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Microsoft’s announcement that is has laid off about 5,000 workers this year, and may lay off more, is just another sign that, despite the hype, tech companies aren’t much different than manufacturers in how they treat their workers. Sure, most IT companies make a big deal about the work-life balance. Most trumpet their less-stressful office environment, their “collegiate camradarie,” their in-house perks.

And admittedly, the free jellybeans at Google’s New York office are probably the finest jellybeans you’ll ever taste, a statement that ranks right up there with “Warren G. Harding was probably the finest American president named Gamaliel.”

Nonetheless, a warm, fuzzy office environment doesn’t do you much good if you’re no longer allowed in the office. What really matters to most employees is a steady paycheck and, increasingly, health-care coverage.

I’m not being naïve here. I realize Microsoft’s senior management has a duty to shareholders. I’m sure the company’s execs are extremely concerned about keeping costs in line with projected revenues, particularly as the recession and Vista drag on.

"As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure, including additional job eliminations," Microsoft CEO Steve Ballmer said in an e-mail to employees on Tuesday.

Okay. But consider this. Microsoft is still a money-spinner. The company turned a $3 billion profit in the first quarter of the year. Yes, that’s a decrease from the year before, but it’s still a hefty quarterly profit. What’s more, the company is sitting on $25.3 billion in cash, cash equivalents, and short-term investments.

Given that cushion, you’d think the Windows folks could afford to carry their workers through this rough patch. If each of the terminated 5,000 employees cost the company, say, $100,000 per year (salary and benefits), that would add up to $500 million a year for the lot. At that rate, Microsoft could keep the 5,000 workers on the payroll for two years without making much of a dent in the company’s cash cushion. What’s more, Microsoft took a nearly $300 million severance charge just to lay the workers off.

To be fair, Microsoft isn't the only IT company letting go of workers. And it’s possible the company’s managers see a longer recession than I do. It’s also possible they’re marshalling their cash for another run at Yahoo or some other company that’s a strategic fit.

All I know is, unemployment tends to throw the work-life balance all out of whack.
 

Comments (8)

	1. 05-06-2009 18:10
	Many times companies take every opportunity available to weed out the bottom 5-10% of the less productive staff at their company.    It affords them the opportunity to do this without the guise of a reorganization - just cut the bottom 5-10% - the economy is bad right now, GE perfected this strategy. It allowed them to clean house, keep everyone else sitting on the edge of their seats, and some significant percentage of employees actually feel lucky not to have been cut are are now even more productive.    The career of the IT worker can be thankless at times..at other times extremely rewarding. Registered

Bill Gerneglia

	2. 05-06-2009 23:26
	Siebel Systems was also notorious for lopping off the bottom 10% of its sales force on a regular basis.    I’d rather work for a company that rewards loyalty with loyalty. SAS Institute is a company that has a great reputation for how it treats its employees, and I’m sure it’s been a big factor in recruiting the best talent. Registered

Mel Duvall

	3. 05-06-2009 23:30
	Companies wonder why employees are so quick to jump ship these days. If a company like Microsoft won't stand by its employees when the going gets tough, then why should its employees feel any loyalty when a recruiter comes knocking. Registered

Jack Powell

	4. 05-06-2009 23:42
	Oh come on. Even Microsoft has to watch its balance sheet. If revenues are falling, forecasts show tough months are ahead, then Microsoft owes it to its shareholders to take action. And the company says its still investing in areas where it sees growth.    That's showing fiscal responsibility. Registered

Kazmarek

	5. 05-06-2009 23:53
	Gaming Web site Gamasutra www.gamasutra.com is reporting that a number of the layoffs are occuring in the company's Massive in-game advertising business. Strange given that video games are one of the few brightspots in this recession. Registered

Mike Valley

	6. 05-07-2009 08:58
	I find it interesting that the biggest resource a company can have (the human resource) is usually the first consideration when it comes to cuts. I wonder how much Google spends a year in "free" jellybeans and if it might be better spent securing an administrative assistant's job? In all seriousness, yes companies do need to be fiscally responsible to their share holders, but their first responsibility should be to the employee. Company loyalty is a fast becoming a thing of the past. If CIO's want to hire the best and brightest, they need to consider what the company's long term strategy is in being responsible to those employees. A company is nothing more than its employees after all. Registered

John Sane

	7. 05-08-2009 15:31
	No doubt, managers at publicly traded companies do have a big responsibility to shareholders. And if Microsoft was starting to hemorraghe cash, I could understand the layoffs.    But as Mr. Sane noted, companies are only as good as the workers they employ. And shareholders do benefit from good worker morale, increased productivity, etc.    There\'s no easy answer, I realize. For some reason, I just thought Microsoft might do a little better by their employees. And what\'s it going to cost the compay to staff up, once the recovery begins in earnest? Registered

John Goff

	8. 05-09-2009 15:10
	I don't disagree with any of the previous comments, but the bottom line for the cuts was an attempt to manage the share price. Unfortunately, it's rarely about the shareholders per se, rather it's always about new, more & larger shareholders as in the institutional kind. The Checks & Balances for publicly traded companies are analysts. All analysts have a model, essentially a spreadsheet which is their recipe for where the stock should be trading. A good analyst's model can take into account almost anything regarding a name. Everything from a company's vitals (ex:Revenue) all the way to even applying values & quantifying qualitative data. A publicly traded company's C-suite knows they can immediately & positively effect these analysts' models by making employee cutbacks, because it removes costs overnight in a clean, linear & measurable manner. Therefore, there is very few moves a company can make that is as quick & immediate to an analyst's model & hence, the target price for the company. These targets for a company is one the largest factors for a stock to be bought, sold or shorted. In this case MSFT knew they could miss the "street's numbers" (consensus of what Wall St. analysts predict the company will report based on their models) due to lower than expected fiscal-third quarter revenue. To offset how that revenue drop negatively effects the analysts' models they've been promising cost cuts (ie-job cuts) since January. Publicly traded names often focus more on their share price & less on running their businesses. They essentially know how the math works & therefore, they attempt to control & manage the output/solution/target price of the analysts' models.     http://www.google.com/hostednews/ap/article/ALeqM5j37zIklzZhUuxpnOsq_RuNWoNeOAD97P49BO1 Registered

Thomas DelVecchio

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