And in Zappos' case, I get why they offered severance deals. They were embarking on a radical experiment in organizational structure, and not everyone is going to be on board with it. Rather than having a bunch of people at the water cooler talking shit about the changes, you offer them money to leave so that people who aren't on board with the changes get out of the way.
I would guess that many of the people at Zappos who took the deal were managers themselves. If you're a middle manager, you have skills around managing people but maybe not so much with doing the actual work. If your skill set doesn't align with the new job you're being asked to do (which is effectively a demotion), and the company offers you a buyout to leave, what would you do?
My assumption would be that those are the people that this move is attempting to push out.
Besides managers who are looking to jump ship and pretend to do work somewhere else, a lot of professionals are on the list- lawyers, accounting people. I imagine some of these people will show up on Amazon's roster in the near future.
Little presumptuous isn't it?
its possible the commenter i was responding to was referring more to the "rah rah" aspect of zappos as a whole, rather than religious zeal re: this new organizational concept. those are different things in my mind, also both are exhibited by the directive "to all employees: read this book and indicate you have done so".
anyway it isnt a comment on whether or not the zappos idea itself is useful and/or just another fad coated with new terminology (i have no idea). just that when you can identify someone else as engaging in religious zealotry, its fun to consider what that zealotry is being compared to, which probably turns out to be something like "everybody knows its supposed to be this way", aka. some sorta implicit religion.
On the other hand, if you've been contemplating a job change, take it.
By your definition, what is a tech company?
You can be a tech company and sell commodities, Amazon is an example of that.
I imagine most developers could find a job with similar pay in a month or maybe one and a half, so the reasons would have to be strong enough that you'd give up an extra 10% in salary, or even being able to take a 3 month long vacation.
On the other hand, if they recently had to move to Vegas I wonder how hard it is to find work there and I can totally see people not wanting to move again so quickly.
Of course, those who have reservations about working where they are, should take the severance package, but that's the point.
Also, I am a bit surprised that we are discussing 3 months of pay as a magnanimous, almost foolish, concession from management, whereas in many places around the world that kind of compensation is law mandated when you lay-off people without reason.
Geographic area heavily influences this. Last time, I spent 8 weeks with almost no nibbles (and then suddenly had two companies fighting for me on the 9th week).
I've got mouths to feed. And when you interview for your new job, you are going to be asked why you took the buyout. "LOL 3 months salary" isn't a good answer.
There's that element directly, but I think even more powerful is the sense to the employees that they are consciously opting in to staying. They are literally passing up a (small) pot of gold in order to stay in the new structure. The mere fact of choosing in such a way (even if that's the default choice) will tend to increase commitment in the inevitable dark moments of the transition.
Each change creates winners and losers. The losers will be around that water cooler. You can't manage this before the trajectory is flown. Best of luck to all involved.
If Zappos can experiment with a new leadership style, maybe it produces desirable results that can be replicated elsewhere. Maybe it fails miserably. What's likely to happen is that there will be things that work and things that don't, and I guarantee Amazon is interested in that. Because of all the things I've heard about Amazon (many of them good), I've never heard that it's a great place to work. Their turnover is high, so maybe they're looking for ways to reduce it while not losing the culture of urgency (though some would say fear) that makes them so good at executing on things.
Of course, if it's a total failure, Bezos will likely fire Tony and trash the entire idea.
For what it is worth, managing staffing levels is one of the hardest things to do in a large organization because the visibility of contribution is so low. You have the quiet guy who gets things done everywhere but is invisible, and the useless guy who keeps up a very believable patter of what they are getting done. If you layoff people just based on the optics of the situation you screw yourself.
Who will maintain teams without people whose specific role is maintenance?
What a buy-out does is take money out of the equation. It makes it so that everyone who is there for financial reasons has a financial reason to leave. This can be logical if the company has little to offer financially, as in, for example, a company that's in bad shape during the financial crisis. The only employees who're left are those who are not in it for financial reasons - the true believers in the company, those who like their coworkers, and those who want to gain skills. Those people will be a lot happier when they don't have to listen about their financially-motivated colleagues grousing about how the company is going under, and they'll be more productive when they're happier.
The CEO's fatal mistake was that he forgot that his board is financially motivated. From their perspective, he's acting insane, because why would anyone stay at a company for reasons other than money? And they're his bosses, so they can have him removed. For this to have worked, he probably should've taken the company private, or at least packed the board with people who bought into his vision for what kind of company it should be.
The board's fatal mistake was in removing the CEO. By offering buyouts, he had just aligned the company in one direction. By removing him, they suddenly took the company in a different direction - one that they had less than zero capital in, because the CEO's previous actions had alienated everyone who might've helped them.
In both cases, the failure was in understanding that people are different and may have different motivations, and that a company survives based on how well it can hold together people who all have their own goals and worldviews and motivations.
Imagine your employee base graphed on two orthogonal dimensions: their performance level, and their motivation for working for you. (In reality, "motivation for working for you" is actually many dimensions, and performance is likely to be somewhat correlated with certain motivations, but this illustrates the point at least.) The buyout offer doesn't affect people who aren't financially motivated, so take them out of the equation, and look only at the folks who are strictly financially rational.
You can loosely group them into high-performers (those who are known achievers, who always have an offer in hand as soon as they make overtures toward searching), mid-performers (those who pretty much amble along, and for whom the job search provokes intense anxiety, because they typically have to put in 3-6 months of full-time searching to find a new position), and low-performers (those who don't do anything and everyone already knows it). In most companies, the distribution of these is roughly 10-80-10. You can fire all the low performers; the point of bucketing them into the "low performer" category is that their underperformance is obvious enough that they leave a documented paper trail that makes this unambiguous. And in a company that's run into financial difficulties, the top 10% has probably already left, because they continually get job offers and when your company is going down the tubes, it's to their advantage to take them. That means that most of your financially-motivated employee base probably fits into the middle range, the folks who are average employees and will have average difficulty finding a new job.
The point of a buy-out is to reduce the anxiety levels surrounding getting that new job to the point where anyone who is unhappy at your company but isn't sure they have enough money or skills to go elsewhere ends up taking the leap.
Unless you're not confident enough that you'd be able to get a job in those X months, either because of your skills or there not being jobs around.
Also, even if you like your coworkers, or want to acquire skills, if the ship is going down and you feel confident enough that you'd be getting another job quickly, then you might jump ship anyway.
As one of my co-workers explained it: If you're incompetent you can get a great payout and then go be someone else's problem.
Corporate loyalty has been dead for many, many years.
The one case that it isn't is perhaps companies like google where an employee gets the founders award, which is millions of $$$ of stock options that vest over a relatively large stretch of years. I know a guy who won this award and he is google for life.
In medieval times, the vassal paid homage and swore fealty in a commendation ceremony, and the lord granted him a fief. The vassal had a duty to aid his lord, and the lord had a duty to protect his vassal. The vassal gave loyalty, and got a secure income in return. It was a permanent relationship. To dissolve it, you had to use an axe, rather than a pink slip.
Corporate loyalty died when management culture forgot that the company owes duties to its employees in addition to its shareholders. Defined benefit pensions became defined contribution retirement plans. Then the employer contribution disappeared. Health insurance plans dwindled from all medical expenses paid to you paying 80% of the premium, $30 co-pays at every turn, and deductibles that are met midway through the twelfth month of the plan fiscal year, then reset. Training programs evaporated. Severance packages got smaller, or vanished. Even the amount of notice I get whenever permanent layoffs are to occur has become days, rather than months.
So there are no more loyal vassals. We are all mercenaries now. I'll start sending out resumes if I so much as notice that the building has a new janitor.
H. R. tells new hires:
"How great it is to work here!"
Give me cash, not lies.
A few years later it turned out the "good profits" were actually accounting fraud. The company tanked and everyone lost their job. But Nortel had a fairly good pension system, so the people who had worked there for 25 years or more were fine, right?
Well, the company feared that while they were tanking the "best and brightest" executives would leave. Oh my! What to do? They were allowed to siphon the pension money into "executive retention bonuses". Of course this didn't stop the company from ultimately running out of money, but it did get rid of a large part of the pension money.
Investigate your pension scheme and make sure you understand what will happen to your money should the company go out of business. Especially find out where the pension system is ranked as a creditor. No company is too big to fail.
As for me, I only worked there for 5 years and left when it was at its height. After I quit I got a letter from Nortel stating that my minimal benefits were not worth it for them to administer. They were going to keep my pension money and I was welcome to sue if I didn't agree. I guess as it turned out, it didn't make much difference...
Look at the airline industry. Plenty of pensions have been restructured during the string of bankruptcies. Pensions are guaranteed by a federal body, but only up to ~$50K/yr I believe. You'll never get less than that, but you $100K/yr pension might get cut in half and the gov't will say "that's the best we can do".
These things should always have been administered by 3rd parties and required to be fully-funded.
No "executive" can look at so much money "just lying around doing nothing" without wanting to get their grubby little hands on it.
Very sad for a lot of people
I haven't heard of any developers who make 400k. Then again, I suppose you never said this was for developers, so is there another job where this actually applies?
My last 2 job changes were in the 20 - 40K increase range.
250K is not unheard of. I guess this caps out somewhere, but if the US immigration keeps H1Bs under this control than we are going to soon experiencing 300K wages.
Do you know if it's easier to get promoted when switching jobs? I have a hard time believing that since I think you would have had to accomplish something significant on several projects to get to principal, but if you switch companies it's very hard for them to truly the impact of what you did.
When you are applying for a new, higher, role having enough experience at your current level, being sure enough of yourself and demonstrating the ability to create value within the test period will be more than enough for most companies out there.
When trying to get promoted internally you have to deal mostly with office politics. In a way, the quality of your work is only a small part. And, if you are good enough, it can go against you, I know people that have been skipped for promotions for years because their managers knew that the whole department depended on them.
Of course, there are exceptions and I admire those companies, but they are just that: Exceptions.
In SF this can be achieved quick, enough if you demonstrate your knowledge during the interview loops. For certain positions they also ask for previous experience but those positions more of the management side I think. If somebody walks in and writes good code we are willing to hire even into senior position, I don't care too much about the history. I have seen a candidate walking in to the interview from a grocery story where he worked as a cashier. Not only he got hired based on the interviews but he became one of the top performers on the team.
I think it is definitely easier to get "promoted" by changing jobs, especially if you are in a meritocratic environment, like some of the startups in SF.
The speed with while a typical ~100k dev role gets promoted or awarded payrises to become a 200k position is _much_ slower that the dev who cherry-picks better opportunities when that arise, and works out close-enough-to-truthful explanations for any resulting 6 or 12 months roles (usually with ex-colleagues who'll give references backing up your post-role-claim that it was a 6 or 12 month contract role, not a permanent position.)
Do developers in finance require any unique skills? Also is there anything special one would have to do to break into the finance industry?
There are finance startups where the above doesn't apply, but they don't pay like the banks do.
Then again, that's the only time I've ever done it, so I can't really say at all whether that trend might continue (almost certainly not).
If I was a hiring manager, seems totally reasonable to me.
The higher-ups in be corporations have yet to get that memo.
This reminds me quite a bit of a blog post from The Wetware Crisis on what he deemed The Dead Sea Effect ( http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d... )
While not a forced evaporation which you describe, its the 'the best people can get jobs elsewhere' and 'the less capable people entrench themselves as experts on critical systems to where they can't afford to be let go'.
When you don't know how to run a business, cut costs and call the result a profit. Then take the bonus for "hitting the target", and pull the golden parachute ripcord.
So you wind up with good engineers, and all the bad management and support that couldn't find jobs elsewhere, and that works out real well, you betcha...
I remember this being an issue with General Motors near bankruptcy (2008) too. They couldn't lay off union workers, and figured it would be cheaper to offer them buyouts than keep paying their above-market salaries.
There too, people pointed out that the only takers would be the best workers, who can easily find work elsewhere, and they'd be left with the ones who can't.
Most of the Uk's mobile networks was designed and built by ex bt people who took redundancy
"a tenure-based package to leave the company"
People who have been longer with company are also more likely to be older than average employee. So I think he wanted to get rid of "old" people who would "slow down" company and be unfit for its "new and vigorous" culture?
The longer you've been with us, the more you've likely contributed and we should recognize that as we part ways. The longer you've worked with us, the more life upheaval the separation represents. The longer you've worked with us, the more personal relationships you have developed, perhaps with the same people making the decision to eliminate your position. A generous severance (which IMO requires a tenure component) sends an important signal of stability to the employees who remain AND makes it easier for managers (who are of course humans themself) to make the decision to eliminate the position of a long-tenured but "surplus to ongoing operations" employee.
What's the alternative? The person who joined 6 weeks ago gets the same package as the 10-year veteran? That seems worse all around to me.
It was unclear what his intentions were. To determine loyalty to the company, possibly. But what actually happened was that people who were good at their job, and could find work elsewhere, left. So they would have had all of the top talent leave the company and the remaining employees would be the people who did just enough to get by. The company is still trying to make amends with the employees.