I'm gonna cosplay an "analyst mindset":

1. Need to measure costs and benefits of slashing benefits/pay.

2. A benefit-- slashing benefits/pay allows us to hit some obvious financial goal

3. A cost-- Uh oh, I don't yet know how to reliably measure any of the costs.

4. Good analysts don't take action without measuring.

5. I'm a good analyst.

Conclusion: I cannot take the action of slashing benefits/pay

The only way to make it work is to add a step "3b: cherry pick metrics for the costs of slashing benefits/pay such that the phony metrics justify the decision management already wants to make of slashing benefits/pay." But now we've shifted from "analyst mentality" to "the mindset of the little Beetle-like bureaucrats described by George Orwell in 1984."

* Comp bands for are now targeting p50 averages rather than p75 or top of market. So you can't close new hires that are going competitors. And you can't give raises to your top performers

* The health benefits are less generous when renegotiated for the following year

* T&E that would have been approved - granted some maybe that shouldn't - but importantly some that should have for top-sales people, are no longer approvable. So your top sales people leave. Or similarly the accelerators or other measures are changed, that might look good on paper but rub top sales people the wrong way.

* Head-count isn't replaced, so teams have to take on more work

* Perks like conference attendance or hardware upgrades, which arguable aren't perks but investments in your team's productivity, are cut/limited

Agreed, but a gradual erosion can occur over the course of several years. PEGs and the operating company's management team have massive incentives to hit their growth metrics. If decreasing 401K contributions helps management hit their EBITDA target, many would argue that they should do exactly that. However, the impact of these decisions accumulates over time and can eventually derail a company's performance.

Which is why companies can "grow" in accounting terms while actually being hollowed out as going concerns with a future.

Likewise with the planetary economy, which appears to be growing financially while in ecological terms it's almost literally eating its own seed corn.

A better approach needs a revolution in accounting. Current accounting practices are built on so many false assumptions they cannot possibly produce lasting long term opportunity, except for a tiny minority of exceptionally and unhealthily privileged people.

Few giant American companies have been as consistently successful as Intel. I can think of only Microsoft, one or two energy conglomerates like ExxonMobil, a telecom or two like Verizon, and maybe a bank like Goldman Sachs.

Something about staying in your lane while increasing opportunities in that lane seems to be a good long-term formula.

But overall, giant companies with 30 year runs of knockout growth and/or dividends like Intel are Cinderella stories. Google will be the next one to qualify in a few years I suppose.

Software engineers from a CFO perspective aren't any really different than plumbers or carpenters. It's just labor. Getting a cheaper rate on labor is far more beneficial to the company than say making sure it's employees are happy.

If the company could cut wages 50% across the board and then give the executives 20% raises for saving 50% in labor, they would do it in a heartbeat.

Can we think of a way to connect and individual’s creativity to money flow?

As an engineer I am most productive when I solve a business need without writing code. How can I associate my contributions with measurable profit?

Once that metric becomes anything close to a target the monstrosities it would bring ae horrific!

It's why most Fortune 500 companies run Java, so they can easily replace one person with another.

Whoa, citation needed. I’m fairly certain yhis isn’t true unless you are optimizing for just the next month.

Plumbing systems are extensively documented and well-understood. The equivalent situation in plumbing would be that the entire layout of the city's sewage system (or similarly, the construction plans for the company's headquarters) is only kept inside the heads of two senior developers, likely because the Powers That Be have decided that keeping accurate documentation is not worth the cost. Preventative maintenance and quality control are impossible, because nobody knows which pipes have been laid first and are the most at-risk from leaking.

Point being: everything is just labour. That doesn't mean software "engineering" should be allowed to fall so far below the baseline we expect from other engineering professions.

Do you sacrifice your own monetary benefit to save a company? But then what about your family?

I don’t think analysts are not smart enough or not caring enough. But institutionalized greed corrupts the integrity of everyone.

https://www.nytimes.com/2013/04/19/opinion/krugman-the-excel...

This seems to be a hard one for some types to truly grok. A common response is that we need to figure out how to measure it, thinking there was some single magic number that things could be distilled down to. But often even if you figured out how to measure some of them, there's always other intangibles you're not tracking. So you need to always be conscious of it.

Can they quantify their love for their partner? No? Well, I guess they have to give up any efforts to improve the relationship.

You can think many things of Bezos, but he does know how to make a business make money. Data is important, but things that are hard to measure that you only learn as anectodes is also important.

I'm not disagreeing here, but it could be that the fraud is a drop in the bucket of Amazon revenue. And just trying to get metrics on it, may cost more than what Amazon benefits from it.

I tonight bought a 3d printer hotend from the source company, because I couldn't be sure the product I order from Amazon would be genuine.

It's pretty bad when the products being sold on Amazon are labeled "Genuine assembled E3D V6 Hotend", when if Amazon gave a shit, it would only need to say "Assembled E3D V6 hotend."

Anedoctes are not data, but when you have some with no data, instead of ignoring it you should take it as a signal to go search if there is data to support it. Great scientists and mathematicians usually have good intuition of things to research, not because they have data, but their mental models of the subject tell them that there should be interesting data there.

"Why are they leaving?" "Well, we used to have meaningful raises, bonuses, profit sharing, etc. but you have consistently cut those things." "Yes yes, but why they are leaving?" "...."

I knew the founders well, and they knew I was critical to success, so they made me quite the offer to stay. For where I'm at, my salary is far above CoL, so I don't have an incentive to leave yet. That and I got some shares that will vest when the company sells this year.

But if I hadn't gotten that bump before acquisition, I'd likely be gone. It's impossible to get a raise now. On the plus side, I now work like it's impossible to get a raise, if you catch my drift.

Once it sells, I'll move on to something I love again. Planning to do consulting with some friends who started a co-op.

If you exclude layoffs and incentivized retirement, it seemed to be that a greater percentage of individual contributors left as compared to managers. Lots of managers stuck around for 12+ months, and it seemed like the percentage of managers of managers (e.g. directors, VPs) who stuck around was even greater. Almost the entire C-suite stayed for years after the acquision.

Was there any financial or other incentives given to managers to stay? As an individual contributor, the morale was just terrible. I just couldn't understand why the managers and other people in leadership positions stuck around.

Money. Investors typically carve out equity to retain key personnel (i.e., management units/stock). The units are worthless unless the company appreciates in value, so management becomes laser-focused on doing whatever it takes to increase the company's valuation. Everything else becomes a secondary concern.

I get that they exiting leadership knows the company and it's hard to find new people. But it just seems so crazy to me.

We had teams that had 50%+ percent of people gone between layoffs and attrition. It was comical to see how much stuff fell between the newly formed cracks. I still can't comprehend how much they must have been incentivized to stay when the earth was crumbling around them.

expand this over 50 years by 1000s of similar groups of people doing the same thing and you go from the "Arsenal of Democracy" to begging China for masks and ventilators

People at the very top unfortunately now listen to the bean counters far too much.

This really does make social problems of an us vs them sort when all of the money manages to drift up with only the false promises of altruism at charity galas being the sign of any of the generated wealth making its way back down to the workers...

https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...

The goal of a private equity group can sometimes be be to extract as much money from the company as possible in a given time frame, rather than to ensure the long-term success or survival of the company.

Metrics are the only goal that means there. It's all about making the numbers look pretty.

I think it is not surprising, when you consider that a precise weather forecast for more than 3 days is usually considered impossible.

When you deal with very complex systems, where small changes can have a big effect via self enforcing feedback loops - how can you expect to calculate all that?

And human social dynamics seem to be at least as complicated as the global weather.

Not saying that my path is better, definitely not money wise, but I knew early, that I do not get along with a culture, that is focused on assigning oversimplificated numbers to people, which is what MBA's seems to be mainly about.

But most people lack the critical thinking skills to correctly apply wisdom when necessary and instead need a solid framework to operate within. That's how these things inevitably develop. Just like how Agile is supposed to be about getting working code over being bogged down in process but inevitably ends up with with half baked products that have massive issues.

Six Sigma also gets applied to industries it has no business being in. The mentality works best when you have a fixed workflow. In manufacturing it would be if you are making a lot of one thing. You can do a lot of optimizing. But I have seen it employed in organizations where every project was vastly different. Instead of a lean approach it should have, and previously was, following a house of quality philosophy. This happened to be in an industry where cost was rarely a consideration but performance and reliability were.

What you're saying makes sense to me in that you should never fall into the "this is how I've always done it" trap, but putting a complex beauracratic process around that is just going to create a whole new problem.

What was done for some time is at least to some extent proven o work. Any new way is not yet proven to work and can be worse (or can be better but it is not granted)

If you ever work in government, procurement people think like that because their goal is objective competitive process that that meets the minimum standard to fulfill the purpose.

There’s a certain logic to it. You don’t want to see random government employees driving around in Teslas, so generally speaking they will be in nondescript 4-door sedans. Having a human say “no” makes them accountable, so a complex process will determine what kind of car you need.

Taken to extreme, it becomes a problem. Procurement officers get lazy and focus on their process instead of the needs of the customer. So they treat humans like Ford Tauruses and allow vendors who understand how to game the process walk out the door with millions.

1) which important company components produce signals that aren't measurable (e.g. internalities like deep domain knowledge in R&D or externalities like market swings or competitor behaviors),

2) which signals are too dynamic or complex to optimize, and

3) which signals are insignificant, irrelevant, irreproducible, or simply meaningless noise.

Applying Six Sigma to R&D illustrates these caveats nicely.

But “every customer counts” so other activities which are likely to result in more customers are put on hold to capture a single customer.

The problem in these cases is often that the management consultant doesn’t consider the resource limitations and opportunity costs of their decisions, particularly if they come from a much larger business. If you have only one lead engineer, then getting them to chase discarded parts (or, in my case, a single customer) makes no economic sense at all.

Quite often, the problem is not a focus on measurement per se, but rather the very human problem of focusing only on those metrics that support the analyst’s intuition.

Some of us chose to keep ourselves sane.

E.g. yes not providing free/cheap coffee/drinks in the office saves money, but it has a damaging cost in terms of employee attitudes and getting people to talk openly in a friendly environment about what they're working on and being able to ask for help.

These things can't be directly easily measured but can be quantified in a way that bean counters see the true value of the little extras...

They probably do understand that cutting costs impacts company culture and morale. But shutting the company down probably impacts that much more.

Massive Financial Incentives + Highly Leveraged Balance Sheet + Intense Pressure = Risky Decision Making

Is that the only other option?

We were on the cusp of turning the corner and the consequences of their approach are staggering in terms of people, revenue, and client relationships.

I’m looking to discover how I might more effectively engage them in the future.

Any advice?

Thanks! Neil

Stack ranking is still used widely throughout Fortune 500 companies, which is one of the most culture destroying management practices known to man.

“One would think you Jedi would understand the difference between knowledge and… heh heh… wisdom”