Many companies are afraid of being sued or "ruining their reputation" through too many firings. Instead, they waste much more on wasted salaries and ruin their reputation internally by keeping useless people around.
Large organizations (and many small ones) just don't do it if there's any way to avoid it. They're rich targets for lawsuits, of course, but more importantly, it has widespread effects on morale. Fire one guy, and ten start thinking that their jobs are nowhere near as reliable as they had thought.
Companies don't fire talented people. They fire those, who, during the good times were just barely adequate for the job they did, and in the bad times they became liability.
I've worked for companies where it was easy to fire people. There was no shortage of borderline useless people and getting fired was usually more about getting on management's nerves rather than performance.
People living in fear of their jobs created the most toxic environments.
A useless employee not being fired does not only breed resentment in coworkers, it also erodes trust in management: Other employees will lose their trust that leadership is willing to follow through with hard decisions for the good of the company (speaking from personal experience).
Management being capricious is basically "news at 11", but management being perceived as hesitant/incompetent can be MUCH worse EVEN from the PoV of an employee (=> because that indicates the company has no future)!
Developing a bad reputation is like sunburn. It doesn't turn into cancer instantly, but it slowly accumulates damage over time. Right now a top worker (particularly in a critical field like AI) has a lot of choices, and the company that gets a reputation for randomly firing entire teams is going to be a harder sell.
Big public companies need an excuse to fire as many people as they would "naturally" want to fire given 1. just how many people they hire, 2. how often those people turn out to be duds, and 3. how often they pivot strategies internally that no longer necessitate even better-performing people.
They can't normally fire as many people as they want to fire, without looking bad / "appearing weak" and therefore losing stock value.
But if "everyone's doing it", then they won't look bad/weak.
See also: raising prices. If one company does it, they just lose market-share. But if they do it because "everyone is doing it", then margins can go up vertical-wide without anyone having to explicitly collude in an anti-trust sense.
Seems costly to fire, not just because of HR and management process overhead. People are trying to build successful teams, and regular firings distract from goals, ruin morale, and create an unsafe environment.
The bad employee does do untold damage though. They don't live in a vacuum. Good people quit over them (and not everyone is comfortable with blaming it on an individual, so management may not even know they're the reason). Workspace can become toxic. Rumors can start spreading making people not accept a job.
So you lose a lot of people by keeping a bad apple, too. In the example I gave above, at least 4-5 people I know for a fact quit over them before they were dealt with.
And don’t you end up with hire-to-fire practices as a result of this? Hire a lame employee just so they can be the one on the chopping block; preserving your actual valuable team members?
There’s no benefit to employers in firing good employees. Firing them is expensive and full of liability and hiring replacements is also very expensive. If you accept that employers are self interested, then they’ll want to keep good employees and get rid of bad ones. Making it hard and costly to fire bad employees doesn’t benefit anybody except bad and unproductive employees.
Alas, for all of the focus on the interview processes to "prevent" false positive hires, those same companies suck as actually getting rid of the bad hires. Some is rational risk aversion to lawsuits and the like but that clearly bs when you see just how fast people that aren't liked by someone high enough up the food chain are shown the door.
The effect on morale and real productivity of getting rid of the toxic and worst performers is amazing.
This reasoning seems plausible to me, but it seems to be having the opposite on employees from what I have seen. Why invest yourself in a company that will fire thousands of people for petty reasons? I think this will cause many employees to shift more focus on how to look good on paper, versus doing actual interesting or useful work that might fly under the radar.
I'm not saying I think this is right, but people have so little social capital compared to companies. One mistake by an employee could follow them their whole career. A massive firing by a company will be forgotten about in the news by the end of the day. People will need work and eventually apply.
I agree. There has to be a balance. Companies need to be able to let people go who are hurting the company overall. The balance comes in in making it expensive enough that they won’t go firing people without cause as it now being expensive means it has to be worth it to do so.
Firing and rehiring destroys morale. A perfectly stable and functional company can destroy itself by trying something like this. Employees will start to realize that no matter what they do they're getting shafted and their productivity will drop. Some will seek employment elsewhere, but those are often the ones you want to keep. You'll be stuck with mediocre and bad employees. When you try to fill in positions with new employees, they see a dysfunctional shop and start looking for the exit.
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