Comment by canpan
8 hours ago
Can someone explain, why this is done? I get a feeling, it's normally done when a company is in trouble or will soon? But they should have more money than ever.
They say it is to focus on innovation, but if you are a smart young person in NL, would you want to work where they just fired 1700 people? And if you already work there and are a top player it is a good time to rethink? A company I know wanted to focus, instead of firing, they sold the parts of the company they felt did not fit their future vision for money.
Actually, they are eliminating 3000 of the 4500 engineering manager positions. However, of those 3000, they are moving 1400 to an engineering position. The article also says that engineers are spending 35% of the time coordinating with their managers and that they want to cut the red tape with this move.
Of course, it's hard to tell how much is PR and how much reality. However, if there is substance to it, it would want me to work there even more, since they value engineering culture over management culture. Having more velocity is good.
> of those 3000, they are moving 1400 to an engineering position
Interesting. In old companies the only way to climb the ladder (get a raise) was to get into management. And then if they were a bad manager, they might get 'sidemoted' into some position where they could still contribute. Anyway, back in the old days, it was not uncommon to see 'managers' or even 'directors' with no direct reports.
So are you saying that there are not new positions open for engineers that were actually doing engineering and that instead some managers that were not doing engineering will now suddenly have to pick up the thread again and start doing engineer?
That would be disappointing for engineers that were actually doing engineering, as yet again their grade increases would be taken by management types.
Where do you know the details from? It’s not in the press release. Is that some insider information?
I think the press release is actually clear that they felt this was necessary to retain talent:
> Engineers in particular have expressed their desire to focus their time on engineering, without being hampered by slow process flows
I'm guessing ASML had a lot of regrettable attrition and heard this in the exit interviews.
It's well known here in the region around ASML that they are very process heavy and things move slow. I'm not keen on working for them
> would you want to work where they just fired 1700 people
Firing 1700 managers is somewhat different than firing 1700 ICs. Whether managers will want to work there is an open question, but quite a lot of ICs will see the trimmed management layer as a good sign that they'll be free to get shit done
IC = individual contributor. Wikipedia translating management speak:
> Individual contributor, a business role for an employee without management responsibilities
Thank you, I was lost reading the comments. Funny that all the comments shitting on managers are speaking their language.
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At ASML, they could also be integrated circuits being baked in an oven to cure.
They trimmed the managerial layer. A smart young person isn't immediately affected by it and (at least to me), this signals focus on actual work and flattening of the structure of an organization.
It is done because management needs to show that profits are increasing or they themselves will lose their jobs. Since they do not want to lose their jobs and they do not know how to increase profits they decided to fire 1700 employees with the hope that less expenses will translate into larger profits.
They've also done another thing:
>ASML also announced a new share buyback programme of up to €12 billion, to be executed by 31 December 2028.
They have €12 billion they don't know what to do with with so they will give it to shareholders, for a nice gain of less than 1% per year for the next 3 years. Assuming the annual salary costs of each of the 1700 employees is 150K (likely much much lower) those 12 billion could have paid for their employment for the next 47 years.
I worked for a company that went through 2 cycles like this and I can report that it had zero effect on us engineers.
My impression was that people were constantly being promoted into management and at some point we just had too many managers and that's why it was done. Of course, when you know this, the question becomes: why allow things to get to this point in the first place?
Presumably because people expect to be promoted periodically, so they pile up on the high end until the symptom gets corrected all at once. A realistic (but quite controversial) solution might be to emulate other companies that have done away with most of the promotion hierarchy. Different roles but more or less standardized pay across all employees and an understanding that promotions aren't a thing. Rather than climbing a ladder you're there to get shit done.
Just have the possibility for pay increase without taking on management responsibilities.
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Why? Bad management. Perhaps even bad leadership.
It sounds like:
Layoff --> increase short term valuation --> increase value per share --> owner of shares happy during buyback.
After, it's true that having a lot of middle management can slow things down. On the other side, they could have indeed created new entities, new projects, re-qualify employees,...
One reason, maximizing investor value. CEO and executives usually get bonuses after layoffs.