Cisco Slashes 4,000 Jobs 139
Dawn Kawamoto writes "Cisco's CEO John Chambers dealt employees a blow Wednesday, saying the networking giant would cut 4,000 workers from the payroll. Not quite a death blow, but this 5 percent cut could leave some employees gasping. Chambers took the knife to Cisco last year, cutting 2 percent of its workforce."
Easy come, easy go (Score:5, Interesting)
Cisco has been in a kind of layoff mode for quite a while, on and off. I'm a Cisco stock holder and I know that layoffs can raise the stock price in the short term, but in the long term they often are not good. but I think it's time to dump it. I'm getting rather tired of it.
Re:Expenses and Revenues (Score:5, Interesting)
Well, TFA says that revenues have been going up while the last couple years of layoffs have been going on (about 8k firings in 2011 & 20012). And they are cutting sales people in addition to engineers, so not all cuts are necessarily ones that would only improve the short term at expense of long term growth.
Since they have been able to increase revenues (not just profit) while cutting significant number of sales personnel it looks like their current cuts worked out for the best. Sometimes a company's needs change to a point where their labor needs change. Maybe management noticed some areas where they were being excessive and trimmed their costs.
Cisco is a very unique company... (Score:5, Interesting)
Well, TFA says that revenues have been going up while the last couple years of layoffs have been going on (about 8k firings in 2011 & 20012). And they are cutting sales people in addition to engineers, so not all cuts are necessarily ones that would only improve the short term at expense of long term growth.
Since they have been able to increase revenues (not just profit) while cutting significant number of sales personnel it looks like their current cuts worked out for the best. Sometimes a company's needs change to a point where their labor needs change. Maybe management noticed some areas where they were being excessive and trimmed their costs.
Actually, most of the previous cuts were in their appliance services-in-a-box division, and the majority were sales persons, although for the appliance, there were engineering and other staff cuts. The other cuts were in other divisions that were pure services plays, and were mostly sales staff, since once that stuff is written, it needs minor maintenance. The last large cuts were in the Collaboration division (appliance, mostly the remote support people who remotely control the customer's machine to help them out), and the WAAS - Web services.
My understanding is that there were a number of companies, predominantly in India and Pakistan, that would use the Cisco solutions and call up customers claiming to be Microsoft support people calling to help the person out with the malware on their computer. Then they would proceed to install malware after getting you to open things up. The jobs became redundant when a Microsoft intrinsic firewall update to Windows caused the product to quit working.
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One thing you have to realize about Cisco, is that they are a very unique company. It's not so much that they are innovative, but that they acquire other companies that have innovated. And they are seriously bad-ass good at acquisition and integration of other companies. In fact, they are the #1 company at it, by some metrics.
The important metric in this case is post-acquisition attrition from the acquired company. I worked at a startup which was acquired by IBM. We all, across the board, got an immediate 25% "pay for stay" bonus for agreeing to stick around for 6 months. I know this because we had a company-wdie meeting where IBM HR announced it. The attrition in the first 6 months, where people left 1/4 of their salary on the table and went elsewhere? 25%. The second six months, there was an addition pay-for-stay for 6 months; this round didn't include everyone. Those of us who got it, got a 40%-60% of their salary bonus for agreeing to stay another 6 months (we talked amongst ourselves). The attrition rate over the next 6 months was another 20%. That's a grand total of 45% attrition in the first year, with people being offered 1.65-1.85 times their previous salary.
Other companies do better at integrating acquisitions than IBM, which is pretty piss-poor at it (one issue: they immediately replace support and HR staff as redundant, and you end up having to go to someone you never met with personal leave and insurance and other HR problems). When McAfee acquires a company, expect around a 25% attrition in the first year. Apple, when it acquired PA Semi and switched their chip guys from designing G5 class Power Architecture chips that were about 5 times as energy efficient as IBM was able to build, to ARM - lost about 15% off the bat; this was highly publicized, since they went to Google. No idea what they lost after that, only that it was non-zero.
What is Cisco's average attrition rate after one year for an acquired company? Much better... 15%? Lower. 10%? Lower. 5%? No... it's 2%. Depending on who you acquired and how big they were, this could be 4 friends dying in a boating accident up at Tahoe.
So after a while, Cisco needs to force attrition. It tries to get rid of people it doesn't actually need, and a lot of time, it's not engineering types, it's sales types, or HR or su
Re:Have any one of you worked there? (Score:5, Interesting)
Large companies like Cisco are usually terrible at identifying dead wood.
I spent 10 years at Microsoft. By the time they had their first large-scale layoff in Jan 2009, I was already gone but I still had quite a few friends there. The stories I heard would be hilarious if people's livelihoods hadn't been at stake. For example I know of a team where every single individual contributor was let go while the entire management chain was unaffected (and left with no one to manage).
I was working for another company in the area at the time and we had a lot of the fired MS people come interview with us. Surprisingly most of them were very good. Given our proximity to Redmond we'd always had people from MS interviewing and in the aggregate they were below average. But somehow in the weeks after the layoffs, most interviewees from MS were far better than what we'd been accustomed to. From what I saw I would say that the typical interviewee was an individual contributor with 10+ years experience. Frankly, it boggled the mind. I remember how some of my colleagues were scratching theirr heads. "Why on earth would they let go of all those competent experienced people?" they wondered. Having worked for MS before I understood all too well what had happened. This is a company where "visibility" is easily mistaken for "getting stuff done" and where how fast one climbs the management ladder is as the _only_ metric of success.
In my experience this is fairly typical of large corporations. They DO have a lot of dead wood, mostly in the form of bloated middle management. But unsurprisingly, those are NOT the people they fire during layoffs. Tell me, has MS become faster and more nimble since firing 5,000 people in 2009?
Cisco is 100% performance driven (Score:4, Interesting)
Cisco is 100% performance driven. I wonder how much of this is just a variation of rank-based employment evaluation [wikipedia.org]?
Are they just trying to keep things lean and mean? If you don't churn the bottom performers, people get lazy. Cutting 10% might catch some hard workers going through hard times (family, health issues). Cutting just the bottom 5% allows for a bit of grace, and should inspire the 6-10% to step it up. Especially if they are given their rankings, and know how close to the bottom they are - but I don't know what Cisco does there, only speculating.
Re:Meanwhile, back at the bean counting dept. (Score:4, Interesting)
I can't help but laugh at this.
My wife is an accountant and boy does she like to argue about these things. We live in the city and often take the subway, especially on weekends. One day, I mentioned that they should try and do something to get people who would otherwise drive to take the subway. For a network system, once it is up and running, the cost of adding people on it is 0.
The subway is going to run every 5 minutes whether there are 50 or 100 people on it.
Man, she jumped on that statement like a pitbull. Took my by surprise, as I just said it in passing. She would not let the idea of a 0 additional cost stand.
Acknowledged that the system still has be funded... that potentially the paying users are subsidizing others... but my only point was that if you could get someone who would have otherwise driven to take the subway which had excess capacity, the additional cost would be 0.
She would have none of it.
I even tried to use the internet example. Once the network is built, it doesn't matter how much people use it (except for transit charges), so pay per GB are a scam. They can control their network for congestion, but beyond that, it is just a scam. She had less trouble with this one, but still fought the idea of 0 additional cost.
I suspect the same mentality is there for business. In reality, the company is playing employees a salary. They're going to come to work and be there. If you have excess capacity of work (to use such a term), why not use it for something productive. I guess the alternative is to get rid of the excess capacity... but if you don't plan to do that or can't do it (work can't be split up...) then make use of it for 0 additional cost.
I'm all for knowing about cost and figures and planning...
But it's almost like they learn a few methods and formula and then think that is all there is to business no matter how much reality differs.