Massive Job Cuts Are Reportedly Coming For Microsoft Employees

mrspoonsi (2955715) writes with news that Microsoft is reportedly planning a major staff reduction that would top Steve Ballmer's record 5,800-head layoff in 2009. From the article: The reductions — which may be unveiled as soon as this week — will probably be in areas such as Nokia and divisions of Microsoft that overlap with that business, as well as marketing and engineering, said the people, who asked not to be identified because the plans aren’t public.

Comments

Who couldn't see this coming?

[Virtucon]

Domination in the desktop eroding. Products not making a big splash in the market. Shareholders restless and right after an announcement by the new CEO about agility and business realignment. All of these things add up to reductions in force in areas where they're not profitable. It'll be interesting to see if the cuts will be across the board.

Re:Who couldn't see this coming?

[rickb928]

FWIW...

I work for a S&P 500 financial corporation. I've been here through multiple major layoffs, one a 10% global layoff, the other a 20% global layoff. One in response to the unpleasantness in 2008-9, the other in response to business decisions to refocus and drive growth by investing in new markets and new products, necessitating divesting and letting a lot of good people go that simply did not do what was needed at the time.

It's a familiar and trite complaint that layoffs serve the C-level exclusively, but I can easily see Microsoft choosing to remove distractions, reduce current expenses, and even take the opportunity to shake the tree and rid itself of (real or imagined) low-hanging underperformers.

IBM did this repeatedly, and is still doing it, as large corporations regularly have to sift their work force and reset priorities, UNLESS they are consistently evaluating their strategies, have truly strategic planning that looks beyond the horizon, and work from a position of true knowledge of their business and performance. Microsoft is regularly accused of failed strategy and poor performance. And they can certainly be accused of being too big to be well managed, especially in the eyes of the minions who live with the decisions.

Microsoft's market(s) is(are) difficult places to predict performance. Intangibles rule in that space, and failure is the norm. Success if fleeting. Windows is Microsoft's bedrock, so as the marketplace starts to embrace nontraditional devices that need not use Windows, Microsoft should be looking beyond traditional and on to emerging opportunities. Can they move quickly enough to outflank competitors? Google is huge, but acts like a startup on specific projects. From my viewpoint, Kinect is the last Microsoft project that could be described as nimble. There are some interesting things they show off, but none yet ready for a product. Surface is just not floating anyone's boat yet. Nokia was dead on arrival, so losing that is admitting they could not resuscitate it with Windows Phone, the poster child for losing the traditional to the nontraditional. Ask me some time about my new set top box, running Microsoft Mediaroom, and closed captioning. At least Microsoft left this in marginally perfect state, but another idea they had to abandon.

Harrison's Postulate confirmed. Enjoy.

Re:Who couldn't see this coming?

[ShanghaiBill]

You forget that it affects morale.

It can affect morale in either direction. People that work hard tend to resent the deadwood. If the layoffs are carefully targeted, and employees see long term problems being addressed, then morale can go up. The important thing is to make the cuts deep enough that you don't have to come back for a second round. Nothing kills morale more than the uncertainty of waiting for the next salami slice.

I once worked for a CEO what didn't believe in firing people. Employees realized they could spend time gossiping in the break room, or working on their own side projects, while ambitious employees quit and went elsewhere. Morale was horrible, everyone thought the CEO was an idiot, and the company went bankrupt during the dotcom implosion.

Dropping the Xbox?

[timrod]

I know when Ballmer resigned as CEO, there were members of Microsoft's board calling for them to drop the Xbox division entirely because it wasn't profitable enough. The article mentions that people on the marketing teams for the Xbox are among those being cut, and I'm wondering if this isn't MS taking the first steps to selling off the Xbox division to someone else.

Re:Dropping the Xbox?

[nine-times]

So they get rid of their most successful consumer product....

"Successful" in that it sold a lot of units. Maybe not so successful in terms of profits. I don't know what the current state of the balance sheet is, but as of a couple of years ago, the entire XBox line was still in the red. To begin with, they sell the hardware as a loss-leader. Plus they spent a bunch of extra money on the first generation to break into the market, so they were expecting the XBox360 to be successful enough to pay for those losses. Then the XBox360 was riddled with hardware failures, so Microsoft lost a ton of money on replacements. At one point, I remember it was estimated that almost 50% of all XBox360 units had manufacturing defects requiring the units be replaced.

I don't remember exactly. Everything I've written above is pulled out of my fuzzy memory. The point is, the XBox was hardly the enormous success you might be imagining.

Re:Chain effect

[dpbsmith]

Indeed. I worked in a Fortune 500 company--I arrived in the middle of a new CEO's "three-year turnaround plan," and shortly thereafter he was replaced by another CEO and shortly thereafter the company collapsed with stunning speed.

One of the things that was interesting was seeing the effect of a layoff from inside. It isn't just morale, although since layoffs were done on the "night and fog" principle--they didn't post lists of those laid off--for about two days after each layoff, all worked stopped as everyone else in the company spent their time telephoning everyone they knew to see if they were OK.

But there was also an immediate, precipitous problem with any kind of customer support or service. The air was full of overheard conversations. "Let me put you on hold. Uh, Marie, this customer wants to order a license for a vestibulator spracket. Who handles that?" "It used to be Bob, but he was laid off yesterday. Uh, Lewis, do you know?" "No idea, maybe his manager would know. Let me see, his manager was Kelly Sundstrom." "Oh, she's no longer with the company..."

No joke. Customers wanted to buy stuff and couldn't. Customers with service contracts couldn't get gear fixed. The stock price went up because at that time Wall Street seemed to love layoffs, but there were, actually, reports in the IT press about customers being disgruntled at bad service, and Wall Street never seemed to connect THAT with the layoffs.

Re:Good

[afidel]

Yeah well, what about something in between? Fire people in order of how badly they need to be fired,

That's what Cisco does, they do regular bottom 5% cuts where those who are ranked in the bottom 5% on their performance reviews are let go. Groups that are performing well and are full of talented people are sometimes allowed to take their 5% from open positions, but only with the approval of an SVP or above. (at least this was the practice when I was there in the early 2000's)

Microsoft's only commodity is ...

[CaptainDork]

... stocks.

They sell stocks. They cater to the shareholder and that's a money-grubbing bunch of folks.

Look at Facebook. They are making decisions that are radical departures from their pre-IPO culture. It has to be.

Facebook, too, sells stocks.

Knowing that explains the business model and strategy of public corporations.

Re:Microsoft's only commodity is ...

[captbob2002]

Once upon a time a company that made a decent product and treated its customers (and employees) well didn't have to worry about their stock prices.

Re:of course

[afidel]

I know you were going for funny, but the reality is Microsoft licensing just isn't that expensive. We've got the full ecal suite plus service center for all servers, SQL, Exchange, etc and MS licensing is well under 3% of our annual IT budget. Salesforce, our document management system, our Oracle maintenance, our cellphone bill, our copier bill, and especially personnel are larger costs.