Tech industry CEOs initiate job cuts after big losses; why not cut the CEOs?

World Tech Tribune.com ^ | Copyright 2002 - October 17, 2002 | Scott McCollum

[Scott McCollum]

“No business could survive in a free market by not cutting those relatively high-paying but now silly jobs created by many tech companies before the Silicon Valley dot-com bombs went off in 2000. However I have to wonder why it has taken two years and these CEOs still haven’t gotten rid of all that dead wood in their companies. Two years on the profit/loss rollercoaster and the CEOs are still pointing fingers at their rank and file workers as the problem? Nothing is more disheartening to hear than some clueless tech CEO spin on a cable news channel’s financial segment about the benefits of their company’s nascent cost cutting measures: 'We had a bad quarter with the sluggish economy and slowing demand for flux capacitors worldwide. To make up for it and keep my huge salary with locked price stock options and multimillion dollar bonuses, we’ve decided to close four of our plants, cut manufacturing jobs, trim our engineering division and move most of those operations to Asia.'”

[Scott McCollum]

“Why aren’t more shareholders and/or board members screaming for the heads of these underperforming CEOs? How many Americans were so forgiving to Jimmy Carter in 1980 after four solid years of “stagflation,” gas shortages and the 'CEO' of the United States telling us to all wear sweaters during cold winters without heating oil?”

[angkor]

I recently quit a Silly Valley high-tech company because senior management ("The Triad") was persistently self-obsessed, pomous, solipsistic, and absolutely disinterested in market/customer feedback (The Triad knows best). Besides the headaches, I decided that to depend on these bozos for my income was far riskier than depending on myself.

So I'm back to consulting, have won a few contracts, and am happier.

[jettester]

Ever heard of the saying: "The man with the gold wins."?

[HamiltonJay]

Quite frankly because most of the dot bomb companies the CEOs and Execs are buddy buddies with the board and hold huge controlling interests, they can't be fired unless they choose to be fired. Which is just one of the many reasons why so many of them suck eggs.

[Scott McCollum]

There seems to be very little in the way of "corporate responsibility" amongst CEOs in the high tech sector. Not to lump them all together - I'm sure there are good guys too.

Maybe this is more a political issue. There's no question that it doesn't look very good when your company is tanking and as the CEO you fire thousands of workers in an effort to achieve profitability rather than tightening your own belt.

However, that political perception might not be shared by Wall Street...

[jimt]

The prescription of firing workers in bad times is very common. To a certain extent, measures like that must be taken in certain circumstances. In my volatile industry sector, we've used staff cuts but also (semi)voluntary wage and hour cuts as well. It's a good approach when the problem is temporary. But in our case our executives took the same whack in compensation as the guys who sweep the floors.

[Scott McCollum]

in our case our executives took the same whack in compensation as the guys who sweep the floors.

A very, VERY uncommon practice in Silicon Valley...

[RightWhale]

It isn't CEOs. Hanging all the CEOs will make no difference whatsoever. Everybody that wanted a computer has one now. Everybody that wanted a cellphone has one now. Nobody will sell him another, newer, better one until the old one is used up. In the meantime, the rapid growth of factory capacity to fill the initial population demands is over. Market saturation. Nobody is excited about the latest version of anything. The old one was exciting enough.

[weikel]

Your right the tech sector( and im an engineering student so this isn't good for me) will probably be in a slump until the next generation of computers comes out... not good.

[Glenn]

The old one was exciting enough.

While it may be true that the market has reached saturation, technology is still growing incrementally. It's in the consumer phase now. Competition is ruling the market once again. None of those is a bad or ominous thing. Good call, RightWhale.

Have you seen those Lego Mindstorms? Have you seen the mini-bots out of Japan? Now there's some technology action you can bite into.

[Snerfling]

Nobody is excited about the latest version of anything.

I couldn't agree with you more. I'm in the business, and I'm constantly amazed at people who are hoping against hope that the 'next big thing' is right around the corner.

Typically, it's younger people who didn't even experience the mid-90's. To hear them describe the future, what with 'rich streaming media', 'edge servers', collaborative processing, wireless, etc. you'd think this stuff hadn't already been tried and rejected.

They retort that the technology wasn't ready before; not considering that at some point in market adoption, many people just DON'T want the product/service, no matter what the price/performance.

PCs are a great example: as inexpensive as they are now, they will never come close to the 100% adoption rate of TVs, CDs & DVD/VHS. At heart, the vast majority of people enjoy passive, non-interactive entertainment.

The future lies somewhere else - where it is, I haven't a clue. I just believe that people crave change, and at some point something new will crop up.