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.
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.
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.
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?
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.
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.
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.
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.
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 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.
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.
- 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.
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.
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.
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?