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Cisco Emerges From Restructuring 13,000 Employees Lighter
Joining the ranks of accepted submitters, Zibodiz writes with an article in PC World about Cisco restructuring. From the article: "Cisco Systems emerged from 150 days of restructuring on Tuesday ... The networking company started to streamline its operations and refocus itself on a few core businesses earlier this year after posting disappointing financial results. The subsequent restructuring shut down its Flip consumer camcorder unit and other businesses and eliminated 12,900 jobs, with almost 23,000 employees moved in the process. Executives laid out some more details on Tuesday at Cisco's annual financial analyst conference in San Jose, California. Cisco's five areas of focus now are its core routing and switching business, collaboration, data-center virtualization, video, and tying these elements together in an overall architecture."
Zibodiz further writes "Perhaps the most interesting thing to me is that Cisco had 12,900 employees that were doing things other than 'routing and switching, collaboration, virtualization, video, and ... architecture.'"
The traditional model towards profitability was to sell more product, grow your operation, hire more workers and build more factories, wash-rinse-repeat.
Today it seems like the road to profitability is to not grow, increase short-term profits by downsizing, make existing workers do more work, wash-rinse-repeat.
That's great news if you're a CEO only concerned with the short-term profitability of your brief stint as CEO (before you bail out with your golden parachute). But it's pretty shitty news if you're a worker or a long-term investor in said company. And it's even worse news if you're out of work and looking for a job.
SJW: Someone who has run out of real oppression, and has to fake it.
imho, the main problem with cisco is their inability to have a decent price list that one can count on, all hardware is sold at a variable discount different for each customer, seemingly depending on the direction of the wind. Also the necessity of having an active support contract to get firmware upgrades including the ones that patch urgent security bugs is a turn off, in particular when one has payed 5 or 6 figures for a piece of equipment...
In the spirit of "sharing the pain" all groups were tagged with layoff requirements. This included lean teams doing critical operations in core businesses (routing, aggregation, security etc).
While the engineers are still excellent, Cisco is no longer a company run by skilled technical professionals focused on delivering quality products. Its an accounting operation infested with old-boys-clubs where decisions are primarily the result of office politics, not technical correctness. The smart people are leaving, the lucky ones are getting laid off with severance packages, the unfortunate are left holding the bag.
Cisco is one of the most annoying, difficult companies to buy from.
They have so many products, with many different feature levels, with many different service contracts, that no one I have talked to understands what they sell.
I've actually had to say to them:
I AM TRYING TO GIVE YOU MONEY. THIS IS A VITAL FUNCTION FOR ANY BUSINESS. INSTEAD OF MAKING IT EASY FOR ME TO GIVE YOU MONEY, YOU ARE MAKING IT HARD FOR ME TO GIVE YOU MONEY!
Or people performing non-core business needs (janitors, shipping/receiving, security and various other support services). Any time a company fires X amount of people, they either downsize and also fire X+Y or they outsource and fire X then hire X number of contractors. The news never reports on the actual number of people affected.
Thanks. I started to post this same point, but Slashdot ate my post. There's HR, training, travel coordinators, project management, facilities (building maintenance, for instance), mailroom staff, on-site copy personnel, cafeteria staff... A lot of times I see people assuming that if you're not technical then you're overhead, but they never stop to consider the sheer amount of work required to support the core business functions.
By the way, the actual quote is this:
Cisco's five areas of focus now are its core routing and switching business, collaboration, data-center virtualization, video, and tying these elements together in an overall architecture.
Emphasis mine.
Actually in general what I see, the fat is the last thing to go. First they cut out the muscle, then the internal organs, then they start to concider the fat. In general the initial cuts are to support, then to engineering/developing, insert a few more key links here, then finally they start to even consider the possibility of cutting their management buddies that helped drive the place into the ground to begin with. Usually they try and delay losing managers until the managers are close to a 1:1 ratio with people they manage.
Just once, someone would read the article before making stupid comments like this. Here, from one of the linked articles from back in July:
The layoffs will eliminate about 9 percent of Cisco's regular, full-time workforce. In the ranks of vice president and above, Cisco said it will cut 15 percent of employees.
There, does that make you happy? Here's another one:
{Cisco} moved from a controversial collection of boards and councils managing the company to named individuals being responsible for product lines.
Sounds like administrative middle management being eliminated to me.
Also note that in the announcment in July, they talked about transferring a unit to Foxconn, saying:
No jobs will be lost in that transaction, but about 5,000 Cisco employees will be transferred to Foxconn
Read the articles and get that chip off of your shoulder.
First Cisco offered an Early Retirement Package... this backfired since many of the senior technical folks, who would have no problems getting a job somewhere else took the package and immediately got a job at a competitor. Nothing like paying top talent to work somewhere else.
They as part of the layoffs they said that they would lay off 15% of all VP and higher folks. A few Distinguished Engineers were let go.
Then this morning they announced that FOUR new VPs were made Senior VPs.
Cisco's employee profile is shaped like an hour glass, you're either upper management or a grunt. There is no middle class here. I"ve also heard of this place like a upside down pyramid. Btw, VPs get a compensation that is orders of magnitude greater than any individual contributor (including Distinguished Engineers, for which there are 100 in the entire company).
Yes, good point about the people taking voluntary early retirement. From that article:
...non-commission-incentive employees will receive one year's regular base pay plus their annual incentive target amount. Commission-incentive employees will receive 80% of one year's regular base pay, plus 80% of their annual target commissions...
Health benefits will include a lump-sum payment equivalent to 24 months of current medical, dental, and vision coverage...
Cisco will also provide 401(k) and stock payments to eligible employees. For 401(k) plans, the company will provide a one-time payment equal to approximately two years of company matching contributions, paid as a lump sum outside of the 401(k) plan. Payment will be calculated as 4.5% multiplied by total 2011 target compensation, up to a $245,000 limit, regardless of participants' actual 401(k) participation level.
And it wasn't about getting mid-career people out and cutting 20 years off their expected jobs.
The program is aimed at a segment of U.S. and Canadian employees at least 50 years old who have a combined age plus years of service with Cisco totaling at least 60
kind of hard to sell more routers and switches when your 10 year old products are more than enough for a lot of your customers
You have no idea how correct you are. As someone who has worked in the "core" areas, Cisco leadership now comprises of people who have stayed there due to various reasons like politics, visa issues etc etc. Most of the really smart people responsible for the networking boom in Cisco have left for greener ventures or they got tired of the politics/incompentency that is rampant in Cisco. Another example that is really close to my heart - The unit I worked for has around 500+ people out of which it is safe to say 450+ are Indians. It is safe to say the situation is the same in other units as well. The culture has become so Indianized that managers often talk in hindi and organize lunches to Indian places even if there is maybe 1 non-indian in the group (what will he do , quit ? ). The situation is so bad that even within Indians there is politics. My group that I worked on comprises of 5 people out of which 4 are from the same part of India. The 2nd level Manager only looks for people that are from the same part of India as he is. This is also visible in other groups across my BU. No problem against Indians for me, but these people brought with them a highly non-professional and obsolete management style consisting of manager-worship, no questions asked style of leadership and that was suffocating for me as a developer. Any average person like me in Cisco is bound to get frustrated and leave!. Most people there choose to stay because they have their green cards being processed and they cannot leave. The managers know that well and they try to exploit that in every way possible. The end result is an extremely mediocre management team that now faces competition from Huawei, Juniper, HP etc and has no clue how to go about it.
Here are reasons as to why it makes NO SENSE to hire American workers.
Full Congressional meeting.
2006 speech predicting the incoming problems.
discussion on the job destruction act
Text submitted to Congressional committee before the meeting.
You can't handle the truth.
Some of the 12900 employees that were laid off or had voluntarily retired were doing things outside of the 5 areas of focus. Some on my development team were in one these areas but the bulk of the development in this area was shifted overseas. A large number of the voluntary retirees were doing work in these areas as well. With some of these folks in very key roles.
"Gentlemen, you can't fight in here! This is the War Room!" -- Dr. Strangelove
The problem is that companies add links to the command chain during expansions, but seem unable to remove them when consolidating. If anything, they add layers even then, which is counter-productive and hinders integration.
The end result is that over time, companies get heavy around the middle (to continue the fat anology).
Any company - ANY - where there are more than five steps from the top boss to the lowest worker is going to be grossly ineffective. Not only because all the superfluous management is a big money drain, but because it will suffer from sluggishness and Chinese whisper effects in the chain of command.
Cutting down on this fat is always harder than just cutting individual bosses and everybody below them. But doing the latter will always leave the company more top-heavy. It's simple maths, and thus too hard to understand for CEOs and CFOs.
So the sturdy pyramid turns into a tower, and one day it topples. Cisco isn't too big to fall, it's just a bit more wobbly now.
Good read on the back of the recent WSJ article by Andreessen about 'Software eating the world'. The post makes the case that Cisco is 'doomed' on the basis that 'If the output of your hardware is information or the manipulation of information then you are going to get eaten. If the output is something else then you are not.'
http://brontecapital.blogspot.com/2011/08/software-eats-part-of-world.html
With Intel buying Fulcrum, Vyatta and other virtual networking plays entering this space, the current method of buying hundreds and thousands of standalone firewalls, load balancers, switches, routers, WAN accelerators, VPN boxes, SSL terminators etc. as seperate appliances is going to start looking antiquated quickly. There will be exceptions where dedicated single purpose hardware is still required but even those exceptions are shrinking.
I have only worked at one organization that went through any significant downsizing, but it played out differently than you laid out. First they cut from the bottom and did away with as many redundancies as possible. They also aimed at parts of various departments that were not critical to the operation of the company. On the second round of layoffs they took out most of the middle management. That is what sucked the most for me. I lost my boss (no big loss, he didn't do much anyway) but then had to pick up his work, plus my work, and didn't receive a bump in salary. Even my suggestion that they split the difference and bump me up to half way between what I made and he made was rejected.
I have since moved on. The people who rarely get cut are the senior management. You know, the people who are so out of touch with what is really going on that they fail to actually lead.
Sales, and Management tends to get cut too. Most companies don't hire lawyers are part of their payroll.
Yes A lot of R&D projects get cut especially ones that are not part of the core business model. And when R&D gets cut the Engineers and Programmers who are working with the R&D Projects get cut.
Most of the time a Manager should be managing 5-8 People. if there is 2 Groups with managers managing under 5 then one manager will get cut and the other will take both spots (After a bunch of Reorganization) So it is usually 4 employees per 1 manager. then 4 managers per 1 director. 4 directors for 1 vp.
However what happening is companies really don't like killing off units, so they will take out 1 or 2 employee from each department leaving no layoffs in management. So they don't kill off a future profit center, or a cost saving center.
It isn't a conspiracy it is just the numbers working out to the end guys disadvantage.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Self interest is what causes people to band together and form governments to help protect them from others who control vital resources and would otherwise take advantage of them, or who fraudulently or deceptively trade (as two examples).
The world you experience is only a close approximation of reality.
The government of the United States, formed under the Constitution, was intended to fulfill the following functions:
- your wrote that, and then you wrote the MEANS by which the actual GOAL was to be obtained.
You didn't write the GOAL.
The GOAL is to provide a more perfect union by protecting individual liberties and freedoms, to protect people's rights, property, to uphold criminal and contract law.
The GOAL is NOT to "collect taxes and duties" - those are MEANS to the GOAL.
So you are so confused when it comes to the PURPOSE of government, why don't you take 5 minutes to think about this: do YOU exist so that government can collect taxes, or does government exist, so that you have liberties and freedoms protected in this life?
You can't handle the truth.
Those who employ you are not driven by the same motivations as you are. Your employment is a function of difference between the value that you deliver to your employer and the cost of your employment, or profit that you generate for your employer.
Your employment comes as a function of profit and capital available to your employer. Profit is what keeps you there and capital is what makes you productive, as capital provides you with tools and everything you need to do your work.
Whether you are driven by it or not (and you are going to work rather than sitting doing nothing, so you are driven as well, since you do need to eat), your employer is driven by profit.
You can't handle the truth.