Of course, but one must acknowledge that past growth is a large (often, dominating) contributing factor to future growth.
But that's part of my question: what did they predict that merited a layoff, when their cost structure wasn't ballooning out of control, and which made the alternative of maintaining a hiring freeze throughout 2023 insufficient?
Hindsight is 20/20, though. The narrative from the company isn’t that “we purposefully overhired and are now laying the excess off for fun”, it’s that they believed they would have use for the excess given the trajectory of the company and the overall economy but they were mistaken. Which is not particularly strange - the future is famously hard to predict.
Is the current macroeconomics really a good reason to lay people off? It feels to me almost like double speak for a company that just made less money than they expected and blaming it on the economy rather than taking any responsibility.
Agree. It's not enjoyable to work in a bad macro environment. My point is that companies that have significant cash flows won't have to lay off employees and might even continue to hire, acquire businesses and consolidate their business. They will expand, not contract like the rest of the market.
I don't think they thought it was permanent as much as no one really knew when it would stop. They had to make a choice whether to hire enough to sustain the current growth rates or scale back growth in which case competitors might be able to capture that market share. No one had a crystal ball regarding when exactly the growth would stop and what the post-growth period would look like, so from that perspective using all available evidence, the play was to capture market share and worry about the future when it happens.
It's a reasonable strategy, the risk being their cost structure gets unbalanced and they might have to lay off people. Contrary to what people here seem to think, laying off people isn't the end of the world, and many of these companies are very comfortable doing it once their growth calculus changes. It was a calculated risk and if we are being honest, it paid off very well for most of the companies which are currently doing layoffs. In many cases the alternative would be to forfeit growth just to potentially save jobs down the line - but what would that look like for companies like Amazon? I don't know if people remember but when the pandemic hit Amazon was scrambling to meet the demands of customers and prime shipping times shot up from 1 day delivery to sometimes more than a week. Those situations would give competitors like WalMart an opening to capitalize on taking market share.
At the end of the day, no one had a crystal ball, and while companies probably shouldn't have assumed whatever growth rates of the quarter were permanent, to ignore the growth and not hire in that environment carried it's own risks. And besides, are the current growth rates permanent with all the macro-economic factors at play? Of course not, most likely the economy will pick up at some point, but companies don't know when exactly that will be, so the prudent thing is to prioritize their workforce on high priority revenue generating products and balance their cost structure around the current economic realities.
I dont think they intended to have to lay off people. If everyone recalls during the core of the pandemic people really thought that this was the new normal. Im sure they thought that this was a full time step change in demand. I doubt they anticipated a recession (much like most companies). The executives at most companies aren't that smart on long term macros, much more reactionary to immediate needs
It reminds me how this shows the true capabilities of management. You see, if management and economists could do what they claim to do, predict changes in the market and adapt to them.
Well then the 24% and 75% numbers would be the same number. Why? They would have seen it coming, and responded and adapted the firm, before it did this kind of damage.
I've never once seen managers actually succesfully to do this, or even close. I've seen them keeping up hiring and scaling companies right into oblivion though.
Current layoffs are not due to macroeconomics, but more a normalization
of what happened in the last couple of yers. Most of the companies laying-off
they all over hired.
I think that's a fair point when you hear stories about people who are hired and then laid off within a couple months (or sooner). Nobody can predict the far future with accuracy, but those kinds of stories usually just point to corporate incompetence and the company usually could have planned better.
But when it comes to cases where economic and business conditions have drastically changed, I don't think it's reasonable that we expect business leaders to have crystal balls for years in the future.
The actual truth is these companies were running in the regime of "we can afford to just throw manpower at projects". Everyone was just trying to gather up people to fill roles. Playing conservative in this regard was looked down upon - "you can't predict what the economy is going to do, and what if the competition just ends up hiring more people and they end up winning big?" .
Now its the exact opposite - "other companies are downsizing to conserve costs. If we keep people, this could come to bite us in the ass because those companies can be ahead financially".
I mean alternatively they wouldn't have had those jobs and i think the team hired on hope of sustained growth.
If we always hired on expectations of layoffs (which i believe were incredibly generous from news reports) your current staff would be be beyond burnt out.
I think where a lot of companies find themselves is "[last year] we think we're going to grow 20% next year and need to hire 15% to cover that business growth; [this year] oops, we only grew 5%, meaning we should have only grown headcount by 2% and now need to layoff around 10% of our staff to keep our financials sound and protect the jobs of the other 90%"
I think that's a lot of repeated applications of the former case.
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