Tag Archives: Layoffs

Microsoft’s smartphone division hit hard in upcoming layoffs

Windows Phone

After having already laid off 7500 workers last year, and currently trailing badly in the smartphone market, it appears Microsoft is one step away from throwing in the towel in the smartphone market.

If you’ve ever taken a college-level accounting class, then you’re familiar with regulatory filings that lay out a company’s financial strength and weakness both in written and spreadsheet form. In this case, we are talking about a form 10-K, and the one just provided by Microsoft shows that while their personal computing, cloud, gaming and enterprise divisions are doing well, their smartphone business is not.

When news sites inform you of this, though, they never tell you where exactly you can find the specific numbers indicating how many are being laid off, and the report is 103 pages of tables, explanations, credits, debits, and analysis!

But never fear, I am here to help you weave through it all. You can view the whole thing at this link, and if you would like to see the specific mention of the layoffs you will want to look at page 84, under the heading 2016 restructuring. The first  paragraph lays it all out. In fact, all of page 84, under the main heading ‘Restructuring Charges,’ is interesting yet sad to read.

If you don’t mind heavy accounting and corporate speak, the document is really quite interesting to read overall. It goes into detail about all their divisions, how well they’re doing (or not), their unclaimed revenue, profits and losses, writeoffs, even their acquisition of Minecraft. It’s not an easy read, but it’s informative.

Even I, the most diehard fan of Microsoft and their phone (Mine was an original Nokia, and I even still have a Zune!), finally had to break down and get an Android-powered Galaxy Note. I still wish Microsoft the best and hope, somehow, miraculously, that they can turn it all around.

Massive layoffs at Microsoft

Opinion incoming! We all knew it was coming, but the numbers were bigger than anyone had anticipated. 18,000 Microsoft employees will be laid off over the course of the next year. It’s a terrible circumstance, and one Microsoft isn’t completely familiar with. In fact, it was only in 2009 that the company made it’s first ever large-scale layoffs. Just like then, these are global with most of the cuts expected to come from the newly-acquired Nokia. Factory workers, especially in Finland but also in San Diego, Hungary and Beijing will be the largest casualties, but in a company-wide email CEO Satya Nadella emphasized that even management positions were on the chopping block as well. I’ll post the email, which was posted on Microsoft’s web site, below, and then offer some thoughts of my own.

From: Satya Nadella
To: All Employees
Date: July 17, 2014 at 5:00 a.m. PT
Subject: Starting to Evolve Our Organization and Culture

Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments.

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.

Satya

Here are my thoughts: Firstly, this is to be expected after any merger. The fact is, this kind of thing introduces a lot of redundancy and that has to be dealt with. When there’s a merger, where the two merged companies overlap there will be a duplication of duties and that results in wasted money and a sluggish company. Other units are also being axed, such as the Xbox Studios which never had a chance to produce anything of note.

On the other hand, we are talking eighteen thousand layoffs. These are real people, people with families and kids and responsibilities, and in Oulu Finland where Nokia is the largest employer (I believe), the impact will be devastating.

And that leads to my biggest issue of all: The tone of the email. It is incredibly cold and managerial with no compassion for the human toll. He uses the word ‘Synergy’ three separate times, along with other management-speak terms such as ‘synthesize,’ ‘strategic alignment,’ and ‘people managers.’ You can read a much more thorough of the analysis at Ars Technica; they broke it down quite nicely. And sadly.

You know what screws (not the term I wanted to use, mind you) up every company it touches? Managers. bean counters. MBAs. When a once-great company has its heart and soul sucked out, and people ask “What happened to this company?” it’s always because managers came in and focused on numbers. That has to be done to some extent, I get that, but the focus on the bottom line becomes so deterministic that the creativity and the humanity are forced aside. And this email reads like it was written straight out of ‘Management 101.’ Bad management is bad, I’m not denying that. But management as it’s often taught in school is much, much worse. Cuts need to happen, I understand that, but the tone and language of his email rubs me the wrongest way possible.

I hope this turns out to be the right thing, and again I emphasize that I understand why he is doing what he is doing. It’s just the way he expresses it that I don’t like.

The press release regarding the cuts can be found here, and Stephen Elop’s (head of Nokia) email to employees, which may actually be worse than Nadella’s, can be read here.

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