A sad day for Microsoft — layoffs. The inevitable result of “panic spending”

While I no longer work for Microsoft, after 20 years there I have a ton of friends who are still there.  Microsoft is a company that cares a lot about it’s employees.  The fact that they have just announced layoffs (Mary Jo Foley Todd Bishop Kara Swisher)is a huge step.  I know that the leadership of Microsoft would have rathered done anything else before having to take this step — they know that it will change the company forever.  It really hits home just how serious this recession is.

If only everyone could go back in time just one or two years, people could notice that the frantic hiring that was happenning was too much.  Frankly it was a decision that was not employee friendly because it added the risk that if things turned down, then layoffs would be necessary.  Obviously laying off an employee in an environment where getting another job is next to impossible is way worse than letting them find another job in the boom time.  Nobody was thinking that — but that was the implied risk that was taken.  It wasn’t employee friendly — but it also wasn’t on purpose.

I hope managers at all levels learn a lesson through this process that they take into the next boom time.  Keeping expenses in line, focusing on doing more with less, driving employee productivity and efficiency are all things that are equally important in lean times as they are in boom times.  Some groups do a great job at that (e.g. SteveSi) — others fall into the trap of what I call “panic spending.”  When their team’s products are struggling in the marketplace, it’s so easy to say that we aren’t investing enough.  Then starts the panic spending on things like:  hiring, new offices, travel, non-ROI positive marketing, expensive vendor contracts, etc.  A better answer is to focus on keeping team sizes small, but increasing focus, clarifying goals, and decreasing bureacracy.

We can all hope that this is the last round of cuts Microsoft has to make for a long time, and that everyone can act with moderation in the next boom time.


  1. I would have to believe that employees would rather make smart sacrifices (cut travel, fewer contract gigs, tighter expense approvals) and personal sacrifices (smaller or no bonus, vacation reduction, etc..) instead of seeing this today. I suspect there are areas that are bloated measured ROI wasn’t happening (marketing maybe) and it’s not going to be pretty. My wife lost her job and now we’re having to leave Marin and move back to Seattle where family can help play a greater role and where the cost of living is about 40% less!

  2. Ouch — I’m so sorry to hear that. Layoffs are about as ugly as it gets… I wish you guys the best…

  3. Brian Yamasaki says:

    Hi Ken,

    I was just trying to get in contact with you to see what you’ve been up to. And I ran into your blog. Interesting commentary. I’ve always wondered why MS needed so many bldgs. What can all these people be doing? Remember when there were only 16000 employees? Does MS have too many APIs? Too many platforms? Can a company this large be profitable enough for shareholder expectations? Does this mean it should be spun off into thirty small companies (like Expedia) to fail and flourish as the market bears. Would those independent applications and services abandon MS platforms for web and mobile platforms. Can MS compete without its internal applications and services groups to support all these APIs? Can I stop asking questions?

    Anyhow, send me some email and let’s talk sometime.

    Brian Yamasaki

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