July 07, 2017

Massive layoffs are really not normal. Really.

A couple of days ago, I blogged about Microsoft's imminent wave of layoffs. I was particularly nonplussed with the way that a lot of the coverage was unfolding; everyone seemed anxious to portray Redmond's fourth massive restructuring effort in four years as somehow normal, the sort of thing that successful companies do all the time. But I couldn't recall a single instance of a successful company laying off thousands of employees as part of a massive restructuring effort, let alone a company that had laid off thousands of employees in the each of the preceding three years, and was looking set to add significantly to that total in year four.

And make no mistake, although it may not be the worst of them, this is the fourth year of massive layoffs at Microsoft. They cut 18,000 jobs in 2014, an event which CNN Money described as "by far the largest round of layoffs in the company's history." They followed that by cutting 7,800 more jobs in 2015, a year in which they also took a US$7.6 billion “impairment charge” related to their acquisition of Nokia, and restructuring charges of over US$750M. 2,800 more jobs were cut in 2016, as they continued to wind down their Nokia business.

As companies tend to do, when delivering bad news, Microsoft softened the blow on many of these announcements by touting some kind of success; their cloud services division saw 3% growth in 2016, for example. They've carefully avoided talking about the overall health of the company, and their share price hasn't suffered too much, at least so far. But there's no way around the steadily mounting numbers, here, as Microsoft's massive structuring becomes an annual event.

That 2014 CNN Money article gives some context for this:
Though Microsoft is laying off a massive number of employees, it doesn't come close to the biggest job cuts in corporate history. IBM (IBM, Tech30) cut 60,000 jobs in 1993 as part of a massive restructuring of the tech giant. During the Great Recession, Citigroup (C) slashed 75,000 jobs between 2008 and early 2009. And Hewlett-Packard (HPQ, Tech30) laid off 27,000 employees in 2012.
At 28,600, the cumulative layoff total Microsoft's annual restructuring has has now surpassed Hewlett-Packard's 27,000 layoffs from 2012. But, while the numbers are slowly mounting, there is one clear difference between Microsoft's layoffs and the other examples cited by CNN Money: all of the other examples were one-time events. Only Microsoft seems to have turned this kind of restructuring into the way they start every fiscal year.

Don't believe me? Check for yourself. Google "massive layoffs -Microsoft," and see what you get.

Retail dwarfs coal, and yet Trump has said little about massive job ...
Yahoo Finance-3 hours ago
Almost 500,000 layoffs have hit retailers since 2009, according to Challenger, with many of the layoffs due to fundamental industry shifts in the way consumers ...

Cash-strapped LeEco's chairman resigns and pledges to repay all ...
AsiaOne-10 hours ago
... woes also scuttled a US$2 billion (S$2.8 billlion) deal to buy US television maker Vizio, hurt other related ventures and led to massive cost-cutting and layoffs.

SoundCloud Bankruptcy Nears: 173 People Laid Off; 2 Offices Closed
Digital Music News-12 hours ago
Company CEO Alex Ljung has just announced the layoff of 173 employees. Offices ... But despite the massive userbase, SoundCloud has struggled to create a ...

Even With Fewer Layoffs, Poor Schools Face More Disruption
Voice of San Diego-16 hours ago
The way layoffs are conducted in California can lead to massive churn. Because of a state-mandated timeline, districts often issue pink slips in March before they ...

I Used to Spend $1000 a Month on Fitness. Now, I Do it All for Free.
Cosmopolitan.com-17 hours ago
Then one day, due to massive layoffs at my company, I lost that high-paying job and, with it, the ability to bankroll my regimen. Given my new financial constraints ...

Why courts haven't stopped parade of suspects, by judge
The Nation Newspaper-18 hours ago
“In the sense that there are massive layoffs and poor or non-payment of salaries, sales of newspapers and advertising are also low with what most media houses ...

New Stelco investment promises produces mixed union reaction
Globalnews.ca-20 hours ago
Howe says U.S. Steel ownership was marked by drastic cutbacks in production, massive layoffs and lockouts. He says Bedrock Industries knows it will have to ...

Axed-ESPN anchor Britt McHenry launches online rant against Colin ...
Daily Mail-21 hours ago
McHenry made headlines recently after she posted and then deleted that she was sacked from ESPN in their massive layoffs because she was targeted for her ...

Camden ready to take guns off its streets
Cherry Hill Courier Post-Jul 6, 2017
... as a particularly bloody year wound down in Camden. The city, decimated by massive layoffs in its police force, set a grim record with 67 homicides that year.

Flipkart asks Snapdeal for 30 more days to hit back with revised offer
Moneycontrol.com-Jul 6, 2017
As part of this Plan B, the plan is to further cut down the costs which may include another around of massive layoffs affecting around 600-1000 people in the ...
Quick! Spot the hugely successful company in that list which is laying off thousands of people, to the tune of 27,000 jobs (and counting) in four years as part of a normal, annual restructuring of their business!

Successful companies do not need to lay off thousands of employees every year in order to "better realign their allocated resources to their strategic imperatives," or "reaffirm their commitment to returning to profitability," or whatever excuse they're giving on the day. This is not normal for successful firms; only failing firms do this. This kind of restructuring can turn a failing firm around, but the need to keep restructuring normally means that the first attempt didn't work; it means that the firm is still failing.

Every layoff-related headline is a story of failure. There isn't a single exception. So, why is Microsoft's being treated as business as usual? If everything is actually fine, why does Microsoft keep shrinking, even as their competitors aggressively grow?

Pay no attention to that man behind the curtain. This is not normal. Don't be fooled.