American Capitalism 101. Sacrifice future growth for immediate profits.
Meta is doing the exact same thing:
Mark Zuckerberg’s social media giant will reportedly hand out roughly 8,000 pink slips on Wednesday, May 20, eliminating about 10% of its global workforce. Notably, though, these cuts will arrive on the heels of one of the most lucrative quarters in the company’s history: $56.31 billion in revenue and $26.8 billion in net income for the first three months of 2026…
https://moneywise.com/news/top-stories/meta-layoffs-8000-workers-zuckerberg-ai-spending
Slashing 10% of your workforce annually is something Jack Welch thought of when he was CEO of General Electric; essentially it shifts that 10% of staff overhead cost straight to profits per year.
The justification they give for the figure is that it’s the lowest performing 10% according to internal key performance indicator (KPI) metrics. What this effectively does is two fold:
-
Anyone who’s focusing on delivering stuff the company needs long term isn’t always or sometimes never will produce nice neat KPIs that can be measured along with the rest of the company. This means these people are under constant pressure and can often get swept up in the firings.
-
It makes KPIs, a measuring tool, the target which as any statistician will tell you that when you make the measurement a target it ceases to be a good measuring tool. Because everyone is automatically incentivised to deliver KPIs NOT the actual company deliverables that generate the added value and therefore the profit.
This means after 5 to 10 years of this cycle all that’s left of the company’s institutional knowledge is how to deliver for KPIs and the sycophants who best adapt to this reality. You get a hollowing out of the company.
If this AI fuelled trend keeps up then companies like Cisco and Meta will eventually implode at some point.
I remember the grocery store I worked at started posting the rate for each cashier of items scanned per minute logged into a register. They didn’t say anything about it, but I now realize they were probably leading into using that data as justification for something.
My dumbass 16 year old self thought “I’m going to get that number so high it breaks the system.” I would lock my station after the previous customer, and take a little time to face all of the UPC codes and look up produce codes and make a general strategy. Then, I would unlock the register, scan like a madman, then lock it and casually start bagging. The customers would get concerned they needed to hurry up based on my fervor, so I would tell them “Take all the time you need, see that show yesterday?”
Next time they posted the rankings, my number was 20x as high as second place. After a few weeks of getting my number a little higher each time, my boss’ boss came by and told me to knock it off since I was polluting their metrics. Next week no new rankings.
I like to think I inadvertently helped prevent KPI nonsense.
It also fosters a culture of non-cooperation with colleagues (because they are now your competition), where workers and teams try to sabotage each other, or at least not help, and throw each other under the bus. So there’s mutual mistrust too. And no one wants to take a risk and innovate, leading to further stagnation.
makes KPIs, a measuring tool, the target which as any statistician will tell you that when you make the measurement a target it ceases to be a good measuring tool
This came up recently elsewhere and is known as “Goodhart’s Law”
Yup. Not all value is easily and directly measurable. Trying to overmanage and only value measurable factors is incredibly counterproductive. But hey, that makes the stock price go up. So who cares about anything else.
This means after 5 to 10 years of this cycle all that’s left of the company’s institutional knowledge is how to deliver for KPIs and the sycophants who best adapt to this reality. You get a hollowing out of the company.
That happened (and continues to happen) to my former employer.
After years of layoffs and outsourcing, the company doesn’t have anyone on staff anymore who knows how half of the systems work.
Theae days, if something is more than 5 years old, the operations and maintenance staff (entirely outsourced contractors now) have to pray the documentation is correct (or even obtainable) if they have a hope of fixing it if anything breaks.
My experience is nowadays documentation is even going to go away, as the answer to fixing things is more and more going to be “get Claude to fix it”
the answer to fixing things is more and more going to be “get Claude to fix it”
Yeah that will certainly work (eyeroll) to deal with things that were done 10 years ago as a workaround to some other undocumented incompatibility.
With Meta it very much looks like overhiring. What are those 8000 workers even doing, designing CSS for each individual ad on Facebook?
This blows my mind when I try to think about it. And this is only 10% of a supposed 80,000 globally. Facebook owns a bunch of companies though so I’m assuming they’re being counted too. Instagram, WhatsApp, Oculus, etc
Implementing additional forms of wankery in the “Metaverse”.
God willing
I actually think a few % a year is healthy (1% feels right to me). I work at a company where we never lay anyone off and it’s led to a bunch of deadweight in the company that make work harder for everyone else. You gotta have some mechanism to let low performers go.
10% is way too high though
You gotta have some mechanism to let low performers go.
That’s called “firing for cause.”
Of course, that actually has accountability attached to it. Misusing layoffs for that purpose is an end-run around that accountability, which is why sociopathic corporations prefer it.
“For cause” at my company is gross malfeasance, not merely performing well below expectations. It’s the employer again putting themselves first: problematic employees are “harder” to get rid of than the status quo of letting them stick around indefinitely. Sucks for everyone else who has to work with them. Every company should cull a small number of people every year.
-
I was about to say, two layoff posts on my feed back to back. Not a good sign.
This will continue to happen until sociopath executives see consequences.
Well if you don’t have to pay people then yah, revenue will go up for now.
Collect your bonus, get your stock, bail and move to the next job. Sell the stock before the damage you caused rears its head.
Finance should be banned
Fucking suits.
Shit like this is why I had to learn the trades as backup while I was still in the game, in this case training to be a computer technician.
You better thank the Job Creators for the right to work, Serfs! Now go gratefully into the gig economy, singing the praises of Tr*mp.
Can’t be expecting the peasants to share in the success of their hard work! Better to fire them and rehire them for cheaper when they are desperate.
It’s an interesting case for leftists because there is no means of production to be seized. Nothing needed to create websites or apps is hard to get or proprietary. If anything, the means of production is capital itself, because only by paying people can you direct a lot of them to spend time on any particular thing. I wonder if communism has already addressed this case somewhere. I’m hardly educated on the topic.
Part of me is glad I’m getting the hell out of this system in the near future. My heart goes out to younger people being royally screwed by it and I don’t see any way out of it within that system.
I’m with you. After this position ends I’m changing careers. Tech has gone to shit lately.
The stock market is a weird thing - prices seem to be tied to whether a company can make more this quarter than last quarter, and not tethered to whether a company makes a profit. I figure that they made record revenue and now need a strategy to make even more profit next quarter, which they hope to achieve by reducing expenses via layoffs.
I don’t like it, but the economy is more tethered to speculation than reality.
It’s a pyramid scheme. You participate long enough to be able to move your money to a more stable platform and live off the measly interest that provides.
it’s not weird. it’s literally how capitalism works. it feels weird because it actually feels fucking wrong and disgusting but we are propagandized into thinking this is ok.
Nah, not even the basic “its capitalism” excuse works anymore for that idiocracy. Capitalism may force companies to increase earnings, which is already stupid enough in itself, but the timeframe that’s measured in got reduced so much in the last few years that even short term goals are impossible without cutting costs.
Ten years ago monthly earnings were at most an indicator, what mattered most were fiscal years. It slowly evolved to quarterly earnings and now we are at a point were a single “bad” (as in, not as much profit as last month) can plunge your stock prices by 10+%.
Yes capitalism always fucked over the working class, bit it wasn’t made to force big, profitable companies to self destruct for 0.5% higher monthly profits.
i think you neglect to consider capitalism’s growth (as a mechanic) itself. What you describe is exactly how it is working. What I believe is that this is an evolved economic system, designed from the start to “eat its own dogfood” so to speak.
Line go up dog, just give in and roll around in the slop with the rest of us.
What is the logical progression to this kind of a thing. Is there going to be a turning point or is bottom a long long way to go?
I’m just brainstorming here, but do layoffs pave the way for hiring new grads at entry level wages, with more cutting edge knowledge?
Sure, that overlooks the loss of tacit knowledge that keeps the company running. I haven’t actually figured out yet how large companies can keep packaging out their senior employees that glue their disorganized systems together with undocumented knowledge.
That’s an interesting question. Either there isn’t much tacit knowledge in the company that they can’t put in onboarding documentation, or the company is focusing on short term gains at the cost of long term stability
Neither have the large companies. The only difference between you and them is that you have acknowledged this loss of knowledge.
“Correlation.”
Line go up!!!
Cisco can take their campus fabrics/DNA and shove it up their arse. They stopped trying a long time ago and IOS is still a pain to use.
A wooden baseball bat starts at like $75 for quality wood and never runs out of ammo, in case you’re worried that there are more rich sociopaths than there are bullets in your backpack.
Seems fine, employees were well compensated and supported. Its a big company 4000 isnt a huge amount. Interesting to see a bigger pivot to silicon and optics.
