Unpopular opinion, but I don't understand this type of comment. It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off.
But what would that even look like? A fine? That would probably make no practical difference, and would discourage them from making changes that need to be made. Fire them? Then you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs.
Layoffs are awful. They affect lives and families deeply. But all businesses don't go up and to the right forever. Reductions are a necessary part of running competitive companies.
> Iwata ran the Kyoto, Japan-based video game company [Nintendo] from 2002 until his death in 2015. To avoid layoffs, Iwata took a 50% pay cut to help pay for employee salaries, saying a fully-staffed Nintendo would have a better chance of rebounding. [0]
By taking that pay cut, how many employees could Nintendo keep that would otherwise have been fired? 5? 20? Certainly not in the hundreds or thousands. This just seems like virtue signalling.
Edit: to expand on my point re virtue signalling: the article states the CEO took a salary cut, not total compensation (and it doesn’t elaborate on the value of the cut). Salary is a small fraction of CEO total compensation - the bulk of which is stock based, and even in the event that stock grants were also cut, the CEO surely already had significant stock. Cutting a relatively small component of compensation in order to boost the stock price which disproportionately adds to the CEO’s personal wealth seems like virtue signalling to me. If the CEO said “shareholders be damned, morale and culture are all that matters in the long run, no layoffs etc etc” that would seem more meaningful.
Optics matter. When a CEO approves mass layoffs, and ALSO approves a 60% salary increase, I can only conclude that the CEO is nothing but self-interested. Rewarding yourself for firing a statistically significant percentage of your company SHOULD indicate failure, not success.
I feel like this would be the few times where virtue signaling is probably a benefit. It can make all the people in the company feel like the leader is on their side, and maybe make the employees less resentful and be more productive.
In 2021, the average S&P 500 CEO made 324 times what their company's average worker made [0]. The widest gap was at Amazon, with Bezos making over six thousand times as much as the average worker at his company. The report is from a few years ago, since then the gap has increased further. So yes, many companies could trivially retain hundreds if not thousands of workers simply by cutting the CEO's pay.
Taking a massive pay cut isn't "virtue", it's a direct and measurable sacrifice. Just because you don't agree with the position or outcome doesn't make it "virtue", I'd wish people stop using that word for things they disagree with.
5 or 20 workers (and their families) who don't get jerked around for stuff way outside their control is an absolute win.
Right now, there is no actual downside for executives. Just less upside. Did they earn XX Million this year or XXX Million. Some tangible downside would be nice.
I mean, heck, why aren't they fired? And really, it's more then middle management where that'd make a huge difference. If bad performance led to actual shakeups in the entrenched middle management, we might actually see business practices change rather than continue on through the established fiefdoms and petty corporate politics.
If the CEO taking a paycut materially reduces the size of what would otherwise be a large layoff on the basis if reduced cost savings, the CEO was way overpaid to start with. (And it probably doesn't change the number of people the firm can usefully employ under changed conditions, even if it provides cost savings, because the latter is based on whether employing them makes more money than it costs, to which external cost savings are probably mostly irrelevant.)
It should be added that layoffs are not commonplace in Japan. What you'll see instead are bonus cuts and salary reductions (at most 20 percent). To do US style layoffs you would need to show that the affected department was directly involved in a line of business the company has abandoned. If this isn't the case the employees stand a good chance of successfully suing the company in court. And then there's the reputational damage which would be considerable in a country where lifetime employment is valued.
In other words this kind of behavior wouldn't be viewed as all that surprising locally.
Mass layoffs -- unless the company is actually tanking and on its last leg, which isn't the case with any of the tech companies who have been doing this recently -- cause the share price to rise. CEO pay, or at least bonuses, are often tied to the share price.
To put salt in the wound, my understanding is the research on elective layoffs (ones that aren't forced by circumstances) indicates the outcomes are mixed at best, leaning negative.
So all this crap is just cargo-culting our current management paradigm, and/or execs cooperating to suppress wages and weaken labor, which had gotten a bit too uppity after Covid (that's one thing waves of layoffs like this do accomplish).
Probably: just leave out the full-of-shit sentence...
There's an Indonesian joke based on the word "responsibility" which is "tanggung jawab". "Tanggung" in this context means to carry the consequences, and "jawab" is to answer. One can say to a friend "We have to share this responsibility. I'll do the answering, and you'll do the carrying of the consequences."
I think a start would be to stop saying the phrase “I take full responsibility for this decision” if you aren’t also publicly taking a pay cut.
There’s no need for a CEO to bring themselves and their feelings into the conversation. It’s this weird attempt at empathy that fails, because the CEO isn’t making any sacrifices.
Just say that there are layoffs. Most rational people who have been in any business for more than a few years recognize them as an unfortunate part of the business cycle.
Agreed. But just say that. No need to pretend taking responsibility, which is defined as facing consequences when things go bad.
“As CEO, I’m truly sorry to those impacted. But I strongly believe that this change is what is needed now to make sure Dropbox can thrive in the future.”
Simple: they sure love to talk a big game about responsibilities and taking responsibilities. Until it's time to actually do it. For the good of the company of course (if the company is in such dire straits, as the most highly paid employee - and probably not the hardest working one - why don't you take a big pay cut? For the good of the company of course).
> It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off.
No - as a consequence of poorly planning cost controls. It's not that the people don't need to be laid off for the health of the company, but that the executives who made the bad decisions don't get the boot along with them, in favor of more cautious or frugal leaders.
Yeah I'm not sure people with compensation well into the millions get to go "haha, sorry, still figuring this out!"
Cool, can we pay you intern wages then?
[EDIT] To make this a bit more substantive: I think this is a sign both that we need to stop with this whole professional-managerial-class horse-shit, promote people who know how to do the actual work of the business, and reduce exec wages because the job's simply not all that damn special and the comp shouldn't be so high that only godlike-perfect performance could possibly justify it, because in truth nobody's that good at it.
Step one of this would be reducing M&A activity (hellooooo antitrust enforcement) and reigning in the power of finance, since letting Wall Street suits put their HBS frat brothers in charge of everything is at the heart of why this stuff's how it is.
Preach! The job is straightforward - lot of these decisions they make are very clearly articulated by LLMs. We need more businesses, more competition, not bigger businesses.
I think it's an outlet for general frustration with the justification for high executive compensation (and returns on capital, for that matter) often being "they have much more responsibility and risk" when the actual downside is typically nonexistent, and even if there are consequences, the outcome is something like "LOL still richer than any ten of you combined will ever be", i.e. the "risk" is all fake.
Perhaps you've misinterpreted that statement? It is the board that takes on greater risk with executives as compared to other employees. The executives are given the keys to the kingdom, which means only an exceedingly small group of trusted individuals can be considered for the job. By the transitive properties of supply and demand, when supply is limited, price goes up.
The thing is, high executives have become a self-perpetuating class entrenched in corporate boards, this is the reason CEOs comoensation keeps skyrocketing, not supply and demand. And this entrenchment obviously also stifles accountability.
How does this self-perpetuating entrenchment not become a factor in what establishes the supply and demand, instead managing to exist as something off to the side?
Why do people understand this phrase "taking responsibility" as some kind of admitting of fault? Maybe I'm missing something, but it seems neutral and could even be referring to positive future outcomes for the company.
Because the context is that 20% of their employees are now unemployed. The tone of the letter is also "this is a hard but necessary choice" and not "this is great news for dropbox!"
> As CEO, I take full responsibility for this decision and the circumstances that led to it, and I’m truly sorry to those impacted by this change.
I think Houston being a cofounder means the financial picture looks different. Last year he made $1.5M in total comp. Which is a lot in absolute terms, but cutting his pay to zero would only allow keeping ~6 of those laid off. OTOH, he owns 25% of a $9B company. His salary is a rounding error compared to the performance of the stock.
Not to be an apologist, but I bet Drew really does feel responsible. He’s not professional management, and he always acted like Dropbox was his kid, at least from what I saw working there. I’m sure this feels shitty to him, though it’s obviously worse for the people laid off.
True - it means he could transfer, say, a billion dollars worth of stock to the affected employees and still be a billionaire. If he actually felt all that bad about it, of course.
Why can't the executive taking responsibility also take a pay cut and tighten their belt the way they expect the company to and the people who they've fired do?
Taking a hit on their giant salary seems completely reasonable to me. Having skin in the game makes people perform better in all sorts of cases, and I don't see why a CEO would be different.
Do you also object to sales reps or athletes making less money after a long period of performing poorly?
It's the grey goo of manager-speak. It rides both sides, but never truly picks one.
The other two options: blame employees(someone not you), or take some form of punishment as an individual.
I too do it sometimes, and I feel bad each time. I at least tell people what it is and that it's just the reality of the situation. I'm not gonna commit career suicide and jeopardize my family's livelihood but I also won't blame them. So I follow the meaningless middle road where the status quo mostly stays and we all at least learn from it.
Ah, you're only going to endanger the livelihood of your employees' families, most of whom have substantially less wealth than you. I bet the rest of your employees don't really care that you "feel bad."
I'm not responding in the context of layoffs nor have I fired people because of my mistakes luckily. That's a different story, and I was trying to explain to OP my take on it.
Yeah that opinion is unpopular because it's deeply stupid.
“you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs” or you would maybe get a better decision maker who didn't have to layoff — or hire unnecessary — workers in the first place? Ridiculous speculation.
Responsibility without consequences just means failing upward. That's why we have a gilded executive class of people who are barely qualified to run a local Taco Bell franchise.
> But what would that even look like? A fine? That would probably make no practical difference, and would discourage them from making changes that need to be made. Fire them? Then you would probably get a worse decision maker in the driver seat going forward, who also didn't learn from experience of going through layoffs.
Well they're the one asking to "take responsibility" here, the fact that they claim responsibility yet nothing happens is exactly why people don't like this phrasing.
Also who the fuck else can be responsible anyways ? The cook ? The guy who mops the fucking floor ?
People come in two flavors: conflict theorists and mistake theorists.
Conflict theorists think that every event is a result of power struggler. So if someone gets hurt, someone must be punished for that.
Mistake theorists think that the world is complex and sometimes bad stuff happens because most people operate with good intentions most of the time. Often, that means no punishment needs to be metted out.
To mistake theorists, conflict theorists look like ideological blood thirsty savages. To conflict theorists, mistake theorists look like enemy troops.
This is a gross oversimplification but it always shocks me to see how much more conflict theorists there are on hn now than before. So many comments here blaming the CEO or capitalism, most of which are going off extremely scant information.
yeah, taking a personal financial hit on this would go some way to at least pretend to actually have tried preventing it. Not sure about this particular CEO's salary, but I wouldn't be surprised if you couldn't finance a few engineers' salaries by cutting the CEO's, without it even hurting very much.
Not saying it's enough, not saying that's the only way, but I find it peculiar that this seems to be unthinkable.
> It sounds like people want executives to get some kind of punishment or pain as a consequence of laying people off
Um... yeah. Yeah, that's pretty much exactly what I want.
I used to work at a Dairy Queen. One dude there had been working there for a couple years. Unfortunately, one shift his drawer came up a dollar short. Our cutoff was 5 cents - a nickel - over or under. He was immediately terminated, of course.
He cost the company one dollar. A Dairy Queen cashier making minimum wage is held to a higher standard of accountability.
The latter. If you can not manage the company correctly and it leads to the job losses of hundreds of people not to mention the millions in salary that was wasted by their poor planning then yes they should be immediately relieved and not allowed to run any other company. They are clearly incompetent.
Considering dropbox is not facing some economic recession outside of its control we can only blame the CEO's incompetence.
I don't really get why layoffs mean that the company was not managed correctly.
Let's say you believe you have an opportunity that will double the value of the company, with a 30% probability, or cost the company 10% of it's value. This means it has an expected value of +21%. This is pretty good, and exactly the sort of thing shareholders want from their management. So you increase headcount and pursue the opportunity.
In the 70% scenario when that doesn't work, you have to downsize. Failure is not just possible, it's probable. That doesn't mean that the CEO mismanaged...they may have, I don't know the Dropbox details. But in the scenario where they haven't mismanaged, what do you want? Do you want companies to never take these risks in the first place?
When they hire as part of the push for that 30% chance, are they telling them that they have a 70% chance of being laid-off if the bet doesn't pay out?
If it's "just a bet" and not mismanagement, then we should tell people that, shouldn't we?
The reality is that these bets are only bets for the people getting hired/laid off, and they don't even know they are betting in the first place. Even worse because we're not talking about simply losing money here. Losing a job is many times a life changing event in real people's lives. It's not like someone betting on a stock.
That's why there should be consequences for the ones making those decisions. They get the most rewards, but none of the punishment. How's that fair in any shape or form?
Most big tech companies did mass layoffs in the past few years. They are now fully recovered and posting record profits this week all with the same leadership. You are saying they are incompetent and someone else could have navigated this better?
It's always amazed me how much leeway and clemency leadership gets. I worked at a company that was always fairly intentional about their performance review process being a meat grinder, and they also did something that didn't look nearly dissimilar enough to good ole microsoft forced curve / stack ranking.
So if you were an IC and were on a project that failed (or even just didn't succeed enough), God help you. Many folks just quit when they saw a project going sideways, or tried to escape/transfer. Alternatively, people would report green statuses and hope someone else fell over first so they wouldn't be the root-cause.
Obviously this caused many problems. It was very hard to execute projects with lots of people or teams, and/or that took a long (>3mo) time. It came to a head when finally a major initiative missed another deadline "just barely" and it finally tripped circuit breakers and someone went in and did a full Inquisition. Yeah no the project was f'd and they basically just gave up ("pivoted") to an adjacent goal. Their official diagnosis/RCA was "people were too scared to report red, so everyone prettied up their status reports a bit, and that was compounded by each roll-up status report also prettying up the status.
Literally no leadership changes happened as a result of this. Then I got laid off. (Unrelated, just the big layoffs of 22. I was not directly involved in this, I was in big data and this was all happening in the main product infra stuff).
So yeah. Your project fails? Bye. But your f'd up performance grinder culture causes literally hundreds of people to behave so out-of-alignment with the actual company goals? Nah man stick around for 2 more years and leave at your leisure over some other petty squabble.
People make mistakes all the time, hopefully it's mistakes they learn from. You can't simply fire someone for being incompetent, unless it's so bad and beyond the pale.
> You can't simply fire someone for being incompetent
Lmao what? Outside of being absolutely skint and unable to make payroll, that's pretty much the only reason to fire someone (I mean other than misconduct, which is also a type of incompetence)
What if managing the company correctly requires hundreds of people losing their jobs?
I understand the anger in this scenario as employees, but I don’t think doing layoffs means leadership is clearly incompetent. Running a company is hard.
Doing layoffs definitely says something about the company’s values and current standing, but I don’t think it necessarily means the CEO is bad.
> What if managing the company correctly requires hundreds of people losing their jobs?
It occurs to me that there is no failure of performance a CEO can produce and be held responsible for. Are these CEOs really so irreplaceable that when they bet incorrectly they can't be replaced?
20% of employees have been fired. The CEO directly cited mismanagement as the cause. And yet, its impossible to fire him because "its a learning experience" or "think of the upside!".
A CEO being fired does not mean the company falls into the abyss. The company still exists and can hire a new CEO. I'm certain there are plenty of fools more than willing to risk the livelihoods of 20% of Dropbox's staff in exchange for a mansion in Miami.
> Are these CEOs really so irreplaceable that when they bet incorrectly they can't be replaced?
That’s the thing though, another comment nailed this perfectly. If they made a +EV decision to hire more people, but the preverbal roulette wheel landed on 00, maybe it’s not a bad bet that they should be fired for.
It needs to be repeated until its acknowledged: "risk management" wasn't the reason given for the layoffs.
The explicit reason given was "economic headwinds" and bad organizational structure. If in your role as CEO you have left the company in a poor position to handle normal, cyclical slowdowns then you are a failure. If in your role as CEO you have produced an org chart which burns money and slows progress then you are a failure. You should be replaced. Period.
The same consequences that a person lower down the ranks would have.
For example, if I lead a team that fails, the team will be disbanded and I will be either fired or demoted. (obviously if there are external factors I/we might be reprieved )
If the CEO leads an aggressive strategy that doesn't playout, they rarely get fired and certainly don't get demoted.
At a minimum, don't say "I'm taking responsibility" when you aren't facing any consequences whatsoever. If an executive wants to talk like that, they best put skin in the game. Otherwise, shut up.
If the company miscalculated, or mismanaged, to the degree that it suddenly has to cut 20% of its workforce in order to survive (or give shareholders what they want), then yeah, that's a pretty big mistake, and your head should be the first one to roll.
I bet you'd have a lot fewer CEOs calling for mass layoffs.
They should face the same consequences as the people they are firing. Lose their health insurance (or pay COBRA), have a few months' worth of expenses in the bank, have to find a new job, that kind of thing.
I suspect you wouldn't see these comments if CEO pay was on the same order of magnitude as the people who actually work at the companies they run. Watching someone treat your livelihood like a toy, while also being rewarded with more money than any person will ever need, is a bit grating.
I ask this myself. What is the point of both doing layoffs, and then also firing the CEO? That next person will probably be worse, won't have the learnings of the layoffs, and would probably increase chances of layoffs happening again.
putting an employee elected representative on the board
negotiating the layoffs and severance with employees (e.g., giving folks the opportunity to voluntarily take layoffs to reduce the number of involuntary layoffs).
Have you ever managed a complex, dynamic, changing system and found that the optimal size based on current conditions was 20% less than it was at some prior time?
Why is it a blunder? Do you think only poor CEOs face downturns or overhire?
And if a company hires too many people for a few years and then right-sizes, isn’t that better for the economy overall than if they simply stayed small the whole time? They still paid salaries for those years and added to the overall level of employment.
Do you want a system where CEOs are hesitant to hire? Or where they’re afraid to right-size the workforce and instead run the whole company out of business?
There’s literally zero logic to your position, just feelings and Monday morning quarterbacking.
Maybe he should, Meta's main product has peaked in their biggest markets, and his last massive bet went nowhere. He may not be the right person to lead the company at this point.
