I don't understand how anyone in the world accept such social contract of being laid off anytime for arbitrary reasons.
If you create a company, you take care of it and all of its members. If you have to cut expenses because the company needs to be "leaner" then you cut the salaries starting from the top executives. Eventually you fire management, because the state of the company is in part the result of their decisions in the long-run.
Will the 10% of the employees be the ones who are already in the less comfortable financial and social situation in their private life ?
I used to work for a mobile phone operator in Europe, so no quick way to lay off people. After the startup phase they ended up with hundreds of people in the software/network department that they really didn't need anymore. Not there at least, as the focus moved from development to operations. Some people were moved to operations but (I spare you the technicalities) we eventually ended up in a separate company providing exactly the same services to the original one. Then we started to get incentives to quit. I left even before they reached that phase. They are still doing the same job with less and less people (I think they moved many jobs in cheaper eastern Europe countries.)
The point is that sometimes you really need less people to do the job or you can find them in other places without affecting the final product or service. There is nothing that can prevent a company to do that, not even employee friendly European legislation.
Sure, adjustments are sometimes natural. The important thing is that is should not affect employees too negatively. Huge difference between a 1-day/1-month resignation notice without compensation, and a multi-month (or even multi-year) reduction process with incentives to quit. The latter makes it possible for basically everyone to get a new decent job and change over without gaps in employment.
> The point is that sometimes you really need less people
There's another crucial point: that this need is forecastable many (many) months in advance. If people are joining (or continuing to work at) a company with an expectation of investing in the 'long haul', but the company knows that this 'startup phase' isn't likely to last more than another nine months, there's a strong temptation for executives to deceive their employees.
As you say, 'nothing that can prevent a company to do that', but along those lines, there's nothing that prevents seeing this for what it is: an adversarial relationship where companies are doing their best to trick their employees.
In the UK, if your job is genuinely no longer needed, you can be made redundant, with mimimal pay off and notice (Typically 1 month notice and a minimum of 1 week per year redundancy)
Ehh, I've seen that happen in the UK, but only on the small scale. You cant do that if you're making 10% of the workforce redundant but if its one or two people you can. They moved them to a new role, gave them very little work to do and genuinely made them hate work, then after a year (I think they hoped they would have quit by then) the positions magically became redundant and they had a months notice.
Safe to say I left that place of my own accord not long after.
In periods of "low order" for things like shipping/mining a company may put the employees on leave that the government pay, but this is only temporary. It's a method to avoid hire/fire waves.
Two points in rebuttal. First, companies can expand more confidently if they know they can reduce more easily if they need to. It is more efficient for companies to be able to right-size themselves. Bolstering this point of view is that the USA has a 4% unemployment rate, which is about as low as you can get without things starting to break down. The US economy has been outperforming almost everyone too, creating more prosperity for more people, compared to countries with more restrictive controls over employment.
Second, specific to SpaceX, they actually succeeded in making reusable rockets. They used to need to build a new rocket for every launch. Then they needed to build their reusable fleet up. Now they don’t need to build hardly any rockets. I think this is what success looks like for them right now. From this point of view a 10% reduction is pretty low, and is only so low because they still have even bigger plans.
> Bolstering this point of view is that the USA has a 4% unemployment rate
As a counterpoint, Germany has much stronger employee protection laws and unions and has a comparable unemployment rate. That said, resizing is still possible there, it just has some lag.
Kinda off topic but job protection in Germany is such a joke it's almost fake news. Got terminated recently after 12 months for no reason, filed for unfair dismissal, won the case. 3000 eur is what I got (lawyer fees 1500). You can be fired for very little cost, it's dangerous to think you're protected.
The longer you are with your employer, the longer the protection. You should also receive Arbeitslosengeld I for at least 6 months (longer if you would‘ve been employed longer) and unlimited time of Arbeitslosengeld II (I think you would qualify), so you won‘t be homeless, freeze, lose your health insurance nor hunger, because it‘s all payed for by social security.
The economic performance and prosperity creation might not be that directly linked. GDP is not a good measure for prosperity of individuals (households). Sure, better than nothing, but there are a lot better ones available. Such as the AHDI - adjusted household disposable income.
My comments had nothing to do with a minimum wage discussion, and I doubt SpaceX employs people for even near to minimum wage. This is a company that creates rather high wage jobs. It is also doing very risky things. If the USA had stricter rules about employment protection and all that came with it, Spacex would not exist at all, and the 90% of well paid employees that remain wouldn’t have gotten these jobs.
The ability for companies to take big risks is what pushes the economy forward so that we can all have better lives for a reduced cost, and better jobs too. To “protect” jobs you would hold us all back, we’d still all be working on farms or in factories instead of on computers, increasingly from home. Is that what you want? Why are people rioting in France? Maybe because they feel poorer than their parents. Their laws protecting jobs have removed opportunity from everyone in order to provide stability for some.
France is rioting because those protections allow them to not because they are slowing down economic growth. France has a culture of rioting and civil disobedience in part because those protections give people enough breathing room to be involved in politics.
Have you ever been to Alabama? Mississippi? Florida outside of the metro areas? They're equivalent to third world countries with infrastructure held together by duct tape and spit. Every time I drive through those states, I feel like I'm in some edgy anarchist's student film about late stage capitalism. Those areas should have been rioting for decades now but US economics is set up in such a way as to deprive the constituency from any practical way of getting involved.
Yea, I used to live in central, rural Florida for a few years. It's rural. Farms and ranches. They have a lot of land to cover, a hot and humid climate that eats anything left alone for too long, and not a high density of expendable cash because it's various types of farming which has almost always been low margin. So the roads are going to not be great. But people were as fat and happy there as anywhere else. Spanish moss makes everything look dilapidated, it grows on everything including power lines. Sure it's poor compared to many other places, but I've also been to third world countries, and they are certainly not that. Not even close. So yea, the poorest areas of the USA are still not too bad, I think that says something.
Wage growth in the US has stalled out for many years, but just recently since the unemployment rate has gotten so low (and this is with the participation rate rising) we are seeing wage growth in excess of inflation.
Wages will not rise if the labor supply exceeds demand. You need more jobs and/or fewer people in the labor force before wages will rise.
The American approach is to provide business friendly regulations and tax policy which incentivize companies to invest and take risks. The “social contract” is not vested with the company, but rather a free flow of employees between companies based on who will hire whom, who will pay the most competitive salary and benefits, and which companies are the most attractive.
The state/Federal government then provides programs that basically provide umbrella protection for all workers like unemployment insurance, short term disability, marketplace health plans, etc.
It’s not efficient for individual companies to be providing welfare to employees they don’t want or need. It’s a drain in the entire economy because the employee is doing less valuable work than they could do elsewhere, and the company has less money to hire workers they actually need.
With regards to ethical wages, SpaceX should pay well, so people don't depend on them (they can save enough to be able to sustain themselves for at least a few months while they look for a new job). If SpaceX doesn't need that many workers they should give them prior notice (2 months or more at least, I don't know how they handled this).
Article says 8 weeks of pay minimum, so that’s two months. USA has 6 months of unemployment benefits at half pay, which the employer pays for. Not sure if the severance pay comes with an agreement to not use that...
The employment to population ratio is 79.7% for people 25-54. That has only been exceeded for less than 10 years in history. The only time it has ever been exceeded by more than a point was June 1997-May 2001 during the dot-com bubble.
Employment to population ratio does not exclude anyone. It is the number of people divided by the number of people who are employed. It is also not 2016 anymore. The prime-age labor force participation rate has risen about a point since then.
Labor force participation rate is also not a measure of employment. It is the number of people who are employed plus the number of people who are actively looking for employment but who aren't employed. If you want strictly what portion of the population is currently working, that is employment to population ratio, which is what I posted.
The Ford pay thing is poorly understood. The factory had ridiculously high turnover and it severely impacted productivity. Nearly half the $5 wage came from a bonus after a committee visited your home and decided you were living morally according to Henry Ford’s standards: https://www.forbes.com/sites/timworstall/2012/03/04/the-stor...
That 4% number really isn't crap. By favorite restaurant close to work just cut lunchtime service because they couldn't hire enough staff and I see "Help wanted" signs all over just like I remember from back in 2000.
So cut from the top down, period? Cut the people with the vision and strategy of the company, until nothing but the assemblers and forklift drivers are left?
I believe in worker rights, and the ability of a person to live in relative economic security. But should a company not EVER be able to restructure when it realizes it has too many workers, or too broad a mission?
Is 2 months pay and medical not a decent send-off for workers who provide little value to a company?
I wish healthcare were publicly provided, but besides that, if the alternative were for SpaceX to file bankruptcy or to go broke for lack of competent management, I'll take some laid off workers.
Imagine you run a start-up. You need to expand rapidly and hire all sorts of salespeople. In 10 years you have cornered the market so well that there is no (good) alternative product and growth in the market de facto goes to you. You are the default option.
Do you keep the salespeople that you hired, or do you cut management for getting in the situation that salespeople weren't creating any value?
It's funny how you assume there'a choice. Unemployment in Europe as a whole (including Eastern Europe) is ~20%. Depends on what/when exactly of course but it is. Government (non-productive by definition, by which I mean they don't add value, not that they're not useful) is easily half of the remainder. So Europe has 40% value-adding employees among the working age population, which is about half the total population, or 20%.
In America it's actually better, close to 30%. Everywhere else it's much worse. In the Middle East, Africa, most of Asia it's at most 10%, and usually less than half that.
That means that you could, not in 50 years when the robots have taken over, TODAY, kill 85% of the population and the net effect on the world would be ... nothing. GDP wouldn't drop by so much as a dollar. Today, 85% of all humans alive are useless for the economy (some are school children and will become useful, but you could assume that to be ~10% and you wouldn't be far off the mark).
So for doing everything we do today, and for guaranteeing the future, we need around 25% of the human race. Everyone else is economically useless.
Note that this figure has been dropping for 40%, and has been for essentially all of history, with only short blips where more of the human race is actually useful (like the 30 or so post-WWII years). Even 15% economically useful population, historically speaking, is actually high, not low. What I mean to say is that the neutral expectation should be that that number is going to drop, not rise.
So: no, a company should not ever be able to restructure. Every month, every day, every second we can keep that number up by even a small amount gives use one more month, one more day, one more second of the society we currently have, where people are actually somewhat useful. The alternative, if you think it through, I'm sure you'll see, is war.
Or to put it another way: we need these people to have a job much more than we need a few extra dollars of GDP.
> Unemployment in Europe as a whole (including Eastern Europe) is ~20%.
According to [1] unemployment in the EU-28 is actually 6.7% as of November 2018. Of course, there are some European countries that are not in the EU, but I doubt that including them will cause the figure to rise to 20%.
> So for doing everything we do today, and for guaranteeing the future, we need around 25% of the human race. Everyone else is economically useless.
No, that does not follow. For example, a stay-at-home spouse who takes care of the kids may be "economically useless" in a very shallow sense (i.e. they do not appear in GDP figures), but that does not make them useless.
I think you are overestimating a bit: killing the government employees would reduce GDP. The government may not directly produce GDP, but it is essential for providing the conditions for business. Simply cutting away the peaceful enforcement of contracts and peaceful settlement of disputes privided by the government (two major purposes of the courts and police) would have immediate negative consequences. Within a few years you would also feel the consequences of nobody planning, building and maintaining infrastructure, or collecting the taxes to do so.
Even assuming your argument is correct and the world floats on with between 90-70% ‘dead weight’ as you seem to put it, GDP would fall significantly because you have significantly less consumers spending. Not to mention that society would pretty much grind to a halt because all the people doing intangible work that isn’t counted in GDP, like having and looking after children and replenishing our human capital.
We live in an imperfect world, and not everything has a utility function that is measured by headline figures
Yeah I think you're forgetting that consumers are a very important part of functioning local, national and global economies. If the only businessman in a farming town runs a grocery store selling the potatoes from one farmer and you killed everyone else off besides that farmer and store owner, that town's GDP will drop to 0 within their lifespan. This can basically be extrapolated to the global level?
Also why should we artificially extend forcing most humans into agency-less drudgery for 60% of their sentient healthy waking hours? I think the sooner we embrace having 15% of the population producing the net economic output and providing the rest of the society with what they need, the faster we can figure out a significantly better and fulfilling society for everyone.
There's at-will employment model on one side, and the Japanese Salaryman model on the other side (low vs high loyalty). As usual, the sweet spot is somewhere in between the extremes.
Note that, in this case, the workers are getting "a minimum of eight weeks’ pay and other benefits" - this kind of thing is sadly not mandatory, but it probably should be. Companies can suddenly not need a worker as business requirements change, but the entirety of the resulting insecurity and switching cost should not fall on the worker.
What would be the rationale behind that? This clearly places limitations on a company's ability to optimize for achieving its goals, and ultimately stifles innovation. At the very least the long term impact of those downsides needs to be incorporated into any sort of social calculus. Would you prefer to live in a world without Teslas or SpaceXs, as long as employees are "taken care" of by their companies? This isn't necessarily even a false dilemma - it's entirely conceivable that certain ventures would require some kind of a layoffs strategy in order to be successful. Nor is it indicative of anything being wrong with "the state of the company" as you claim, unless you define it as such.
I find it entirely unconvincing that optimizing for "employee care" is overall more beneficial to humanity, including for the long term well being of the exact same employees and their families, than the alternative.
Well, there are social contracts, and if you violate them, there are repercussions.
There are many social contracts tied to the word 'employee'. Expectation of livable vage. Expectation of stability. I liked the way patio11 once explained it (I think, and definitely am paraphrasing): "If you employ people and business is good, you get all of the profits and only owe them their wage. If business is bad, you still owe them their wage."
I am concerned that many companies are trying to weasel out of this unspoken contract. I remember McDonalds document specifying that they assume their employees have second jobs. Or that many game companies fire their QA teams every time a game is shipped.
Like, I get the incentive, I just don't like it.
To be honest, I wouldn't miss Tesla or Space X if it turns out they can't manage their employees.
> There are many social contracts tied to the word 'employee'. Expectation of livable vage. Expectation of stability.
If you fire 10% of your staff every 3 or 4 years, plus 1% the other years, that means the average employee has decades of job stability. That's probably enough.
Downsizing via attrition means your losses are focused on those with both desire and ability to work elsewhere, and so you keep those who can’t or don’t want to.
“Don’t want to leave” is good, “can’t get hired anywhere else” is bad, and the presence of the latter makes it more desirable to leave even places which used to be fun.
If you want to roll the dice on a new employee then fire the old one. This kind of 10% cut results in losing your best who don’t wait around and just start looking on day one. Worse, they often leave after your round of cuts as getting an offer is outside of your timeframe.
What's the current SpaceX attrition rate like, and how does that change across different organizations? It could be a response to their attempt to gain additional funding, and something they heard or agreed to for said funding. Speculation, but wouldn't surprise me.
SpaceX does not make that public. Best number I saw was 50% of new employees made it to 18 months suggesting rather high annual turnover. Long hours + low pay really add up.
This is very true - a huge amount of 'business strategy innovation' centers not around how to find better product-market fit or how to efficiently produce excellent products but on how best to game predictable trends to funnel benefits of resource collection/human effort at scale into a smaller number of hands (owners, management and the biggest/earliest investors).
The idea that upside potential of an organization's efforts can/should never make it into the workforce and the effort to ensure that it remain this way is extremely sad and corrupting and makes for a world where misaligned incentives and exploitation are much more likely than they 'should' be.
Because it removes degrees of freedom. If there are N ways to achieve goal X, and some of those ways include layoffs, then removing those ways from the space of possible strategies will reduce the probability of companies achieving X.
Some of the ways to achieve goal X are via layoffs, some aren't. You cut some possible routes to X, but you add more routes.
Not all routes are equal. Cutting a particular employee might mean that a vital convergent point is no longer possible to enter, meaning all routes now lead to failure.
Some of the optimal routes to X may require that management get paid a fair wage (rather than 40+ times the median), and that they reconfigure the company to enable them to keep all employees - everyone gets hours cut by half-a-day, say.
TL;DR - in short you're committing petitio principii, assuming the best way is layoffs, and thus concluding the best way can't be taken without layoffs.
Not at all. The only observation I'm making is that {ways without layoffs} ⊆ {ways without layoffs} U {ways with layoffs}. Everything you can do in a universe where layoffs are outlawed you can also do in a universe where they aren't. The difference is that in the former universe you have less options, and therefore less paths to success. None of that means or implies that layoffs are always the "best" option.
It's not necessary that the number of actual paths available is reduced by the imposition of "no layoffs", it can actually be increased. It seems counter logical. A restriction can lead to greater innovation that is stimulated by the restriction, there were I'd warrant far more places to get an alcoholic drink under prohibition than prior to its institution.
>you have less options, and therefore less paths to success //
A priori it seems right, but the successful paths aren't randomly distributed; perhaps there is a key employee who leaves under layoffs and the business fails (another business succeeding).
You can apply basic set theory to chaotic and complex psycho-temporal interactions.
But I agree, as I think you surmise, that we can't simplistically mathematically impute the "best" route will be with(|out) layoffs.
>> Would you prefer to live in a world without Teslas or SpaceXs...
Such world exists and can be found in most socialist countries. It's not bad per see but not that exciting either. I personally believe the workers should be given more opportunities(i.e advance notice so that they can find another job in a timely manner) rather than social care.
You can also leave for any arbitrary reason, anything else is slavery, simply put. This goes both ways.
>If you create a company, you take care of it and all of its members.
If you create a company, you have a fiduciary duty towards your shareholders. A company only exist when it is profitable (either now or in the future) and it can only continue to exist if it can do so profitably. Companies don't exist to "take care of its members", those are what unions are for ... oh ... wait ...
>Will the 10% of the employees be the ones who are already in the less comfortable financial and social situation in their private life ?
How is this even relevant? You provide a service to the company and they pay you for it, they can decide not to do business with you and vice versa. Empathy has little to no place in business, unless it generates more profit of course.
> You can also leave for any arbitrary reason, anything else is slavery, simply put.
Being a slave entails more than just having to fulfill your voluntarily agreed-to, contractual obligations. Using the term "slavery" for this trivializes actual slavery – i.e., ownership over a human being.
If you are in any non-voluntary way forced to stay with the company and you can't leave. For example foreign workers that do labour intensive work where their housing is being taken care of by the employer in an exploitative way, they can't quit working because their employer is in charge of their housing, etc.
In Germany you see things like a single person having to do all jobs at once at a Pizza Hut or only three people working at the same time in a supermarket. A lot of customer-facing businesses are insanely understaffed. If your employer doesn't hire enough coworkers for whatever reason, your life will be miserable.
Yes, with a few exceptions it's restricted to a maximum of 8 hours a day on average (and 10 hours max), with 5 days a week.
However, how much stress you can be exposed to in those 8 hours isn't mandated. You can run many businesses understaffed with fairly little impact if you are willing to regularly replace employees suffering from burnout [1]
Freedom to fire enhances the willingness to hire. There’s a balance to be found, but if you make it impossible to get rid of employees you no longer want, you end up with an anemic labor market, like Europe’s.
Barriers to firing also make it harder to justify hiring higher-risk candidates (e.g. former felons, high school dropouts).
I think you're missing the point, with or without intention.
"Comfortable" doesn't mean that they have a nice house and are happy with their life at work. Comfortable in this context means they no longer have any concern about their own job performance, knowing they have a "sure thing" and underperform in their duties.
Good point. But I wasn't responding to the GGP's central argument, only to the implication that it's bad when employees get too comfortable.
In particular, I'm ranting against the use of the word "comfortable" for describing unmotivated/shitty employees. It's perfectly achievable to have a company that consists of people who are motivated, comfortable, and extremely productive.
It's a ridiculous Americanism that the only way to motivate employees is by making them "uncomfortable" (eg through fear of losing their jobs, like your example, or through other means).
What is the source for higher standard of living in US compared to Europe?
In most of the indexes I have seen, some European countries are ahead of the US, and some are behind. Countries previously in the Soviet union are still lagging compared to western and northern europe.
The median American is richer than the median European (in basically any large country).
The SpaceX employees that got laid off are going to get other jobs and continue making more money and having more money to spend than their European counterparts.
Edit: A few reasons. One is that, since it's easier to switch jobs, good employees have more leverage. Another is that, since it's easier to fire bad employees, the expected value of a new employee is higher and you can afford to pay them more.
I think a big part of American prosperity is a result of companies being able to fire people. It's probably the most important bit of employment non-regulation that this country has, and it's a big aspect in which America is more worker-friendly than European countries. Other missing regulations, like working hours limits, vacation time regulations, don't benefit workers as much (or at all).
Standards of living is complex, more of a vector field than a single scalar.
“Western” Europe is on average rich, Eastern Europe is still recovering from Soviet control and brain-drain. But even Western Europe is spikey, old Welsh coal-mining towns are poor, the old universities are rich.
Even apart from the location income variability, what money gets you varies; health costs much less in the UK than the USA, housing is cheaper in poor places than rich places — even PPP exchange rates aren’t perfect because the ratio of two different goods isn’t constant.
> Comfortable in this context means they no longer have any concern about their own job performance, knowing they have a "sure thing" and underperform in their duties.
There might be multiple things going on here though. While I'm sure there are people who will settle into a job and underperform because they are virtually guaranteed their position, I'm guessing there are a lot more people in a situation where compensation isn't even matching inflation/CoL. In the latter situation the employee may just not care since the company doesn't care enough to compensate them 'fairly'. Depending on a lot of factors it may be difficult for them to find a new job somewhere else, so outwardly it might look like they're just 'comfortable' and underperforming.
If your employees are performing worse than initially, then what are you paying them training for? And getting more comfortable in their position should usually reduce friction around their job and have more experience, so they can do their job better..
When I left my previous employer, the reason was absolutely arbitrary. The new one paid more. I didn't have to wait for the old company to not pay me the agreed upon salary, spend months offering them a "compensation improvement plan", and documenting their failure to follow it in fear that they might sue me for leaving for the "wrong" reason. It's amazing how people pretend at-will employment is somehow equal for both sides when only employees can actually terminate the employment at-will.
> When I left my previous employer, the reason was absolutely arbitrary. The new one paid more.
That is literally the inverse of what arbitrary means:
existing or coming about seemingly at random or by chance or as a capricious and unreasonable act of will
Now:
> I didn't have to wait for the old company to not pay me the agreed upon salary, spend months offering them a "compensation improvement plan", and documenting their failure to follow it in fear that they might sue me for leaving for the "wrong" reason. It's amazing how people pretend at-will employment is somehow equal for both sides when only employees can actually terminate the employment at-will.
Where I live you have (it's the law) to keep on working (and being paid for that work) for a certain number of weeks (depending on how long you have been working at that company). So the company can find a replacement, so you can wrap up things and pave the way for the transition. It's not rare that you can come up with an agreement that let you do that from home (because you are leaving on bad terms) or that the employee takes his vacant days or extra hours to fill up that period.
I say "leaving previous employer because the new one paid more" is not an individual preference or convenient but the intrinsic nature of the decision. Maybe even motivated by necessity if more money was needed.
It's not like he chose the new company because the logo is red.
Do you think that "they cost too much" is an "arbitrary" reason? Or is it the "intrinsic nature of the decision" like in the "I leave because they pay me more elsewehere" case?
Because it's also suck to not able to fire your employee for any reason.
A company purpose is to make money, not to take care its member. Its the government job to take care of its citizen. Using basic income, universal health care, cheap/free housing, etc.
There is a bigger picture in which employers intermediate between producers and consumers. As a consumer, you are free to shop around. You bought a Ford, but perhaps next time you buy a Honda. If the government is really serious about saying that Ford cannot lay off workers, the government has to help. For example, by introducing a tax on importing Hondas.
In the big picture, your job security as a producer trades-off against your right to be a disloyal consumer.
>If you create a company, you take care of it and all of its members.
No. A company doesn't have members, it has employees. Americans should know by now that a company has no loyalty to them and they should have no loyalty to the company. If they don't know this, it is their fault for being naive (or a Boomer).
So companies should be required to keep their low-performers indefinitely? That sounds like a recipe for getting 100% of your work force laid off to me... of course we don’t know the motive behind the layoffs so I guess we are both making some assumptions.
The point of a properly functioning capitalistic system is not that every employe will stay at the same company for the longest time possible. It is to have liquid labor force markets, which will make sure that both the companies can obtain (and replace when needed) the employees that match the company perfectly - and at the same time that every employee will easily find (and change when needed!) a matching workplace, one that best suits their (possibly continuously evolving) trade skills, ambitions, life circumstances, risk appetites etc.
Also,
> laid off anytime for arbitrary reasons
They are not arbitrary by any stretch of the meaning of that word. There are business reasons, changed or evolved business goals or market conditions. Those are all real objective phenomena which play very important role in the life of a company, ignoring which would be very fundamentally detrimental for companies and for markets in general.
Unless the said companies are funded by government I don't understand why there would be a problem. As a CEO your job is to maximize the profit not to create a socialist enterprise. Why should I pay you if I no longer need your services?
That being said I believe things could be done to make the transition easier for workers without hurting the company. For example announcing the layoffs in advance(i.e give a 4 months notice at least). This should be enough so that the workers can find another job.
The problem here is you said I. Personally if anyone in my company fires someone because “I no longer need your services” will be fired for hiring someone permanent that needed firing. Also if they follow our hiring criteria we want them in other places. This across the board lay-off is a sign of some kind of corporate correction. My advice is to think of it that the people you manage work for the company not for you. Correction: you don’t need advice.
It is not exclusionary. By capitalist logic, a company grows because it makes profit from the market, if a company can't do that or lose its source of investment, it needs to shrink or disappear. What you describe is more like a political entity, where the leader is elected and responsible for the welfare of his/her electorate, and if he/she fails to perform, he/she will get booted out. But that is not a company.
>If you create a company, you take care of it and all of its members.
Companies are not created to take care of their employees. They are created to make profit and/or accomplish a societal goal. If a company is non-profit then it's just the latter.
As someone from a post-communist state, it's plainly obvious to me that people on average don't work as well as they could if the threat of termination does not exist. My parents told me anecdotes about their coworkers who were reading books on the job, even playing videogames, and that's in an aero-space design bureau in the 80ies, in less elite organizations systematic alcohol consumption by groups of employees on the job was not something to be surpised by. And that pattern repeats itself in many countries where employment is semi-guaranteed.
The threat of randomly being fired will cause many focused workers to change how they act. They stop trying to help each other, blame increases and internal politics dominates.
If this continues the remaining employees try to hire new employees with a fatal flaw so when the next wave comes they will be the first out.
I'm not saying that N% layoff is a necessarily a good practice. My main objection was to the notion that companies are created to take care of the employees. To me it's the role of the state to take care of the people, the companies are here to be efficient for eveyone's benefit.
Termination due to non-performance on the job is entirely different from at will termination which can hit a performer and non performer alike.
You seems to imply employees are the resources to be used to achieve goals. I do not see an issue in this arrangement if Employees have the same negotiation power as the employer.
>Termination due to non-performance on the job is entirely different from at will termination which can hit a performer and non performer alike.
Termination due to non-performance can also hit a performer. Human beigns and hence their social systems are not perfect. N% layoff is performance related termination, because it's an impossibility that all employees pefrorm at the same level, are of the same value to the company. It's absurd to imply that N% layoff is absolutely random, that companies use lottery techniques to choose who to fire next.
>You seems to imply employees are the resources to be used to achieve goals.
They are. Within the constrains of culture and law.
> Termination due to non-performance can also hit a performer.
If everyone is meeting the success criteria, then still trying to fire lower 10% is Darwinian view of the world. This also means objective enough criteria exists to judge the poor performers. In reality, that guy in the corner with his head down get fired because he is too busy to make connections and show how valuable he is.
This specific case seems harsher because a lot of these people assembled under Mr. Musk's banner because they thought they were working for a cause. I am sure many of them have took paycuts, toiled above and beyond expectations because they thought they were working for a cause. In my view this is not a fair at all.
> They are. Within the constrains of culture and law.
Agreed but every lawful and culturally acceptable things are not right necessarily.
> Companies are not created to take care of their employees.
Says who?
Societies create the conditions under which companies are allowed to exist, therefore societies get to define what responsibilities companies have.
Also, who says that the right of the company to exist >> the rights of the employees?
Not allowing companies to easily shed workers is a way of putting extra fitness pressure on companies, meaning the less fit companies perish and the fitter companies thrive. This is of benefit to society. See Schumpeter, Creative Destruction:
You will note that some of the most highly efficient/competitive economies have pretty strong worker rights. Of course there has to be a balance, excesses in either direction are usually not good. However, in this particular case I don't think any of these SpaceX employees were systematically drunk on the job, or playing videogames instead of working.
Why would someone ever hire if they wouldn't be able to terminate the contract if it's ever needed? And this goes both ways, I do want to be able to quit (with a "short" notice)
Other answers gave plenty of good reasons: employees underperform, projects change, companies close, etc
It's a job, not a marriage, and even those are becoming shorter.
Note I'm not proposing "at-will" employment, I don't think that is good as well (even if employers like it, I don't think it's good for overall labour relations)
There are placees where termination for arbitrary reasons doesn’t exist (see e.g Sweden). Those economies still seem competitive.
If you lay off 10% because times are worse and there is less work, then interestingly you are more or less required to re-hire the same people when you hire again (typically that would be negotiated so you’d buy them out instead).
The 10% you fire also has to be the 10% last hired, you can’t fire the 10% worst performing (again, this can be negotiated so firing an older underperforming hire quickly becomes very expensive - think 1-2 years salary or similar)
Is this perfect? No. But it makes employers think hard about hiring for better or worse, and it means you plan far ahead to ensure you have enough work in bad times, and don’t go on a hiring spree in good times.
It's important to note that these countries (Sweden, Japan) with higher employee protections and guarantees are very different in terms of culture from the hyper-individualistic US.
> see e.g Sweden). Those economies still seem competitive.
That's what you get when you have a high qualified and restricted (in numbers) workforce. But let's see if it keeps being that way or it goes the way of France and Italy
(So how's that idealistic view working out in their real estate market again?)
Again, it's a job, not a marriage. Some stability and regulation is welcome, sure, but jobs for life don't exist anymore.
If you create a company, you take care of it and all of its members. If you have to cut expenses because the company needs to be "leaner" then you cut the salaries starting from the top executives. Eventually you fire management, because the state of the company is in part the result of their decisions in the long-run.
Will the 10% of the employees be the ones who are already in the less comfortable financial and social situation in their private life ?