” as in “grown up” or “forward thinking”. And a private company has to work for its stockholders as much as a public one. A private company just picks its stockholders (usually), whereas public ones have stockholders pick the company. Pushing short term profits (or just “I want this now, even if I can’t afford it”) ahead of long term sustainability is the same core issue that has nailed the housing industry.
On the social side of things, this can be as simple as treating employees fairly and as human beings — which will pay off in greater productivity and better retention.
On the “green” side, most things that are environmentally friendly are also cost effective. Unfortunately most companies get locked into doing business as usual rather than evaluating better, more efficient and more effective options. You can see examples even at companies like Walmart (reduced packaging means lower shipping costs, not just environmental benefits).
Even with energy efficient building retrofits – if you go “far enough” (re-insulate, new windows, more efficient heating/cooling system/etc.) you can often save money by making your building (or home) efficient enough that you need a smaller heating/cooling systems (or in extreme cases, “no system at all”) leading to a net savings. No, this doesn’t always work out, but it’s surprising how often it can.
Looking at your business from a real sustainability/triple bottom perspective (economic, social, environmental bottom lines) tends to be highly beneficial for all parties involved – except those looking for a “quick buck” (though sometimes they benefit too!).
Gene
Inside the “career center” of microsoft.com the company lists 914 job openings in the United States.
MS lists 110 other countries for job openings. Perhaps instead of layoffs the company willl allow the employees of downsized divisions to apply for other work within the company.
During the banking layoffs of the 1980s, many people from the retail sector shifted their jobs skills over to the collections and foreclosure side.
cautious buyer and Kary, “Pure layoffs makes the entire workforce less productive, due to the stress and uncertainty caused”
What typically happens is that the remaining employees are given the other person’s projects and responsibilities, making the workforce more productive. Yes there’s stress and uncertainty however, that tends to evaporate quickly when the remaining employees realize they could be next and they step up their productivity.
Jillayne,
I would be surprised if your prediction in 26 doesn’t ring true. Those subject to layoffs often find a home in another division.
As to 27, I don’t doubt it. I was just pointing out that Microsoft doesn’t have the same reason that a manufacturer has for layoffs, that with fewer people buying they need fewer people manufacturing. Regardless of how many of their current products sell, they need just as many people developing the next generation.
You can increase productivity short term just by giving people more work and threatening layoffs, but if you make a habit of motivating by fear, the best employees will simply pick up and head to Google, or wherever they think is more friendly. Then again, maybe this economic climate is a good excuse to shed some dead wood. We will see what they do.
“I too would question any wage effect from Microsoft. When the dot-com bust occurred, the loss of all the option money didn’t seem to have a great effect on prices. ”
I heard some theory about why that was. I can’t quite remember what it was though. Something like a “shmousing shmubble” or “bousing hubble” propped up prices when they normally should have been going down. Has anybody else heard of this?
Joel,
🙂
Microsoft grew at an enormous pace for many years and they’ve even hedged their bets on staffing by using copious number of contractors for years. Those are some of the areas where they can cut as well as in their own direct staff. Also, if you consider the golden benefits level that they provide as an employer cutting direct staff and rehiring people in contractor positions could make sense as well.
Microsoft may not be growing specifically as much in the NW as they once were but they are definitely growing in areas where labor is much less expensive, such as India and China. As a former vendor to Microsoft, a stockholder, and person who still works with their employees from a real estate perspective, I don’t wish them ill as they are a major employer in our area as valuable to us as Boeing, Starbucks, Amazon, Real Networks, or any other corporate headquarters. Strong local companies, particularly with company HQ in your area, are a mainstay of not just real estate jobs but a large number of the businesses and services in an area.
“Joel wrote: “I heard some theory about why that was. I can’t quite remember what it was though. Something like a “shmousing shmubble
I read this post and the ensuing discussion last night, and I can’t stop thinking about this comment of Jillayne’s back from 18: I’m having a hard time imagining MS workers suffering from depression, losing their homes and eating at food banks, Ardell.
This is totally anecdotal, but this description is on track to becoming a frightening reality for a very good friend of mine. She has contracted at MS a few times but has been out of work (with no prospects despite avid searching) since fall; her husband works at MS, it’s been increasingly clear that his job is in danger, and his attempts to move elsewhere haven’t borne fruit.
I’ll decline to share more details out of concern for their privacy but they are definitely depressed and scared about what life’s going to look like at the end of 2009–and it may well look like the end of your supposition, Jillayne. Suffice to say that the big life events that can really decimate your financial situation happen to people who live and work in Microsoft circles, too.
I suspect even during good times MSFT has been writing big checks to the local Chapter 13 Trustee’s office for their employees in Chapter 13. Boeing also does. The idea that employees of any company are always financially well off is false.
Wow!
What set of responses from Jillayne! Amazing. I sent this thread to a dozen of people in Microsoft. People were mad.
The best one I got was: “Ouch! She just can’t help coming up with phony excuses to justify what she wrote, but the more she does it the worse it gets. And I used to think Ann Coulter was good.”
As someone who works at Microsoft I am looking forward to lay-offs. It’s not that I feel extremely secure in my job (quite the contrary in fact). On the other hand, if Microsoft doesn’t DRAMATICALLY lower it’s expenses in the next couple years, there might not be much of a company left.
This downturn is hitting us pretty hard, just as it is everyone else, and I really don’t think this will just be a temporary blip. If the global economy continues to contract for the next several years (which I believe will be the case), then a bloated cost structure like Microsoft currently has will sink us.
Let’s put it another way: while I dearly want to keep my job (which I quite like), I would hate to stay employed right now only to find there are NO jobs a few years down the road. It’s far better for a company to take hard decisions in the short term (i.e. reducing head-count, etc) to avoid taking even more drastic steps in the future.
That said, I think there are lots of things the company can do to reduce expenses without resorted to company wide lay-offs. Hiring can be tightened even more, and we can get much more ruthless in squeezing the less productive people out. On top of that, there are whole divisions that aren’t generating profits, or have a realistic plan to do so, that should be put under the microscope.
Hey, we could even look at across the board salary cuts. Why should we be paying people more than the prevailing wages? If there are equally qualified people out there willing to do my job for less, then the company would be silly to keep paying me a salary that was set in happier times.
Head-count could easily be reduced by 5% to 10% by 2010 WITHOUT any need for a general lay-off.
Sniglet, I agree with you on the getting rid of unproductive people–but that’s easier said than done. But what about my argument in #15, that a lot of what the company does is for tomorrow’s sales, 2-3 years down the road, not today’s sales?
Kary wrote: “what about my argument in #15, that a lot of what the company does is for tomorrow’s sales, 2-3 years down the road, not today’s sales?”
Sure, this is the perenial argument for keeping albatrosses around. Unfortunately, there are plenty of Microsoft products that have been around for far more than 4 or 5 years, and still have no prospect of serious profitability. I certainly think that Microsoft should still try and make investments in new strategic areas, but I don’t think we can afford to just keep pumping money into perenial losers anymore.
If a given product team has been unable to make a go of things in 5 years, say, then I doubt VERY much they will have any more success over the next few years, which will be exceedingly lean. Far better to just let them die a swift death now, and if the idea still makes sense several years from now we can re-invest at a lower cost basis. Heck, we might even be able to acquire some competitor who has been doing better than us in that space for a song a few years from now (when the Dow is down in the 2000 range).
By the way, salary cuts aren’t all bad. If Microsoft employees had their pay reduced by 15% to 30%, we would see living costs in this region fall, thereby making it more affordable, and allowing us to live on lower incomes. It wouldn’t so terrible for me to take a pay-cut since my rent would inevitably fall too.
Of course, my current landlord would likely lose this house to the bank if the rents fell much more, since it wouldn’t cover his costs, but that’s not my problem. The next owner of the house would be able to rent it out at a much lower cost.
Hi Angie,
The end of 2009 is a long way off. Is your friend 100% certain that he will be foreclosed, homeless and eating at a food bank in December? Sometimes people catastrophize what’s going on and need good friends to listen. Yes, it feels like the end of the world, being laid off when it’s happening to you. I would know this having been laid off myself. It sounds like your friends are lucky to have you to talk to. Anxiety isn’t necessarily a negative thing. Anxiety can be fuel that propels a person to take that next step. If your friends are truly showing signs of clinical depression, you sound like a compassionate person and I’m sure you would help them connect with a mental health counselor.
Hi Kary, Regarding comment 34, are there public records available for people to search that would show how many employees at a certain company were in chapter 13?
Hi Julie,
Thank you for promoting raincityguide at Microsoft. I appreciate your enthusiasm in promoting this piece. Please invite your co workers to join us if they have comments they would like to share.
Instead of personal attacks veiled as if they were said by a colleague, I invite you to join the dialogue about the future of Microsoft. For example, would you prefer that there were no layoffs? Certainly that would be fantastic for everyone all around, including Angie’s friends. What are some of your ideas for Microsoft to retain and grow profits at it’s current staff levels?
Thanks for your participation.
Hi Sniglet,
Thanks for sharing some of your ideas about cost-cutting measures that would not reduce staff. I know a handful of people who have been on mandatory salary reductions for over a year now. First, all employees were required to work 4 days/week and had their salaries cut. Then 3 days/week with further salary reductions. The salespeople were told that their prodution was being watched, so many still worked a 40 hour week. Then the salespeople had all commisions taken away. Next, expenses were cut. The salespeople had to pay for all their own expenses such as cell phone, gas, and so forth. One person I know when from making 90,000 per year to $30,000 per year and it’s less than that when you factor in all the expenses moved from the corporate side to the individual salesperson’s side. At this point, many employees are frustrated and would rather see the company make even more layoffs instead of asking them to further reduce their salaries. Some of these people have sold their cars, filed bankruptcy moved in with relatives, and even given up their children to the other spouse full time because they could not afford to care for their child (this was a divorced person.)
If I were in that situation, I’m not so sure I’d be in favor of such deep salary cuts. These people feel tied to that corporation. I’d cut loose and find other work. I also know that not every person feels like he/she could just leave and go elsewhere.
Jillayne wrote: ” it feels like the end of the world, being laid off when it’s happening to you.”
This is SO true. I have worked in companies going through lay-offs in the past (and have been laid off myself), and saw that for most people the fear of what was going to happen was worse than the actual event. I had a friend in mid career at a large tech firm in California in the early ’90s who did nothing but brood, and play solitaire, in his office all day for a year waiting for the axe to fall. When he finally was given a pink slip he wound up doing very well in a new career.
Jillayne wrote: “If I were in that situation, I’m not so sure I’d be in favor of such deep salary cuts.”
Sure, a salary cut could mean significant pain for some individuals with fixed costs, etc. But it could be good for the company’s long term health, and that is the most important thing.
Jillayne, the bankruptcy files are public records, but the information on employer is not compiled by anyone, as far as I know. And I think only the Chapter 13 trustee’s files would show changes in employment after the case is filed.
Angie,
The percption of “a Microsoft employee” and the reality, often run far afield. There’s a misperception that”
1) Microsoft employees are all in “the IT field”
2) They all make lots of money
3) They all have a huge bankroll from Microsoft stock
4) Insert your answer here
Many, many people dependent on Microsoft to sustain their families do not write code, are not in the IT field, and even if they do, many of the places they would go to work are Microsoft vendors, who will also be affected.
Many of my clients who work at Microsoft do not have huge salaries, have no substantial investment savings accounts, do not own “McMansions” or drive expensive cars, and do not fit the mold people have created in their minds.
Depression can start before even one person is actually laid off. Being sad for fellow workers is HUGE. Even if someone is not afraid for themselves, being afraid for someone else they care about can be just as painful.
If it is true that “The Company” should care more about “the stockholders” than the people who actually add the value, and have added to the value for many years, then “something is rotten in Denmark”.
Ardell wrote: “If it is true that “The Company
Hi Ardell, here is Milton Friedman’s theory.
“Milton Friedman, who won the Nobel Prize in economics when he taught at the University of Chicago, advocated this theory. Friedman asserted that in a free society, “there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits as long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud.”
From Contemporary Business Law, Cheesman, Prentice Hall, Special Edition Series, page 42.
There are other theories. The Moral Minimum theory suggests that a corporation’s duty is to make a profit while avoiding harm to others. Laws have been established that enforce the minimum moral standard. On the topic we’re currently debating, there are labor laws which would address the minimum number of days notice employees would receive if there was going to be a certain percentage of workers laid off.
Recall that in most cases of the massive mortgage lending layoffs during 2007 and 2008, those employees were fired with no notice, including 700+ here in Mountlake Terrace from MILA. These companies found a loophole in existing labor laws.
There’s also the Stakeholder Theory which says that corporations would violate stakeholder interests if it viewed employees solely as a means of maximizing stockholder wealth. This theory is criticized because it is difficult to sort out the conflicting interests of stakeholders. For example, in selecting who to lay off, some stakeholders may benefit (like stockholders and creditors and mental health professionals who earn money counseling anxiety-ridden employees) while other stakeholders may not (like current employees and local real estate agents and loan originators who earn commissions when a home is sold to an employee.)
Then there’s the Corporate Citizenship theory that argues business has a responsibility to do “good.” Under this theory, corporations owe a duty to subsidize schools and save the environment. Social power is seen as a gift from society and should be used to promote the “good” in life. The criticism of this theory is, how do we decide what is “good” when there is a never ending limit to society’s problems? In addition, potential stockholders might be reluctant to invest in corporations if profits were used to subsidize what has been seen as government’s role in society.
There are some money market funds that invest solely in corporations who are good social citizens. The PAX fund comes to mind and investors are investing for reasons other than maximizing return on investments.
Jillayne,
Many thoughts come to mind, from the bottom up:
1) Re PAX funds, “doing good” is different from “refusing to participate in bad”. I remember having to research companies who profitted from South African abuses, and eliminate those companies from portfolios…or not. The portfolios involved were Private Foundation funds, University endowment funds, and such. Seemed inappropriate for an entity that spent its income for good, to accumulate that income from companies supporting directly or indirectly “bad” activities for greater profit. Where one draws the line is difficult to determine, but there are lines to be drawn. Along the lines of bad things happen when good people do nothing. There’s a difference between “profiting” and “profiteering”.
2) Corporate Citizenship – Odd how one cannot build a hot dog stand without first giving the City an Impact Study, but can talk about laying off thousands of people, without regard to the impact on the community. Don’t you think?
3) Stakeholder Theory – Clearly a stockholder should owe some duty, at least temporarily, to those who contributed to their previous gains.
4) Massive Mortgage layoffs does not apply, as the product was eliminated from general public use. If the product you are supplying becomes obsolete overnight…then there are no short term remedies that would “tide the company over” until better times.
When the government reduces it’s workforce in order to eliminate the deficit…we’ll talk about Milton Friedman. Social responsibility requires leaders for others to emulate.
A company who was hiring MANY just recently, should first enact hiring freezes, raise freezes and permit a period of natural attrition, before “talking about” large layoffs to appease the stockholders and support stock prices. Layoffs should be a “last resort”, not a “let’s announce layoffs to build stockholder confidence”. Seems there are many, many other places where Microsoft can limit investment of resources, before hammering on the human factor. Aren’t they expanding infrastructure as we speak? Who is going to be sitting in those new facilities?
Ardell wrote: “A company who was hiring MANY just recently, should first enact hiring freezes, raise freezes and permit a period of natural attrition, before “talking about
Hiring freezes are more something government does, and they don’t seem to make any sense (typical for government). What’s the exchange that leads to a hiring freeze being the logical solution?
Employee A: “Our business is in trouble. What should we do?”
Boss: “It’s tough to make a decision like that. How about a hiring freeze? We should have our staffing for each department based entirely on how many employees quit, retire or die.”
Kary, hiring freezes aren’t freezes. They still hire for critical positions and skills. You just have to come up with a better rationale to hire the person.
Jillayne and Ardell,
A lot of time can be spent on the philosophical viewpoints of who a company exists to serve. I would just say a few things.
The shareholders definitely owe a duty to the employees. If they don’t fulfill that duty in good faith, they won’t have employees, or only the type whom no-one else would hire.
The shareholders and employees both need to create a good product for the customer. If they can’t create something the customers want, the company will cease to exist. I would argue that the purpose of a company is to create a product or service that serves their customers. That is what the company is paid for, after all.
We can probably all agree that a company must do all the following things
1) Generate shareholder return
2) Be the best place for it’s employees to work
3) Create something that customers will pay for
If any one of the three doesn’t happen, buh bye.
I think every company should have a little box outside the door where every employee drops a happy face or sad face every morning. Anonymously. On the back they should put why.
Too many people hate to go to work because of one or two people that make everyone else’s life miserable. Get rid of those people first 🙂
Hi Ardell,
I did mention this in the original post:
“The employees that make their supervisor’s job a daily hell will be second on the list.”
However, most people leave a job because of management. The person reading the smiley faces needs to be someone other than the manager. Remember Tom Peters? His idea was that upper manangement must get out of the office and walk around and interact with all employees, not just the upper management team. The smileys need to go right to the top.
Jillayne,
I saw that. Just never saw a Supervisor put up with an employee who was making their life a living hell. Wouldn’t that employee get fired a long time ago? It’s usually the other way around.
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5,000 jobs.
Microsoft Corp. said Thursday it would lay off 5,000 workers over the next 18 months, including 1,400 jobs today, marking the first time in its history that it has laid off workers across all of its operations.
Imagine what they would do if their revenues were down YOY!
The inability to offer future earnings and revenue guidance is huge.
Unfortunately, I think things are only going to get worse. We are entering a dramatic period of global deflation and economic contraction, and MSFT won’t be immune.
I have a podcast outlining why deflation is in store at http://msurkan.podbean.com.
“So you’re putting the bubble back to 2000-2001?”
That’s when it started. Prices weren’t too out of whack because it was just the beginning. But it’s pretty clear that prices were off. You even said it yourself: “When the dot-com bust occurred, the loss of all the option money didn’t seem to have a great effect on prices.”
“The people making the predictions back then missed predicting the top by almost 100%.”
Just because prices didn’t fall in a given time period doesn’t mean a bubble wasn’t forming. Apparently you define a bubble as a time when prices fall. Most people would call the the bursting of the bubbble. I don’t know of anyone that called the top in 2001, but if it makes you feel smarter to pretend that there were people calling the top, then good for you.
Joel,
I was in CA in 2001 and the bubble started there in 1998. Seems to me that some people from CA bought in WA, starting the bubble here, because prices were getting out of whack there first. Does that sound right?
“some people from CA bought in WA, starting the bubble here”
Some people like, um, Ardell?
Just kidding, but that is the perception from some native Seattelites who think those dang Californians migrated in and “ruined our town”. There is probably a lot of truth to the idea that the Seattle bubble was fed by the bigger California bubble nearby.
Joel wrote: “Just because prices didn’t fall in a given time period doesn’t mean a bubble wasn’t forming. Apparently you define a bubble as a time when prices fall. Most people would call the the bursting of the bubbble. I don’t know of anyone that called the top in 2001, but if it makes you feel smarter to pretend that there were people calling the top, then good for you.”
I can’t get a source all the way back to 2001, but October 2002 Money Magazine had a bubble article, and picked Seattle as one of three cities most likely to pop, citing Economy.com as their source.
Back on the MSFT layoffs, on TV I heard them also say that they might hire 2,000 people for new projects. I haven’t looked for a print source for that, but it sort of makes me wonder how serious they are about having net layoffs, as opposed to merely jettisoning some loser projects of the type I think Sniglet was mentioning. Couple that with only I think 1400 of the layoffs being current and the rest being far out, and I sort of wonder what will happen down the road with their employment levels. To reduce their employment levels they might need to start going to Employees Anonymous meetings.
MS stock is tanking. My house is next door to MS, and I take no pleasure seening MS tank. However, we of any common sense have know this has been coming for years. MS stock value is “in the mind of the beholder” sort of the like the USA paper money. I cant say much for my opinion of MS managment. Only by dumb luck did the nut job that ran Yahoo refuse the $45 Billion for his firm, that has an underlying value of perhaps $1B. Thus Ballmer has the $45 B of cash still.
But Ballmer plans to spen half of it buying MS stock. Big mistake. $22.5B simply can have little to zero mathematical effect on a company values at over 1 Trillion. MS was way overvalued.
Boeing has something like 10 time the MS’s gross revenue on a per stock share basis. MS simply does not have a managment that has the brains to grow beyond the monopoly of the OS business. They make all new ventures have this requirement “It backs up the MS OS Monopoly” and make all new venture lack this requirment “profit”.
What I mean is this, MS would have been better off starting farms grwoing oranges in Florida, ratehr than so much investment in the marginal returns of propping up the monopoly with game machine (now a loss venture) and Embedded Windows (makes close to zero profit). The emotional attachment to the OS monopoly wont let their management think clearly.
“Boeing has something like 10 time the MS’s gross revenue on a per stock share basis.”
Apples and oranges. Both companies have high development costs for their products, but once developed MSFT’s product costs next to nothing to produce. Remember years ago when AOL would send you 2-3 CDs a week hoping you’d sign up? MSFT’s products don’t cost much more than each one of those mailings (actually some are entirely electronic and cost less than one penny).
Oh, and MSFT’s stock price doesn’t plummet every time one of its products crashes. 😀
A company that makes 4 billion in profit for a quarter and then lays off 5,000 people has some serious issues. Bring in the union. It’s just more greed and justified by a lagging economy making it more dispicable. Computers are making us all less human.
Hi Jack,
I believe computers help us to connect with our fellow humans in ways that otherwise would not be possible.
i just wanted a chart and i see this, i dont get any of it, and im very frustrated and i just want to know the layoffs or hiring freezes in the last 5 years for microsoft are for a school project, and im very emotional right now, my dog died and my boyfriend left me and its valentines day on saturday and im just so tireeeeeedddddddd.