It’s not needless pedantry. Revenue is the income acquired before costs, and those costs include employee compensation. Reducing the number of employees has zero immediate effect on revenue. A company with US$10B in revenue can still be losing money if their expenses are higher than revenue.
This is important to point out, because reporting very often uses the wrong metric to describe a company in comparison to its behavior. Revenue is rarely the correct metric, and mentioning it as a comparator in this article makes the issue less clear.
Note that I am not defending CrowdStrike here. Hell, they’re the ones saying that layoffs are going to magically increase revenue:
According to CrowdStrike, the layoff plan is part of a bigger plan to improve different operations and processes and achieve the final goal of $10 billion in revenue by the end of the year.
“[Layoffs represent] a strategic plan (the ‘Plan’) to evolve its operations to yield greater efficiencies as the Company continues to scale its business with focus and discipline to meet its goal of $10 billion in ending [Annual Recurring Revenue].”, the CrowdStrike company mentioned in their 8-K filing.
I’m no paragon of business, but I fail to comprehend how having fewer employees is going to make your sales go up. Maybe they’re laying off salespeople, which puts the fear of god in those who are left as a “motivator”? Laying off people who perform the services they sell seems counterproductive in relation to revenue.
They’re being intentionally misleading about this, and pointing that out is not pedantry.
This is where the magic of near meaningless corpo-babble comes in.
The layoffs are part of a plan to aspirationally acheive the goal of $10b revenue by EoY 2025.
What they are actually doing is a significant restructuring of the company, refocusing by outside hiring some amount of new people to lead or be a part of departments or positions that haven’t existed before, or are being refocused to other priorities…
… But this process also involves laying off 500 of the ‘least productive’ or ‘least mission critical’ employees.
So, technically, they can, and are, arguing that their new organizational paradigm will be so succesful that it actually will result in increased revenue, not just lower expenses.
Generally corpos call this something like ‘right-sizing’ or ‘refocusing’ or something like that.
…
But of course… anyone with any actual experience with working at a place that does this… will tell you roughly this is what happens:
Turns out all those ‘grunts’ you let go of, well they actually do a lot more work in a bunch of weird, esoteric, bandaid solutions to keep everything going, than upper management was aware of… because middle management doesn’t acknowledge or often even understand that that work was being done, because they are generally self-aggrandizing narcissist petty tyrants who spend more time in meetings fluffing themselves up than actually doing any useful management.
Then, also, you are now bringing on new, outside people who look great on paper, to lead new or modified departments… but they of course also do not have any institutional knowledge, as they are new.
So now, you have a whole bunch of undocumented work that was being done, processes which were being followed… which is no longer being done, which is not documented… and the new guys, even if they have the best intentions, now have to spend a quarter or two or three figuring out just exactly how much pre-existing middle management has been bullshitting about, figuring out just how much things do not actually function as they ssid it did…
So now your efficiency improving restructuring is actually a chaotic mess.
… Now, this ‘right sizing’ is not always apocalyptically extremely bad, but it is also essentially never totally free from hiccups… and it increases stress, workload, and tensions between basically everyone at the company, to some extent…and decreased morale, increased stress basically always reduces efficiency, to some extent.
Here’s Forbes explanation of this phenomenon, if you prefer an explanation of right sizing in corpospeak:
It’s not needless pedantry because the original comment is just wrong. They probably can’t coast by on 200 million fewer dollars of revenue, while they surely could on 200 million fewer dollars in profit.
The no needless pedantry for one day challange: failed.
It’s not needless pedantry. Revenue is the income acquired before costs, and those costs include employee compensation. Reducing the number of employees has zero immediate effect on revenue. A company with US$10B in revenue can still be losing money if their expenses are higher than revenue.
This is important to point out, because reporting very often uses the wrong metric to describe a company in comparison to its behavior. Revenue is rarely the correct metric, and mentioning it as a comparator in this article makes the issue less clear.
Note that I am not defending CrowdStrike here. Hell, they’re the ones saying that layoffs are going to magically increase revenue:
I’m no paragon of business, but I fail to comprehend how having fewer employees is going to make your sales go up. Maybe they’re laying off salespeople, which puts the fear of god in those who are left as a “motivator”? Laying off people who perform the services they sell seems counterproductive in relation to revenue.
They’re being intentionally misleading about this, and pointing that out is not pedantry.
This is where the magic of near meaningless corpo-babble comes in.
The layoffs are part of a plan to aspirationally acheive the goal of $10b revenue by EoY 2025.
What they are actually doing is a significant restructuring of the company, refocusing by outside hiring some amount of new people to lead or be a part of departments or positions that haven’t existed before, or are being refocused to other priorities…
… But this process also involves laying off 500 of the ‘least productive’ or ‘least mission critical’ employees.
So, technically, they can, and are, arguing that their new organizational paradigm will be so succesful that it actually will result in increased revenue, not just lower expenses.
Generally corpos call this something like ‘right-sizing’ or ‘refocusing’ or something like that.
…
But of course… anyone with any actual experience with working at a place that does this… will tell you roughly this is what happens:
Turns out all those ‘grunts’ you let go of, well they actually do a lot more work in a bunch of weird, esoteric, bandaid solutions to keep everything going, than upper management was aware of… because middle management doesn’t acknowledge or often even understand that that work was being done, because they are generally self-aggrandizing narcissist petty tyrants who spend more time in meetings fluffing themselves up than actually doing any useful management.
Then, also, you are now bringing on new, outside people who look great on paper, to lead new or modified departments… but they of course also do not have any institutional knowledge, as they are new.
So now, you have a whole bunch of undocumented work that was being done, processes which were being followed… which is no longer being done, which is not documented… and the new guys, even if they have the best intentions, now have to spend a quarter or two or three figuring out just exactly how much pre-existing middle management has been bullshitting about, figuring out just how much things do not actually function as they ssid it did…
So now your efficiency improving restructuring is actually a chaotic mess.
… Now, this ‘right sizing’ is not always apocalyptically extremely bad, but it is also essentially never totally free from hiccups… and it increases stress, workload, and tensions between basically everyone at the company, to some extent…and decreased morale, increased stress basically always reduces efficiency, to some extent.
Here’s Forbes explanation of this phenomenon, if you prefer an explanation of right sizing in corpospeak:
https://www.forbes.com/advisor/business/rightsizing/
It’s not needless pedantry because the original comment is just wrong. They probably can’t coast by on 200 million fewer dollars of revenue, while they surely could on 200 million fewer dollars in profit.