2. Layoff, Hiring Freeze, and what we can do (with Cat Chen)
Cat and I discuss about the layoff trend in the current recession. And more importantly, what can we all do when many companies have hiring freezes and layoffs.
Full transcript text
00:00.000 --> 00:04.960 Welcome to the first formal recording of Not Just Research podcast. I'm your host, Ding Li.
00:04.960 --> 00:10.160 In my day job, I work on AI and ML and creative tools. In this podcast, we talk about work,
00:10.160 --> 00:15.680 career, investment, life, and sometimes research. In this episode, Cat and I will talk about layoff,
00:15.680 --> 00:21.440 which has become more common in mid to late 2022. Hey Cat, how are you?
00:22.320 --> 00:25.040 Good, good. I'm doing well. How are you?
00:25.040 --> 00:30.160 Not bad. Not bad. Excited for this episode. So for those who are not following the tech news
00:30.160 --> 00:33.360 recently, can you say a little bit about what's going on with the layoff situation?
00:34.400 --> 00:41.360 Yeah, yeah. Recently, there are many tech companies started to layoff people. And then,
00:41.360 --> 00:45.680 of course, before they layoff, they started to think about whether they should freeze hiring.
00:46.240 --> 00:52.880 So then that means the opportunity to get into another company is getting narrower and narrower.
00:52.880 --> 00:58.800 But then layoff happened to some of those companies and people come out and it's just
00:58.800 --> 01:06.000 not very easy to find a new job like in 2021. To rephrase what you're saying,
01:06.000 --> 01:11.440 basically hiring freeze usually will indicate maybe later on there will be layoff,
01:11.440 --> 01:15.040 but hiring freeze is the first kind of stage. Is that right?
01:15.040 --> 01:20.400 I think there's a pattern, right? So first of all, if there is a hiring freeze,
01:20.400 --> 01:24.480 is this still open to backfill? That means if someone left, the company left the team,
01:25.360 --> 01:30.880 does the team get the headcount back so that they can hire another person to replace the
01:30.880 --> 01:35.840 person that left, right? So if there's no backfill, then it looks bad. And then
01:35.840 --> 01:41.840 potentially there may be a layoff coming. Yeah, so usually in this layoff, I'm a
01:41.840 --> 01:47.920 researcher position, I think you are an engineering position. So what kind of roles are affected the
01:47.920 --> 01:53.760 most usually in this layoff and hiring freezes? Well, that's hard to predict, I think. It depends
01:53.760 --> 02:00.080 on the nature of the company, right? Some companies, they just layoff people based on
02:03.200 --> 02:08.640 the new headcount planning. If every team, they will use a limited headcount, they layoff people
02:08.640 --> 02:15.680 here and there and ask each team to identify a few people to layoff. But for some, they have
02:15.680 --> 02:22.720 larger scale organizational structural change, then they just stop working on some big items.
02:23.280 --> 02:28.640 And then the whole organization working on that big item would be just gone. Maybe there's a
02:28.640 --> 02:34.320 chance for those people to find new jobs within the company, maybe not, then they will leave the
02:34.320 --> 02:42.640 company. Yeah, so usually you said like sometimes a whole org or a whole team is just eliminated.
02:42.640 --> 02:49.600 How as an employee, how can we tell which teams or which groups or which orgs are more likely
02:50.240 --> 02:56.640 to be the victim of this? Wow, if you can tell, you can do a lot of things. Usually you cannot,
02:56.640 --> 03:03.760 right? If you can predict this, you can predict a lot of more valuable things than your own job.
03:03.760 --> 03:08.320 You don't even have to do this job. You can make money elsewhere if you can predict this.
03:08.320 --> 03:15.840 And also, for some companies, they have a philosophy of like when this needs to happen,
03:15.840 --> 03:21.600 it has to happen right away. Because they don't want people to feel bad and then waiting for
03:23.200 --> 03:30.480 the actual news to come to them about whether each of them would be layoff. So they would make
03:30.480 --> 03:36.080 this kind of decision at a very, very high level, like executive level, and then just
03:36.080 --> 03:43.280 announce and execute within the same day. So then, like, even a lot of front line managers,
03:43.280 --> 03:49.200 they don't have the decision or they don't have the knowledge about this is going to happen. So
03:50.400 --> 03:56.240 I don't think it's easy to predict. But broadly speaking, I mean, you can look at a few things,
03:56.240 --> 04:02.480 right? Number one, whether this team or organization is a profit center or a cost center.
04:02.480 --> 04:10.480 If the layoff is not purely due to organizational restructuring, it's mostly due to economies, then
04:11.520 --> 04:18.240 well, profit center is more likely to stay than cost center because the company needs you to make
04:18.240 --> 04:25.440 more money for them. And then also for certain companies that they have very clear focus,
04:25.440 --> 04:35.040 say they have just a few OKRs, like less than 10 OKRs on top of the annual planning, then they might
04:35.040 --> 04:42.320 just keep those top OKR teams because those teams need to deliver the OKR and they already plan for
04:42.320 --> 04:48.720 it. And then maybe they have very high hope of those few things delivered and then make a profit
04:48.720 --> 04:55.200 or something like that. If that's the case, then this kind of company level goals, the teams associated
04:55.200 --> 05:00.080 with them are less likely to get laid off, I think. But of course, nothing is guaranteed.
05:00.080 --> 05:04.560 Everything we discussed here, we are not trying to make any prediction or help anybody to make
05:05.120 --> 05:10.800 prediction. We're just trying to look back at the history and see how things usually play out. But
05:10.800 --> 05:15.200 there's always outliers. Yeah. So can you talk a bit about what
05:15.200 --> 05:18.560 which teams are usually profit center and which teams are cost centers?
05:20.000 --> 05:25.920 Sure. If you think about Google and Facebook, they are big on making money from ads, then of course,
05:25.920 --> 05:32.560 the ads organization is the profit center for sure. And then a lot of other things,
05:33.600 --> 05:39.920 like the product teams, those are more likely to be cost center because when you build product,
05:39.920 --> 05:47.360 well, it depends on whether this specific product is already monetizable for ads. If they are within
05:47.360 --> 05:52.960 this two large companies, right? If they're not even monetizable, it's just, oh, it's a very
05:52.960 --> 06:00.800 engaging product. People love to use it. But then users love doesn't translate too many directly.
06:00.800 --> 06:05.600 So there's a risk there, right? But for other kind of business,
06:05.600 --> 06:12.880 then it depends on the nature of the business. Say Uber makes money from having drivers and
06:12.880 --> 06:17.520 passengers, right? They cannot cut down one and leaving the other at scale because both
06:17.520 --> 06:22.400 needs to match each other. Airbnb needs to have host, but also needs to have guests so that it
06:22.400 --> 06:26.880 can make money in between. This kind of marketplace, especially two-sided markets,
06:26.880 --> 06:31.360 they need to have teams to keep the two-sided market operations going.
06:31.360 --> 06:40.960 If it's like financial technologies, then it depends on where the money comes from in specific
06:40.960 --> 06:47.200 cases. Yeah. That's helpful. So since I'm a researcher, I will ask more questions about
06:47.200 --> 06:53.280 research, like org. So in your definition, it seems like research org is usually a cost center
06:53.280 --> 06:56.080 because we don't directly publish products. We don't directly make products. We don't
06:56.080 --> 07:01.920 directly make revenue. So what do you think of all this? Facebook and Google and Apple,
07:01.920 --> 07:08.000 and I work at Adobe, all this company, we have a huge research org. And what do you think will
07:08.000 --> 07:15.600 happen there? Yeah. I think in many cases, even before the layoff, research department is usually
07:15.600 --> 07:22.320 the first department to take a head count freeze, right? Like, oh, we have to do this.
07:22.320 --> 07:29.840 We have to take a head count freeze, right? Like, oh, the economy is not doing as well as we
07:29.840 --> 07:37.200 expected, then let's stop hiring researchers first. Layoff, I don't know how to say, but
07:38.400 --> 07:46.720 if the company really needs to save money from layoff, then research department could be one
07:46.720 --> 07:52.240 higher on their list to consider. Of course, it's for them to consider the executive native figure,
07:52.880 --> 07:59.280 what they want, what they can let go, right? Yeah. What are the other things that you want
07:59.280 --> 08:06.880 to share about your thoughts around layoff? Yeah. I think from my observation in this year's layoff,
08:09.840 --> 08:16.560 the job market, I think it's pretty bad for junior, new grads, because when a company
08:16.560 --> 08:22.960 stops hiring, usually they stop hiring more junior people. Because in tech industry, a lot of times
08:24.640 --> 08:30.000 when you hire junior people, it's kind of like investment, right? So you help them grow,
08:30.000 --> 08:35.840 you hope they grow and stay, and then one day they become more senior, and then they are actually
08:35.840 --> 08:42.800 making more and more contribution. You're not just saying that, oh, I pay you this much as a junior,
08:42.800 --> 08:50.800 and then that's already good enough for the work you provide to us. Okay, you provide your work,
08:50.800 --> 08:56.720 but more importantly, you grow, and then hopefully one day you can have a higher output that actually
08:56.720 --> 09:07.280 justify your pay. So once this company shutting down hiring junior people, for example, Facebook,
09:07.280 --> 09:13.760 right? Facebook, when they stopped hiring, they first announced that they would freeze hiring from
09:13.760 --> 09:21.680 junior to senior and then to staff, and then they only keep hiring senior staff engineers.
09:21.680 --> 09:28.640 So there's a very high bar, right? Senior staff engineer is like the top 1% of the
09:28.640 --> 09:36.480 total engineer population inside Facebook. So if you can match the top 1% of the engineers in
09:36.480 --> 09:43.040 Facebook, you can still join, but if you're not, then you're out of luck. So, okay, not every
09:43.040 --> 09:50.240 company operates like that, but generally speaking, the trend is stop hiring junior people first,
09:50.240 --> 09:57.440 and only hire those who can join and immediately make some big impact on the financials. So that
09:57.440 --> 10:05.120 means senior staff or even senior staff. Yeah, I see the job market being very bad for junior people.
10:06.400 --> 10:12.640 This particular hiring freeze is leading to a lot of layoffs, and I also know we're in this, like,
10:13.280 --> 10:16.640 maybe we're already in the recession or maybe a recession is coming next year. I don't know,
10:16.640 --> 10:21.520 there's a lot of news talking about recession. So do you think this layoff will last for
10:21.520 --> 10:29.120 years or months? What's your opinion? For me, I think, like, I am, I don't know. Of course,
10:29.120 --> 10:35.120 I cannot predict the economy, right? That's what the Feds needs to think about. That's not my job.
10:35.120 --> 10:44.240 But for me, I'm kind of optimistic about, like, the layoff will stop after a while, after the
10:44.240 --> 10:53.360 company figure out how to stay afloat. Because for these companies, well, the best way to save
10:53.360 --> 10:58.560 most of the money is like just shut down your operation, lay off everybody, return all the cash
10:58.560 --> 11:03.760 to the shareholders. That's the ultimate, right? But of course, you don't want to do that. What you
11:03.760 --> 11:10.640 want to do is like, okay, stop the sinking process and try to find a way to stay afloat. And that's
11:10.640 --> 11:19.120 why you do the layoff. And also, there's one reason why within tech layoff it's a common thing.
11:19.600 --> 11:25.360 That's just my own speculation, right? Because in tech, large portion of the compensation is the
11:25.360 --> 11:32.960 company's stocks. And when the economy goes down, usually the stock market goes down as well. And
11:32.960 --> 11:38.480 then that means people are not happy with the total compensation going down. A large portion of
11:38.480 --> 11:45.280 the total compensation is like heavily reduced value, right? Now, the companies have two choices.
11:47.280 --> 11:53.360 They can let the employees to feel upset and then some of them choose to leave the company
11:53.360 --> 11:59.440 and some choose to stay. The other one is proactively determining which person, which
11:59.440 --> 12:06.640 department needs to go. If you do it passively, it's more likely that the more
12:06.640 --> 12:13.200 talented people would choose to leave because they have options. It's easy for them to get an offer
12:13.200 --> 12:19.040 from elsewhere, they will leave. And then for other people that they just want to stay,
12:20.240 --> 12:30.400 they want to contribute less or the modern way to say it is like quiet quitting, right? So for the
12:30.400 --> 12:37.040 people who want to quiet quit, they will stay. But then actually as the company, they don't want
12:37.040 --> 12:44.560 this kind of people to just stay here and take the compensation. So usually that means approaching
12:44.560 --> 12:52.160 this passively is not a good choice. Then the company needs to take a more proactive approach
12:52.160 --> 13:01.760 that is probably like reduce the workforce, but then potentially concentrate the remaining of the
13:01.760 --> 13:10.720 stock pool to the people who are staying behind. Usually for people who are at higher level due to
13:10.720 --> 13:16.560 the like learn faster, grow faster, usually that's the outcome, right? So then for this kind of people,
13:16.560 --> 13:22.960 if they push to learn faster and grow faster in the early stage of the career, then that means
13:22.960 --> 13:29.840 that they are just willing to work harder, especially work harder towards a new opportunity
13:29.840 --> 13:38.880 if the existing opportunity is like very reduced. Yeah, I like the way you're putting it. Yeah. So
13:40.400 --> 13:44.960 I think some like right now the podcast is just starting, so I don't think there will be a lot of
13:44.960 --> 13:52.080 audience, but one growing audience I can envision for this podcast is new college graduates. So if
13:52.720 --> 13:59.680 for those who are graduating this year, what do you want to say to them? Because a lot of hiring
13:59.680 --> 14:05.360 free Cs is going on. And as you said, like junior people are not hired at many companies, only
14:05.360 --> 14:10.080 hiring senior staff level, which I'm not at a level. I don't know if you're at that level,
14:10.080 --> 14:17.200 but basically it's far from most new college grads reach. Yeah. So I think like
14:19.920 --> 14:30.240 staying like positive, persevere, those would be what I can recommend, right? The only thing you
14:30.240 --> 14:43.120 can do is persevere through this challenging time. I see that like job seeking with larger companies
14:43.120 --> 14:49.360 in your mind is very different than job seeking targeting a lot of smaller companies, because for
14:49.360 --> 14:56.000 larger companies, their hiring process is actually more predictable. And it's well known from all the
14:56.000 --> 15:00.080 online material you can find, even if you don't find the exact problem, right? You know their
15:00.080 --> 15:08.080 format, you know they are about to get signals about this and that, like your coding skill,
15:08.080 --> 15:13.200 your system design skill, your behavior, and down to what exactly what exact behavior they're
15:13.200 --> 15:18.480 looking for for each company, right? Like Amazon looks for leadership principles. Okay, those things
15:18.480 --> 15:23.520 you can research, you can figure out, and then you can prepare better with the knowledge.
15:23.520 --> 15:30.160 But if the big companies have stopped hiring, then people need to look for jobs from smaller
15:30.160 --> 15:36.720 companies. And now there's not enough information about each smaller company for you to like
15:37.520 --> 15:43.920 prepare in an optimal way. So then I would say it's more like a numbers game that you need to
15:43.920 --> 15:51.040 apply to a lot of companies. Maybe many would reject you on the resume, and then you get a
15:51.040 --> 15:58.480 few interviews, and then still like a large portion of the interviews would not move towards
15:58.480 --> 16:07.120 an offer. But eventually, like when you have a large enough number in your job applications,
16:07.120 --> 16:13.760 you may get some offers. Yeah, so what you're suggesting is the larger companies might be
16:13.760 --> 16:21.760 having freezes, but smaller companies like startups, not all of them are pausing. So
16:22.400 --> 16:26.400 for new college grads, they can still look for jobs at those smaller companies.
16:27.360 --> 16:37.360 Yeah, not necessarily startups, right? There are also technologies workers in, say, traditional
16:37.360 --> 16:45.680 industries or SMB small to medium business, right? So they might not have the high growth
16:45.680 --> 16:55.040 like a startup or high compensation like big tech. But if you want to just start from somewhere
16:55.040 --> 17:02.880 instead of waiting for the economy to recover, then at least those industries provide opportunity.
17:02.880 --> 17:07.680 Can you give a few examples so that these entrepreneurs can have a starting place?
17:08.880 --> 17:14.880 I never tried to do this by myself. So it's more about the experience I heard from other people,
17:14.880 --> 17:23.600 right? So they go online to those job application websites like LinkedIn, Hire.com,
17:23.600 --> 17:32.720 all those websites, then they can look up who is hiring for what kind of roles or require what
17:32.720 --> 17:38.640 kinds of skills. And then they will try to find a match and then apply to those companies. And then
17:38.640 --> 17:45.760 a lot of like small to medium business, they're actually not being so famous and public facing
17:45.760 --> 17:51.440 like a big tech, right? So then their hiring pipeline is more from the small to medium
17:51.440 --> 17:56.560 business. And they don't hire a lot of people, maybe they just hire a few. But then if you are
17:56.560 --> 18:03.120 a good match, eventually you've got an offer, then you've got an offer. But this is like if
18:03.120 --> 18:10.160 we think in like an algorithm perspective, right? When you apply to a big tech, the big tech needs
18:10.160 --> 18:17.200 to filter a few hundred people every year from a huge candidate pool. But no matter what,
18:17.200 --> 18:21.840 it's more like an O and problem, right? Because it's them going through just like large candidate
18:21.840 --> 18:27.600 pool for you. You have a constant of like, oh, fan company, there are like five of them,
18:27.600 --> 18:33.280 four of them, right? If we count the unicorns, there may be like a few hundreds of them,
18:33.280 --> 18:37.760 but then you can cut and then you only apply to those that are relevant to you.
18:39.200 --> 18:45.040 But then once you go into the area of applying to small to medium sized business or
18:45.040 --> 18:52.160 traditional industries, then it becomes an O and square problem or O and N problem, right? This
18:52.160 --> 18:58.480 N candidates and M companies, both numbers are huge and they try to match with each other.
18:59.200 --> 19:03.840 And then of course, it's not efficient at all, but that's the way to go.
19:06.160 --> 19:12.800 That's interesting. Turning from a linear matching to a, to a, yeah, to like a square.
19:12.800 --> 19:19.680 Yeah. To a, to a like a square matching. Okay. So is there any other thing you want to share
19:19.680 --> 19:26.720 about layoff this topic generally? Don't do it in a passive way. Don't like,
19:26.720 --> 19:31.360 you need to prepare for it, right? It's just like, you need to keep yourself prepared in case you
19:31.360 --> 19:38.240 want to look for a new job. Don't work in a company and be very passive about finding new opportunities
19:38.240 --> 19:44.240 because well, you never know whether that some layoff might hit you. And then if you are working
19:44.240 --> 19:50.480 very passively, you are kind of actually quite quitting and now you don't have much to say on
19:50.480 --> 19:59.280 your resume and then you might not have a very sharp skill to just start jumping into interviews.
19:59.280 --> 20:08.880 So I think that's one of the suggestions I would have is, as long as the layoff
20:09.920 --> 20:17.440 doesn't hit your road yet, just focus on putting out high quality work so that you maintain
20:19.200 --> 20:25.200 generating good content for your resume. That's how I would frame it. So that if tomorrow
20:25.200 --> 20:32.000 there's a layoff and then you say goodbye to your company, you will still be able to write like,
20:32.000 --> 20:38.000 hey, I was making this high impact in that company even to my last day, right? Instead of,
20:38.000 --> 20:43.360 oh, there's a blank here because well, I'm trying to quite quit during that six months. And then
20:43.360 --> 20:55.280 eventually they kick me out. So put out some good work so that you keep generating high quality
20:55.280 --> 21:02.160 information that you can put into your resume. And when new employer asks you about those things,
21:02.160 --> 21:08.640 you can actually present them. So those work would reflect your value.
21:08.640 --> 21:16.480 Yeah, that's a good point. Before I let you go, so I think today's the first time I hear the word
21:16.480 --> 21:21.840 quiet quitting. So what's the context there? I mean, the word, once you say it out loud,
21:21.840 --> 21:27.280 I think I get what it means. But can you explain a little bit more on this?
21:30.960 --> 21:38.400 My impression of this phrase is like becoming disengaged at work and trying to do the minimum
21:38.400 --> 21:47.440 to just get by, maybe just passing the performance review at the lowest acceptable rating,
21:48.640 --> 21:55.120 instead of trying to compete for a very high rating or compete for promotion. It's like, okay,
21:55.120 --> 22:03.200 what is the minimum rating that I can get while my employer is still thinking me being valuable to
22:03.200 --> 22:08.640 keep me around? I think that's quiet quitting. But of course, some people would push this to a
22:10.880 --> 22:16.000 more aggressive degree, as they say, they take up more than one job and then hiring those
22:16.000 --> 22:21.520 information from their employers pretending that they work exclusively for one of them,
22:21.520 --> 22:30.320 but they are actually quiet quitting in both companies. But online, if you go to Reddit,
22:30.320 --> 22:35.360 you can read this kind of stories. A lot of people share their story on Reddit because they're
22:35.360 --> 22:39.920 anonymous, they are not afraid of telling their stories. But of course, there's no way for you
22:39.920 --> 22:42.880 to verify whether they are making it up or they are actually doing it.
22:44.880 --> 22:53.520 Got it. Yeah, I think this very first episode, it's a great trial. I think the topic of layoff
22:53.520 --> 22:59.040 is very timely and hope it helps someone. And I learned something from it to actively,
22:59.040 --> 23:03.840 not to be passive and just actively focus on the work that you're doing so that you don't have a
23:03.840 --> 23:12.000 gap or you have like a blank in your resume. All right. And all the YouTube audience, if you have
23:12.000 --> 23:17.520 any other topics you'd like to see us discuss, please leave a comment. We'll see you next time.
23:17.520 --> 23:30.960 See you next time. Bye.