A layoff fundamentally changed how I perceive work

The thing that bothers me most about layoffs due to “financial difficulties” is when you observe management wasting absurd amounts of money on something in one year, then announcing the following year that they have to make cuts to baseline, “low level” employees that don’t cost much at all.

This kind of managerial behavior seriously kills employee motivation, because it both communicates that 1) no one has job security and 2) that management is apparently incapable of managing money responsibly.

“Sorry, we spent $200k on consultants and conferences that accomplished nothing, so now we have to cut an employee making $40k” really erodes morale in ways that merely firing people doesn’t.

> Sorry, we spent $200k on consultants

A former employer decided to freeze pay for a few years and later later start laying off people. During the pay freeze a colleague suggested that we might save a significant amount of money by hiring staff, rather than paying the large number of consultants we had hired. I think the ration was something like getting rid of two consultants would free enough money to hire three developers.

Managements take was that we should keep the consultants, because they where much easier to fire, two weeks notice, compared to four. So it was "better" to have consultants. My colleague pointed out that the majority of our consultants had been with us for 5+ years at that point and any cancelling of their contracts was probably more than 4 weeks out anyway. The subject was then promptly changed.

In fairness to management large scale layoffs did start 18 months later.

There’s the whole capital expenditure vs operating expenses angle too, and depending on a company’s particular situation, one might look better on paper than the other. Without going into too much detail, contractors will be hired typically to contribute to capital expenditure and employees to the latter.

This distinction is even more relevant for earnings. So companies will optimize this for taxation and accounting to win shareholder brownie points.

I am wondering whether a company "optimizing for shareholder brownie points" is a good signal to either look for employment elsewhere or as an investor start investing elsewhere. It seems like a company who prioritizes this either has reached their potential (which might be fine) or is just not able to innovate anymore.

A simple question to ask an employer during an interview is whether the company is profitable or not. If so, for how long?

Most VC backed private companies aren’t profitable. If it is a public company the information is readily available