Yahoo Layoffs

Today are more layoffs at Yahoo. 1,500 to potentially 2,000, some say.

Days like this make me wonder what I would do if my business had to lay off employees. I tell myself, “I wouldn’t lay anyone off. I would hire slowly and grow only as fast as we’re capable of, so we don’t end up with a glut of resources.” I know that’s not always easy, but growing too fast can be disastrous for some companies.

Then, if finances were still really tight and I’ve made other budget cuts already, I’d cut my own pay first. If we still needed more, I’d cut bonuses. Then I’d ask the leadership team if they’d be willing to take a pay cut. Finally, I’d ask everyone else if they’d be willing to take a pay cut. I would explain that we value everyone and want to keep everyone, so rather than eliminate jobs, we’d rather decrease salaries temporarily. The key point is temporary – as soon as revenues are back up, salaries will return to their previous levels. Or maybe even higher.

Is that realistic? Some companies have done this with apparent success. But there will be a few employees who will inevitably leave because of personal financial concerns, such as mortgages and bills. They live paycheck-to-paycheck and any decrease in pay is a serious economic issue.

To try to reduce that, I would explore the possibility of finding contract work for them. Basically, I’d turn my company into a consultancy and hire my employees out, if they’re willing and able to. I would need to keep a percentage of that revenue for overhead expenses, but the vast bulk would go into their pockets. There may be some tax and legal implications though, which I’d have to work out with my attorney and CPA.

The end goal, though, is to keep everyone with the company. No lay offs, no loss of jobs.

Realistic? I think so, though it’s probably difficult to execute. This is just me thinking out loud. I haven’t had the ill fortune of making such a decision, so I don’t know what I’d really do.

In any case, here’s my virtual “pour one out for my hommies.” Good luck, guys.

Author: Mike Lee

An idealistic realist, humanistic technologist & constant student.

9 thoughts on “Yahoo Layoffs”

  1. Yahoo would never do that. Large corporations simply cannot. Lay offs are justifiable by their impact on ticker symbols. It is a shame.

  2. While your heart’s in the right place, especially given the tiny size of your business, that’s just not feasible a lot of the time.

    The Yahoo executives and board have a responsibility to their customers and stockholders, to create the best products they can with the resources they have in the most efficient way possible.

    Reducing pay, even a little, would cause the most valuable workers to leave first. On the other hand, with a company of Yahoo’s size, there’s often a lot of workers who can be lost without a dramatic impact to their team’s ability to continue working. There are also many entire products that can be cut without a dramatic impact to the company’s bottom line.

    It’s sad to reduce people to numbers. It feels uncaring and cold. But the fact is, it’s sometimes the most responsible and loving way to handle a bad situation.

    Of course, the best way to handle a crisis is to avoid it. However, it’s not so simple. What should Yahoo do if it invests in a promising direction that turns out to not be worthwhile? It would be contemptibly irresponsible to continue to invest in a product that is not viable. If a company takes risks *at all* — and it has to, if it’s going to do anything interesting — these mistakes will happen.

  3. While I don’t disagree with you guys, I think it’s sad that layoffs are seen as inevitable. I don’t believe they are. Maybe I’m alone in thinking this though.

    The most common reason cited for layoffs is shareholder responsibility. As a long-term shareholder, I want my investment to do what is best for profitability and viability in the long term. At the moment, I don’t believe layoffs do that. And companies that follow short-term shareholder whims is not a company in which I would invest.

    So the conclusion that layoffs help shareholders is suspect, in my opinion.

    @Isaac, I see three issues that you’ve raised here:
    1) shareholder responsibility (to which I responded above)
    2) losing valuable workers vs not-as-valuable workers
    3) taking risks and making mistakes


    On the topic of losing valuable workers, my gut tells me that more top talent will leave on their own after a layoff than will leave after a pay cut. Studies have shown that one of the main reasons employees quit is due to a lack of faith in their corporate leaders. So my guess is more top employees would feel layoffs are a poor decision than a pay cut.

    I have no proof of this statement, however, so it’s just personal opinion and hearsay.

    Yahoo and similar companies already regularly dismiss their bottom 10% – their lowest-rated employees. Layoffs, in contrast, aren’t just about trimming the number of employees; they are about trimming the product lines and unecessary positions.

    So I agree with your statement that entire products can be cut without a bottom line impact. That’s a suitable reason for a layoff. But cutting non-valuable workers, well, that already happens without layoffs.

    “…with a company of Yahoo’s size, there’s often a lot of workers who can be lost without a dramatic impact to their team’s ability to continue working…”

    Isn’t that just a sad statement to make? Any business owner should cringe at seeing that said about their company. I’m not disagreeing; large organizations always carry some inefficiencies (though smart companies can minimize that). But it’s still a sad commentary on large organizations.


    On the topic of making corporate mistakes, there are volumes of business books on how to be strategically flexible. Layoffs don’t have to be an inevitable consequence of a strategic mistake. I’m currently reading a book that cites one framework for strategic flexibility and managing risks, though there are tons of others.

    So yes, a company should take risks, and risks do mean mistakes will happen… but good business managers ought to be able to minimize the consequences. If a company believes it can take risks and then just lay people off if those risks don’t pan out, than I doubt that company is going to earn much employee loyalty. And I think that’s readily apparent already.

    I’m hardly an expert in this area, but I’m looking at this as a small business owner with plans to grow my business larger. So these issues are potentially very real to me. I’d love to be able to buck the trend and prove everyone wrong, though I’d much rather not be in a position to do that in the first place, if I can manage my business intelligently.

  4. Like I said before, of course the best way to solve a problem is to not have it in the first place. Nevertheless, that’s empty advice to someone who *does* have the problem.

    Re: Bottom 10% Pruning

    Yahoo doesn’t fire nearly enough. In fact, at many large corporations, it is nearly impossible to be fired for poor performance. Multiple times, I have seen engineers literally just stop working for weeks on end–or worse, create crap software of epic proportions–while their more dedicated coworkers had to clean up the mess. No one got fired. The ultimate result? No promotion at their next review.

    Nothing erodes the morale of your best employees like unfair kindness.

    “Isn’t that just a sad statement to make?”

    Absolutely it is!

    Many of those inefficiencies may have turned out to be long-term benefits. However, “responsibility to stockholders” isn’t just about maximizing their long-term potential, it’s also about mitigating the amount of risk that the company takes on in pursuit of that potential. Economic climates change. A justifiable risk in 2006 might not be so justifiable in 2009.

    Finding contract work for laid off employees is probably not best; it’s not a possibility for many people, it’s not Yahoo’s business, and besides, without y-bang alums, where would you be? ;) In many cases, Yahoo has moved people to other areas of the company, and if no match could be made, they’ve been granted between 2 and 4 months’ severance. It’s not like anyone’s going to sleep on the street. (Though, due to the US’s mind bogglingly draconian immigration policies, some internationals have to leave the country.)

    The recent Yahoo layoffs were, in my extremely unqualified opinion, an unfortunate necessity. Yahoo was too inefficient, and needed to pare down in order to focus on its priorities. It’s not good for everyone, but it’s good for the company, which is what the company needs to worry about.

    But that’s not why I’m defending layoffs in general. It’s just one of those things that’s so easy to have an opinion about, but not so clear when you are actually responsible for the decision. I certainly haven’t seen the information that led the executive team to believe that layoffs were necessary. It feels a bit like commenting on a celebrity’s marriage; we all feel entitled to our opinions, and sure of them, but it pays to remember that we don’t have the full picture.

  5. I should take a step back and say my post, while prompted by Yahoo’s layoffs, isn’t at all about Yahoo’s layoff strategy. I’ve talked to some VP and director buddies at Yahoo and am not going to comment about that at all – except to say that anything anybody reads about a company’s actions doesn’t have the full picture. In fact, it’s sometimes pretty funny how the press depicts a particular situation.

    I’m really talking about layoffs in general. My thinking is definitely skewed towards small-to-medium businesses, where something as outrageous as sub-contracting everyone is somewhat feasible. I wouldn’t dare suggest that to a company like Yahoo.

    And for me, what it boils down to is – I’d like to challenge business leaders to look at layoffs not as an inevitability, but as part of a portfolio of options. My suggestions here probably and do suck ass, but that’s okay; at least they are options.

    If layoffs make the most sense, after a thorough assessment of other options, then go for it. But believing that layoffs are inevitable and the only course is, IMO, somewhat shortsighted.

  6. Hey Isaac I dont think you would feel that way if you were one of those laid off. Alot of great people were laid off.

    Hey Mike I dont think your solution is realistic. Nice of you to suggest it though but Yahoo would never do it, not in a million years.

  7. @exYahoo

    You’re wrong. I’m as sure as I can be that I’d feel exactly that way.

    I’m not saying that the people who were laid off were anything less than great. However, 2 to 4 months of pay is hardly being thrown out on your ear.

    I’d certainly rather a pink slip and 3 months of severance to a pay cut. If my pay was reduced without being justified by poor performance, I’d quit as soon as I found another job, likely without any notice, and maybe even call in sick for a week first. I’m a business, too, and I have to do what’s in my best interest. An unjustified pay cut is unacceptably disrespectful.

  8. Wow, this topic sure has touched some nerves, eh?

    @exYahoo, I hear you man. You’ve been through a tough time and have understandably strong views about it. No one likes to be laid off. We’re just trying to discuss it as a management technique – but you’re right, from an employee’s standpoint, it always sucks and I totally agree.

    @Isaac, I hear you too man. I think you’re pretty unique in that way. You’d be one of the great people that would be lost in a pay reduction and that would be a significant tragedy. I’m not sure if other great people would feel similarly though. If we were to reduce it to a numbers game, it would be a balance of which would lose more great people – layoffs or pay reduction. I suspect a large factor would be in how management communicated the decision to its employees and the culture of the company too.

    But I don’t want to keep belaboring this topic – we may just be disagreeing with which way the balance would tip. And that’s cool. Debates like this are how progressive policies are made.

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