Hacker News Reader

> 1) In my career, I've never seen layoffs which were at all good at selecting the bottom 10%. Who gets dropped is pretty random.

This is very true, and I would say definitely the biggest weakness of my point. In a theoretical world in which you can drop the bottom 10% of performers, I think that's clearly the right thing to do, but obviously practice is not the same as theory.

I will say the one other thing about 10% paycuts for these companies that would drive me out is that the companies are still making lots of money. If you're in a business where belt-tightening is plausibly necessary (something that has boom/bust cycles, for example, and hits a particular bad bust one), maybe I can accept a pay cut. If you're cutting my pay but still maintaining a shareholder dividend, I am gone.

> If you're cutting my pay but still maintaining a shareholder dividend, I am gone.

After 1-2 years in any big tech company your equity surpasses your salary.

This has not been my experience, at all. Have I been working at the wrong FAANGs?

What tech companies are even doing dividends anymore? I guess Microsoft has a small one?

Apple

https://investor.apple.com/dividend-history/default.aspx

91 cents per year on a 138$ stock? And this is considered good?

Well, I can understand now why everybody gets out immediatly if stocks drop a little bit. Average daily movement of the stock is 4 dollars, and 8 is not unheard of ...

The question was which tech companies were doing it at all. I provided some data but not a value judgement.

> Having seen both, I'm much more likely to leave /after/ a layoff than after a 10% paycut.

It's different when layoffs are happening across the industry.

When everyone is doing layoffs, seeing your company do layoffs isn't as surprising. It's expected as everyone adjusts to changing market conditions.

But when everyone is doing layoffs and your company cuts your compensation, it's a sign that you might be underpaid relative to what you could get at other companies. So people start looking around for an opportunity just to get back to their old salary.

The other problem with paycuts is that you can only really do it once. In a slowing economy like ours, it's not surprising to have multiple rounds of layoffs as companies cut departments and react to dropping sales.

But having multiple rounds of paycuts would guarantee that your best employees all leave for other companies where they can get back to their old compensation levels.

As an employee, part of the upside of a pay cut is that I'm not looking at successive rounds unless the business is still bleeding.

As a business, it depends on the type of business, but pay cuts tend to be a more effective way to stem bleeding. For example, a consulting firm (so horizontally scalable) with 90% of the employees can only do 90% as much work. Revenues dip. That leads to a cycle where further layoffs are necessary. A pay cut, on the other hand, doesn't have the same dip in output as a layoff.

Now, all that said, many businesses (including some that did layoffs) are vastly overstaffed, to where productivity would be higher with fewer people. But even that can be managed more gracefully.

> Having seen both, I'm much more likely to leave /after/ a layoff than after a 10% paycut.

Would you also stay when you get a pay cut, with the only reason being that the company wants to maintain a net margin above 30%? Because that is somewhat happening right now.

Personally: I wouldn't.

That depends. How well am I treated when times are good? If my company followed Lincoln Electric’s example, I’d stay. If not, the whole thing would unravel.

That’s been the one conclusion of every study on Lincoln. You can’t mimic a small part and expect similar performance.

People seem to be assume they layoff only poor-performers. That’s not even close to true - in the case of layoffs anyway not the annual trimming some companies do. Entire depts will be laid off. In all likelihood some of these people will get their severance and also get to rejoin soon-ish with a pay bump. It also leaves a bad taste in the mouth. All in all, indiscriminate layoffs - like the ones happening now are just self-goals.

I'd leave ASAP if I got a 10% pay cut so the poor performers could remain coasting. Thank you, but no thank you. I'd only consider staying in this scenario if I felt there weren't poor performers around, which is almost never the case in the big companies capturing the headlines right now.