Corporate profit

User Forum Topic
Submitted by moneymaker on November 13, 2014 - 9:31am

When profitable companies layoff people is it basically corporate greed at work? Example Cisco, I don't know much about them yet they seem to be profitable and are going to layoff 6000. Other past examples are Microsoft, B of A, Apple, Verizon, there are many other examples I'm sure. I'm seeing big companies laying off thousands while at the same time fueling up their corporate jets and thinking nothing of it. Disturbing to me but just part of reality I suppose.

Submitted by outtamojo on November 13, 2014 - 10:31am.

When a division/department is no longer needed and is not of strategic importance what would those workers do? IOW, how would their continued presence benefit the company? I suppose they could offer jobs elsewhere within the company and retrain and keep the better employees but that brings on a whole new set of questions.
I do believe there should be some shared suffering between the executives and the rank and file though when there are layoffs -a failed endeavor is after all a reflection on management also and they should not be getting bonuses while the underlings get slashed. All imo of course.

Submitted by The-Shoveler on November 13, 2014 - 11:02am.
Submitted by moneymaker on November 13, 2014 - 11:18am.

That's a good one Shoveler. Dilbert is my favorite comic strip. I guess i missed that one, will have to visit the website to catch up. I guess http://www.dilbert.com/2014-11-10/ is appropriate as well.

Submitted by UCGal on November 13, 2014 - 4:16pm.

I'm glad I'm out of the rat race. My blood used to boil at huge salaries/bonuses/corporate jet expenses of our former CEO as he was cutting about 40% of the employees. But it's not my problem anymore.

Had a friend laid off - just heard from my friend about it today. But it's not the situation in the OP - they fired the CEO too. From what I hear - he's a big part of the problem with that company.

http://www.utsandiego.com/news/2014/nov/...

Submitted by livinincali on November 14, 2014 - 9:46am.

CSCO profit margin is 16% and it's revenues have been flat for years now. Investors are demanding earnings growth and the company just can't seem to generate it without cost cutting measures. I don't think a 16% profit margin is that horribly greedy. I do think Cisco suffers from a lack of innovation though.

Submitted by EconProf on November 14, 2014 - 10:07am.

Profits = revenues minus expenses. Companies naturally seek to increase profits. They can use various means to increase revenues or cut expenses. It looks like, for whatever reason, they could increase profits, or decrease losses, by letting go some of their employees. In other words, the contribution of those employees to the firm was not worth their pay. I don't see a problem with that.
I'm sure they did not enjoy laying off people, but their job is to satisfy their customers and their stockholders, not be a charity.

Submitted by outtamojo on November 14, 2014 - 11:57am.

Yeah but to lay off people because they aren't worth their pay means at some point someone did feel they were worth their pay and the decisionmakers were wrong to think that. The people who were wrong need to pay the price for their error - as a shareholder/owner that is what I demand and I see too often only the rank and file suffering.

Submitted by harvey on November 14, 2014 - 1:13pm.

There's a reason why hiring and firing is done by the part of the organization called Human Resources.

If certain employees are not productive resources, it makes no sense to keep them.

Would you expect a CEO to pay rent on a vacant building that no longer has any use?

Keeping unnecessary employees is no different.

Of course the calculations don't need to be entirely callous. There are compassionate ways to handle these situations, although many CEOs suck at compassion.

Nevertheless the decision to keep or not keep an employee is a business decision, not a charitable one.

And it works both ways. Few people go to work every day to be charitable. They do it for the money.

Submitted by Hobie on November 14, 2014 - 1:14pm.

Whoa. Markets change. What was valuable before can be eclipsed with advancing technology. Pentium III was the bomb, for a while..

Submitted by FlyerInHi on November 14, 2014 - 4:22pm.

harvey wrote:

And it works both ways. Few people go to work every day to be charitable. They do it for the money.

But like any relationship there are power dynamics. The side with relatively more power will have the upper hand and will make the rules.

One example: at will employees can be fired anytime; and the employees can "fire" the employer and leave anytime. But the truth is that employers will fire employees the same day. But the employee is usually expected to give 2-week notice. There is a clear power imbalance.

Submitted by joec on November 14, 2014 - 7:20pm.

This is why I am fascinated by companies who never lay people off. They find ways to reallocate and retrain those "resources" to new tasks. Like you find a way to reuse your old phone for your kid to play android games, etc...instead of tossing it out. This is sometimes done at the executive suite to train up and coming C-level folks to do global tasks, but would be nicer if thought about more throughout more companies.

There's this constant complaint in the tech industry (and I've worked in it in the past) that there isn't enough tech folks.

The reality is that with the way how tech works, unless you learn the current/latest stuff, you're old news and useless to the company. There is VERY LITTLE desire at a lot of companies to get workers exposed to different technologies, current stuff, give them time to learn new things, etc...Just do your basic task and don't bother me.

Some companies are better about this, but I suppose ultimately, it's more profitable to just fire and hire.

Submitted by bobby on November 14, 2014 - 9:25pm.

FlyerInHi wrote:
harvey wrote:

And it works both ways. Few people go to work every day to be charitable. They do it for the money.

But like any relationship there are power dynamics. The side with relatively more power will have the upper hand and will make the rules.

One example: at will employees can be fired anytime; and the employees can "fire" the employer and leave anytime. But the truth is that employers will fire employees the same day. But the employee is usually expected to give 2-week notice. There is a clear power imbalance.


you can up and leave.
"I quit". of course that bridge is burned.
if one work in a small industry, burning too many bridges is bad for career unless that person is a known superstar.
in a big industry, not so much.

Submitted by spdrun on November 14, 2014 - 9:40pm.

But the employee is usually expected to give 2-week notice. There is a clear power imbalance.

Expected to doesn't mean you have to. Not illegal to simply not show up one fine morning and let them chase their tails till they realize you're gone.

This should be used judiciously, only in a way that inflicts maximal damage to a firm that treats its employees like crap anyway.

Submitted by FlyerInHi on November 14, 2014 - 10:24pm.

Expectations affect consumer behavior. So it's a two-way street in name only.

As a whole, people think like caring, decent human beings.

Generally, businessed only care about profits and the law.

During the housing crisis, why was there so much pushback against strategic default? Businesses do it all the time. Developers setup corporations to personally insulate their wealth. When a project goes south, they walk.

In contrast, a person who defaults is looked down upon, when in fact all he did was follow the letter of the contract. Another example: with consumer credit, people could just walk after maxing out their credit lines. It's unsecured, so it's up to the creditors to pursue. Good luck to them.

My point is that if people behave like businesses, without regard to morals, in a legalistic, profit maximizing manner, then the world will be a whole lot different.

Submitted by no_such_reality on November 15, 2014 - 7:25am.

joec wrote:
This is why I am fascinated by companies who never lay people off. They find ways to reallocate and retrain those "resources" to new tasks. Like you find a way to reuse your old phone for your kid to play android games, etc...instead of tossing it out. This is sometimes done at the executive suite to train up and coming C-level folks to do global tasks, but would be nicer if thought about more throughout more companies.

There's this constant complaint in the tech industry (and I've worked in it in the past) that there isn't enough tech folks.

The reality is that with the way how tech works, unless you learn the current/latest stuff, you're old news and useless to the company. There is VERY LITTLE desire at a lot of companies to get workers exposed to different technologies, current stuff, give them time to learn new things, etc...Just do your basic task and don't bother me.

Some companies are better about this, but I suppose ultimately, it's more profitable to just fire and hire.

One of the most know of those is SAS analytics. A key to it is not being a publically traded company. Once a firm IPOs and is on the financial markets, they have to make quarterly targets. The stock market isn't about investments, it's about growth and that's all the market values today. 40 years ago, a good solid dividend, confidence in your cash flow, that ruled. Today, it's just the growth anybody cares about.

Submitted by njtosd on November 15, 2014 - 3:50pm.

moneymaker wrote:
When profitable companies layoff people is it basically corporate greed at work?

Those who administer publicly traded companies (other than those organized under new provisions such as California's Benefit Corporations) have a duty to maximize shareholder value. Whether they do it correctly, incorrectly or whether it is ethical to do so are separate issues. When you go to work at a standard, publicly traded company, you get a lot of benefits (all sorts of stock disclosures, etc.) but there are also the downsides, such as the risk that you will be downsized to keep the stock price afloat. If people refused to work for companies that operate to maximize profits, money would flow to companies organized under different principles.
For this reason, I like privately held companies (like In N Out Burger and Johnson Wax "a family company"). They can operate as they like and have more flexibility, and they don't waste time and money pleasing the shareholders. For this reason, they provide a better value, in my opinion, but the likelihood of rising to the top in a family company is low, unless you're related.
The best would be to start your own company, treat your employees the way you think they should be treated, and enjoy life. Hard to do, though.

Submitted by CA renter on November 22, 2014 - 5:24am.

bobby wrote:
FlyerInHi wrote:
harvey wrote:

And it works both ways. Few people go to work every day to be charitable. They do it for the money.

But like any relationship there are power dynamics. The side with relatively more power will have the upper hand and will make the rules.

One example: at will employees can be fired anytime; and the employees can "fire" the employer and leave anytime. But the truth is that employers will fire employees the same day. But the employee is usually expected to give 2-week notice. There is a clear power imbalance.


you can up and leave.
"I quit". of course that bridge is burned.
if one work in a small industry, burning too many bridges is bad for career unless that person is a known superstar.
in a big industry, not so much.

Of course, when a company fires someone, the owners and executives still have money to sustain themselves; when a worker quits, she risks being unable to provide for herself and her family. This is a very big distinction that really shows how uneven the power structure is.

Additionally, most companies force their employees to sign non-compete clauses/agreements. Can you imagine if employees were able to force their employers to sign agreements prohibiting the employer from hiring someone else who was competing with the employee?

And while most people are unaware of what the employer is paying most other employees (and employers do everything in their power to ensure they don't find out). OTOH, the employers usually know exactly what their competitors are paying their employees...and obviously know what each of their own employees is making, and what's expected for that money. The information is completely one-sided.

I find it sickening that the departments who handle employee-related issues have gone from being called "personnel departments," to "human resources, and now to "human capital." This is a very clear attempt to dehumanize employees. Gotta love our "capitalist paradise."

There is no free market where labor is concerned. The entire market is 100% rigged by corporate/financial interests. And yet, people will vote in droves for the very people who created this mess (both Republicans and corporate-sponsored Democrats).

Submitted by spdrun on November 22, 2014 - 1:45pm.

Aren't non-competes essentially unenforceable in CA short of being an ex-partner in a firm? One can still sign one, then tell the ex-employer to go make sweet love to a pointy object if they object to your next job.

BTW - the free market does still exist. Just not when working for large firms, but between skilled workers selling their services to either individuals or small companies.

Submitted by joec on November 22, 2014 - 7:27pm.

Maybe in 50 - 100 years, but I foresee much higher and massive unemployment in many countries. I'll be long dead, but this will lead to greater social unrest and increased violence...

There is simply an oversupply of human capital/labor/bodies/slaves...you call it what you will, but most jobs can be replaced and more will be replaced as time goes on.

Think what will happen when you have some countries in Europe with 50%+ youth unemployment already...and in 10-20 years. More violence, radicalism, people who simply "don't care"...

Submitted by harvey on November 22, 2014 - 8:26pm.

CA renter wrote:

Of course, when a company fires someone, the owners and executives still have money to sustain themselves; when a worker quits, she risks being unable to provide for herself and her family. This is a very big distinction that really shows how uneven the power structure is.

Additionally, most companies force their employees to sign non-compete clauses/agreements. Can you imagine if employees were able to force their employers to sign agreements prohibiting the employer from hiring someone else who was competing with the employee?

And while most people are unaware of what the employer is paying most other employees (and employers do everything in their power to ensure they don't find out). OTOH, the employers usually know exactly what their competitors are paying their employees...and obviously know what each of their own employees is making, and what's expected for that money. The information is completely one-sided.

I find it sickening that the departments who handle employee-related issues have gone from being called "personnel departments," to "human resources, and now to "human capital." This is a very clear attempt to dehumanize employees. Gotta love our "capitalist paradise."

There is no free market where labor is concerned. The entire market is 100% rigged by corporate/financial interests. And yet, people will vote in droves for the very people who created this mess (both Republicans and corporate-sponsored Democrats).

Post-employment non-compete agreements are effectively unenforceable in California. You quit your job and you can work wherever you want, including a competitor (of course few employers allow someone to work for a competitor at the same time, but that's entirely reasonable.)

A company cannot prohibit you from sharing your compensation information with other employees, although you're right that HR departments often discourage the practice by propagating the myth that it is forbidden.

There is very much a free market for skilled labor - people change jobs all the time and often go work for firms in the same industry. It's called "having a career" and millions of people do it.

Now some choice is limited if a union is involved - because California is not a "right to work" state, one has to pay the union dues if there is a union. No freedom there.

(For unskilled labor the market is not so great, but unskilled labor is going to be virtually nonexistent in a decade or two and nothing is going to stop that...)

I have some friends that work as HR managers and I don't think there's anything "sickening" about them. They tend to be warm and caring people. If you were to start a company, I suppose you could name the HR department with any euphemism you like.

I do kinda love our "capitalist paradise." I certainly wouldn't want to live anywhere else. (I've heard someone mention a country in Europe that's even better, but they refused to say which one...)

Odd ... I thought you said you were a manager for a tech company. Doesn't that make you a tool of the employer? Either way, you should probably brush up on your knowledge of employment law...

Submitted by spdrun on November 22, 2014 - 9:14pm.

And by warm and caring, you mean fake and catty? Right?

(I'd make sure to keep any company I own small enough not to need an HR department.)

Submitted by outtamojo on November 23, 2014 - 2:26am.

Oh gosh, please don't get me started about HR depts- seems like all they do is mislead and deflect until the Unions call their bluff. I work in a non-Unionized dept. but I am always grateful to freeride the representation other dept's pay for. Weird, I find as I grow older I grow less anti Union.

Submitted by CA renter on November 23, 2014 - 4:18am.

spdrun wrote:
Aren't non-competes essentially unenforceable in CA short of being an ex-partner in a firm? One can still sign one, then tell the ex-employer to go make sweet love to a pointy object if they object to your next job.

We have a friend who's been dealing with this very issue for about a year now (non-solicit). He's had to pay many thousands of dollars in legal costs to defend himself, and doesn't see any way to get that money back from his ex-employer. Even if it's unenforceable, it can still be a headache for some employees.

Yes, most of these agreements are generally unenforceable in California (yay!), but are still legal in many/most other states.

Submitted by CA renter on November 23, 2014 - 4:19am.

outtamojo wrote:
Oh gosh, please don't get me started about HR depts- seems like all they do is mislead and deflect until the Unions call their bluff. I work in a non-Unionized dept. but I am always grateful to freeride the representation other dept's pay for. Weird, I find as I grow older I grow less anti Union.

Older and wiser... :)

Submitted by outtamojo on November 24, 2014 - 2:17am.

CA renter wrote:
outtamojo wrote:
Oh gosh, please don't get me started about HR depts- seems like all they do is mislead and deflect until the Unions call their bluff. I work in a non-Unionized dept. but I am always grateful to freeride the representation other dept's pay for. Weird, I find as I grow older I grow less anti Union.

Older and wiser... :)

Who knows... if things start going to hell in a handbasket I may start a union campaign myself : )

Submitted by CA renter on November 24, 2014 - 2:32am.

I'll help run your campaign. ;)

Submitted by CA renter on November 24, 2014 - 2:37am.

harvey wrote:

Odd ... I thought you said you were a manager for a tech company. Doesn't that make you a tool of the employer? Either way, you should probably brush up on your knowledge of employment law...

This topic was not limited to California corporations.

Here is a list of the states and how non-compete agreements are viewed in each state.

http://www.beckreedriden.com/wp-content/...

As always, you need to brush up on your reading comprehension skills.

Submitted by CDMA ENG on November 24, 2014 - 9:38am.

outtamojo wrote:
Yeah but to lay off people because they aren't worth their pay means at some point someone did feel they were worth their pay and the decisionmakers were wrong to think that. The people who were wrong need to pay the price for their error - as a shareholder/owner that is what I demand and I see too often only the rank and file suffering.

You are assuming that business needs are static... They are not.

At one time thousand of people were employeed to build ICBMs... THe business need has changed. Is that the C-Levels fault?

Let's look at it a different way. Your claim that CEO made a bad decision and needs to pay for their error is also incorrect. Those employees were given a job and paid for their time and efforts. Perhaps that is a job they would have not had at all. That actually seems like an error in favor of the employee and not the CEO as they are usually performance based compensations.

As far as your comment that it is the Rank and File that suffers... Maybe that's true...

But anyone that feels that way is assuming that they are entitled to their job...

There are no guarntees in life and no one should ever position themselves to be wholely dependent on one thing.

CE

P.S.

I should have read the rest of this thread before posting now realizing that ppl have rebuted the same points over again. Sorry for the redundancy.

Submitted by outtamojo on November 24, 2014 - 10:38am.

CDMA ENG wrote:
outtamojo wrote:
Yeah but to lay off people because they aren't worth their pay means at some point someone did feel they were worth their pay and the decisionmakers were wrong to think that. The people who were wrong need to pay the price for their error - as a shareholder/owner that is what I demand and I see too often only the rank and file suffering.

You are assuming that business needs are static... They are not.

At one time thousand of people were employeed to build ICBMs... THe business need has changed. Is that the C-Levels fault?

Let's look at it a different way. Your claim that CEO made a bad decision and needs to pay for their error is also incorrect. Those employees were given a job and paid for their time and efforts. Perhaps that is a job they would have not had at all. That actually seems like an error in favor of the employee and not the CEO as they are usually performance based compensations.

As far as your comment that it is the Rank and File that suffers... Maybe that's true...

But anyone that feels that way is assuming that they are entitled to their job...

There are no guarntees in life and no one should ever position themselves to be wholely dependent on one thing.

CE

P.S.

I should have read the rest of this thread before posting now realizing that ppl have rebuted the same points over again. Sorry for the redundancy.

What about the CEO who over-expanded his community hospital and bought overpriced commercial properties during the bubble and then had to slash and diveste who was still being rewarded with bonuses as he was doing so?
Yes those who lost their jobs were paid for a while but his empire building clearly hurt the hospital itself and after he finally abruptly resigned the board looked at selling us off to a stronger partner. Actually he didn't abruptly resign, he did it after the Unions fought a media war with him over all his bonuses and special retirement packages he was receiving as he cut services via layoffs. Some were saying he deserves the extra pay for doing a necessary dirty job.
We on this blog otoh saw all the economic distress coming and would have hunkered down instead of expanding : )
I don't view your post is redundant BTW.

Submitted by harvey on November 24, 2014 - 2:28pm.

CA renter wrote:

This topic was not limited to California corporations.

Here is a list of the states and how non-compete agreements are viewed in each state.

http://www.beckreedriden.com/wp-content/...

As always, you need to brush up on your reading comprehension skills.

Yes, reading comprehension, the card you attempt to play right after your argument falls apart.

Since you are so good at reading comprehension, can you explain how "San Diego Housing Market News and Analysis" means that topics are not focused on California?

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