> don't over hire during COVID under the expectation that the escalated demand will remain permanently forever
I don’t think that follows. You want to overhire to make extra profits. Then just downsize when it’s over. Which is almost exactly what all tech companies are doing now.
Did those extra people jump into productivity immediately during the short term boom instead of taking time to learn the business and fit in, like developers always need? By what magic did all the large US companies manage to do that?
The boom itself lasted for about an year. It's enough time to get some of those people to contribute positively. It's not even close to enough time to compensate for the drag of increasing your headcount by 30%. And the most competitive period was the first few months, where new people were all drag.
Nope, I do conclude that they expected the boom to stay forever. They could have expected things to stop growing that quickly, but they clearly didn't expect a contraction.
To be fair, none of them are on the area of economical forecasting. And the crazy decisions of the US monetary policy isn't something that one could expect people to just guess. But the sheer amount of overreaction from those companies on both situations isn't something to take lightly. That's clear display of incompetency.
Wouldn't you prefer to hire contractors to fill short-term demand and transition them to full employees if the demand ends up being more robust than expected?
> I'm guessing many of the full-time people they hired wouldn't have taken an offer as a contractor.
Speaking for myself, personally, if I were to join a role as a contractor basis rather than a full timer, I would expect extra compensation to justify the added risk of being laid off whenever. Hiring people by telling them they're full time, and then laying them off and treating them like contractors, is a breach of faith by management by hiding the risk factor of "demand after COVID will return to normal level" behind pretty promises. They made some extra profit by underpaying the nominally full time workers who were left carrying the extra risk of losing job, and it's showing now.
Coming to US from Europe - in US employees are contractors(hi at will employment), actual contractors are just people who are smart enough to know that.
Well, contractors don't get severance when their contract ends, whereas layoffs for employees are typically attended by some small payout. That's not much but it's not nothing. Contractors also have to deal with their own taxes and buy their own insurance (for worse rates).
Of course, if I were a contractor I could probably get double my current salary ... but I'd still rather be an employee, even in the face of at-will employment. Particularly given that my employer is doing great and didn't over-hire during COVID.
My brother has a degree in Aeronautical Engineering, and contract work was his foot in the door to a full-time developer position at Amazon.
When I quit my contractor job, subcontracted out to a defense contractor over 20 years ago, the primary contractor offered to hire me directly. It was an open secret that my employer hired people strait out of college, billed them out at very high rates, and the client was allowed to poach a top performer now and then in exchange for paying such high hourly rates. I went from being a contractor to a regular employee at a startup.
Granted, this is a sample size of two.
Though, in neither case were the contractors in question independent contractors. I suppose you're getting at that few independent contractors are willing to go back once they taste the flexibility.
I mean, yeah. I was a contractor but not an independent contractor, and I was paid like shit. My take-home has gone up nearly three times since leaving that world and joining a company full-time in 2018. Independent contractors have it much better, as long as they're able to keep work in the pipeline.
I'm not going to bother engaging with you from the perspective of morality and ethics, since it seems unlikely that would resonate with you. Instead, I will point out how wrong you are purely from a financial lens.
The goal of a CEO of any company is to generate long term shareholder value - eg. to make the company more valuable than they found it. Mark Zuckerberg has been the only CEO that Facebook has ever known, and obviously he has created a lot of shareholder value during his tenure. On the other hand, Facebook has also lost about half of its value in the last year or so. A dropping valuation is typically a lagging indicator of a major strategic blunder or disruption. The market is essentially saying that he has done a rather poor job for the past 2-3 years and the outlook of investors is diminished accordingly.
And yes, hiring a ton of people and then having to lay them off in a short time frame is a huge part of this. In a tech company, profits today are the result of long term execution of strategies and represent a return on capital investment. A designer or engineer hired today is not going to deliver much that will create revenue or profit this year. There is an old axiom in tech companies - if you want a little profit today, hire a sales exec. If you want a lot of profit in three years, hire an engineer.
Bulking up your technology team only to have to skinny it down later is a massive strategic and employee distraction and is absolutely a sign of mismanagement.
You know, back in the golden ages, employers had actual relationships with their employees and the communities they served both as a provider of goods and a provider of employment.
That was the time when the economy actually worked for the people.
Of course they are, the issue is that their side-effects aren't easy to track in pure quantitative terms and even less in the short/medium-term.
Layoffs affect morale, in R&D you see that directly on engineers' productivity and how product managers start to behave. PMs either get risk-averse (don't rock the boat, don't mess with profit-making schemes) which stifles innovation, or they get afraid on being on the next round of layoffs if they don't make an impact quickly, they start to push teams to deliver into their reactionary mode, catering more for short-term impact rather than long-term strategic value.
It's a complete mess that you won't see in pure financial terms, it will have long ripple effects into the company, some companies bounce back, others get crippled by those ripples. Employees that aren't engaged and don't trust their employers won't do their best work, employees motivated by anxiety and fear won't produce their best work. They will produce whatever they need to keep employed, that's not the best thing for a company.
The morale effect is temporary, the ripple effects of it, in my experience, linger for a very long time. That was my point, those are harder to visualise, quantify, but if you live the day-to-day in R&D/operations you see how people react to it over time.
The analogy used in some layoffs discussions of cutting off a limb is fitting here too, your body can still perform some functions but some skills are harder to perform, some movements aren't possible or are very impaired, etc. You are still alive but you aren't the same anymore, for a company it can create really weird side-effects like some examples I brought up on the previous comment.
The limb analogy is apt, but in my experience I’d change the analogy slightly and make the animal losing a limb a dog. There is a saying that “a dog is really a 3-legged animal born with a spare leg”. A three legged dog in a short time adapts and knowing a few tripod pooches in my life, my experience is they get along just fine, and to them, are not impaired compared to their 4 legged counterparts. I think companies are like that too. Layoffs can create definite temporary operational challenges. However, in organizations I have been in that have experienced layoffs, you just adapt and in time and eventually don’t notice the impairment the layoff caused. It’s just the new normal.
I guess if you run a warehouse that's true, but Facebook is a tech company. How many thousands of hours were spent recruiting, hiring, onboarding, and training those employees? How much institutional knowledge left with them? How many decisions took longer to make because managers were focused on picking who got laid off instead of focusing on the work? How many managers became hyper-cautious with their planning because they don't know how many employees they will have? How many hours were lost to employees worrying about job security and prospecting for a new job instead of worrying about solving business problems? How many projects got started because there were ample resources that now have to be shut down abruptly?
Large scale hiring and firing in technology is incredibly expensive and not to be taken lightly. Facebook has wasted a huge amount of time, focus, and energy on this and their leadership should absolutely be accountable to shareholders.
I don’t think that follows. You want to overhire to make extra profits. Then just downsize when it’s over. Which is almost exactly what all tech companies are doing now.