Stripe is just trying to do layoff without paying severance

https://twitter.com/leeloowrites/status/1583151425043173376

by donsupreme • 4 years ago

50 59 4 years ago

aeternum2• 4 years ago

A better question is why did they stop giving low scores to 10-15% of staff? Everyone gets a gold star performance reviews?

dnissley• 4 years ago

Most likely because of the pandemic -- that's what happened at other companies, e.g. Meta

floober• 4 years ago

Right? Also these companies probably hired a lot of folks during the pandemic, and also relaxed their performance criteria while everyone was adjusting to remote work... So this just sounds like some folks are being caught off guard by the fact that yes, there are real performance expectations and you might not be meeting them.

falcolas• 4 years ago

If everyone is doing their jobs, there's no reason for an arbitrary % of them to get low scores.

Giving low scores is, as called out in the twitter thread, stack and ranking managerial BS which is toxic to its employees. Low and high performing employees.

Raidion• 4 years ago

You can choose between one of two problems:

If you don't have strong incentives to fire low performers (aka stack ranking), end up with a slowly deteriorating engineering culture as more capable people end up carrying the weight of worse hires that don't get managed out. Those devs enjoy their jobs less and leave for better pastures (because they're options are good), while worse devs stick around longer (because their options aren't as good).

If you do have strong incentives to fire people, you end up breaking up high performance teams, and create a culture of hire-to-fire and "mercenary" devs. This impacts your culture and forces out "good enough" employees and causes higher recruiting costs.

I don't fully understand if either of those are right in this situation, but I understand how people who felt they were with one type of company can be upset if that company changes its "culture" without a lot of heads up.

ncallaway• 4 years ago

Removing a mandate that 10-15% of staff receives a low rating is not the same as giving everyone a gold star.

You could presumably still give low ratings before when it was merited.

patmcc• 4 years ago

There's a big difference between giving low scores to people who aren't performing up to some standard (whether than makes up 2% or 10% or 40% of your workforce), and always giving low scores to 15% of staff even if they're actually fine. 'Stack Ranking' is widely considered poor management.

aeternum2• 4 years ago

I'd be willing to bet every manager in the company believes all their employees are in the top 60-70% in terms of performance and every employee believes similar.

rockostrich• 4 years ago

They have (had?) performance-based RSU bonuses so my guess is that the status quo was giving "meets expectations" to everyone but top performers so everyone was happy getting their bonus.

ElevenLathe7• 4 years ago

This is a neat hack by management. It would be great if there was a union that they had to bargain with before doing this kind of thing.

whatshisface3• 4 years ago

Getting around severance is, believe it or not, illegal with or without unions.

ElevenLathe7• 4 years ago

Sure, but who is going to bat for you except a union lawyer? Your state AG? Fat chance.

shagie2• 4 years ago

https://www.dol.gov/general/topic/wages/severancepay

Severance pay is often granted to employees upon termination of employment. It is usually based on length of employment for which an employee is eligible upon termination. There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance pay is a matter of agreement between an employer and an employee (or the employee's representative). The Employee Benefits Security Administration (EBSA) may be able to assist an employee who did not receive severance benefits under their employer-sponsored plan. Please contact EBSA if you have any questions.

scarface742• 4 years ago

How is it illegal when legally no company is required to pay severance in the US?

seibelj5• 4 years ago

To everyone reading this - we live in a free country. Nothing stops you from creating a new business as a co-op or employee owned collective or whatever.

So many smart people here who are passionate about labor. Just make that into your company from day 1!

As a business owner I would never do this. But you could do that yourselves without coercing me into them!

ElevenLathe7• 4 years ago

That's true! It's also true that nothing stops your employees from walking out until they are treated better! There's no need (or, morally, any possibility) of banning them from forming a group of their coworkers to organize this process.

Honestly you get more protections if they are part of a recognized union than if their only choice is a wildcat action.

hellotomyrars• 4 years ago

As a member of a union, I will work towards promoting unionization and the benefits of a union. I’m not calling you unscrupulous, and I think not every company needs a union to represent labor. But companies at scale absolutely do. If you’re treated as a disposable cog in the machine that can be replaced at will then your labor is not valued. They will pump you and everyone else dry with the rawest deal they can get.

The only way for labor to get a square deal is through a union. The fact is obvious because large corporations do everything possible to try and prevent their labor from unionizing.

You may be a good person running a business that respects your employees and if you are, I have no issue with you. But if you’re someone stocking the shelves at Home Depot or working in an Amazon warehouse you aren’t respected by your employer and you aren’t getting a square deal.

BaseballPhysics2• 4 years ago

To everyone reading this - we live in a free country. Nothing stops you from creating a new business as a co-op or employee owned collective or whatever.

That freedom is a two-way street, and it's equally true that nothing stops labour from coming together to bargain collectively. In fact, in the US and many other countries, that freedom is explicitly enshrined in law.

yamtaddle• 4 years ago

As a business owner I would never do this. But you could do that yourselves without coercing me into them!

Nothing stops you from operating a business at full personal liability. As a worker, I would never do this, but you can do it yourselves without coercing me into supporting the existence of liability-shielding legal entities with more power than ordinary humans.

See how you can kinda do that with anything, so it's not very convincing?

tfehring• 4 years ago

I'm skeptical that layoffs are the real reason behind this, since it seems like a pretty ineffective way to trim headcount. Even if this results in an additional 10%[0] of employees getting "partially meets" where they would have previously gotten "meets," that'll only generate what, 2% additional attrition per year? I know "tech layoffs" generates more clicks right now than "tech performance management," but to me the framing here just doesn't make a lot of sense.

[0] The article says they're going to be enforcing their "10% to 15% target" now, and presumably some people are already getting those ratings.

JamesBarney• 4 years ago

I've been a manager a few places and been involved in a few performance related firings.

None of them were fired for cause in the sense they wouldn't have gotten a severance or unemployment.

Usually fired for cause i.e. no severance or unemployment is reserved for gross misconduct.

tssva• 4 years ago

Although layoffs often involve severance pay it is not a requirement. Also, in most states being fired for poor performance vs misconduct doesn't disqualify you from receiving unemployment.

paxys• 4 years ago

Stripe had 1500 employees in 2019. Today it has over 8000. The same pattern has applied throughout the tech industry during the pandemic, and it is obvious that not all of these mass hires are well suited for the job. Now that the unlimited money printer has dried up and companies are forced to tighten budgets, low performers will start to face the pressure everywhere.

williamcotton• 4 years ago

I'm not sure that it has anything to do with a given individual low performer. It could very well be that these companies over-hired and were not structured to manage a giant influx of software developers. Having an unlimited money printer seems like a breeding ground for mismanagement.

blueblimp• 4 years ago

Why is this random person's speculation linked as if it has credibility?

darth_avocado4• 4 years ago

- Although unethical, stripe is hardly the only company to do it.

- If you get cut for performance reasons, most companies still provide severance.

- This is not a one off thing. Most companies have 10-15% quotas for “low performance” every year and people are let go on a regular basis.

- Most other employers in tech know this as a practice and getting fired is not that big of a deal.

- if you’re let go for performance, you can still file for Unemployment as long as there was no misconduct on your end.

Although I don’t agree with these tactics and in my long career, have been at the receiving end of it a couple times, I would still say the tweet is a little alarmist. It makes sense in other industries, but in tech, it hardly matters if it is a layoff or a performance related loss of employment.

Besides we are all talking as if the employees don’t know the risk of working for Companies like stripe. For every stripe engineer that makes 400k, there is an engineer working at another company at 200k that is equally capable of getting that 400k job. There is a reason they don’t do that.

wahnfrieden4• 4 years ago

are you just saying, in detail, that exploitative practices are normal in the countries they operate in? these practices are laughably abusive or illegal in some countries, why should we respect status quo here? that's an impressive display of solidarity with capital

darth_avocado4• 4 years ago

Because you get paid for it?

Countries that have more pro worker legislation, also tend to have lower wages? At the end of the day, it’s not a minimum wage job we are talking about, it is a multiple of 6 figures job.

[edit] Besides, we are all talking about the downside of the current setup as if there is no upside. If there is only upside to fixing the problem being discussed here, then there is a very straightforward solution: Unions. But somehow, tech workers are very less likely to enter unions. Why is that? [hint: money. With more protections, you get paid less] It is a zero sum game. There is only a fixed budget that companies have. If you want more benefits, it comes at a cost of lower income. It’s really straightforward.

achalshah• 4 years ago

Is there any difference between this and the kind of forced attrition that Meta and Google have also signaled recently?

harryh3• 4 years ago

This post should be flagged off HN.

Everything in the tweet is factually incorrect.

- Companies aren't required to pay severance when doing layoffs.

- There is no evidence that Stripe isn't paying severance when firing for performance (I'd be shocked if they aren't)

- Employees fired for performance are absolutely eligible for state unemployment benefits.

wahnfrieden4• 4 years ago

your comment ought to be flagged off hn as factually incorrect - they are required in canada, where stripe also operates an office

harryh3• 4 years ago

Fair point about Canadian law being different than US law. For the < 5% of Stripe employees there, that does appear to be true. Though I would again point to my 2nd bullet point:

- There is no evidence that Stripe isn't paying severance when firing for performance (I'd be shocked if they aren't)

Kranar• 4 years ago

Stripe operates a single office in Toronto, Canada. No one would be qualified for severance since severance is only eligible after 5 years of employment and Stripe's office has only been open for 2 years.

likpok2• 4 years ago

- Companies aren't required to pay severance when doing layoffs.

The WARN act requires advance notice of 60 days. I think most companies prefer to pay severance, but it's pretty much equivalent. California has more strict rules (mostly excluding a bunch of excuses to skip complying).

So yes, Stripe would technically not be required to give severance in the case of a layoff. But they'd be required to keep the people employed for 60 days after telling them they're going to be laid off. I'm not sure there's much of a distinction?

harryh3• 4 years ago

The WARN act only applies for "mass layoff affecting 50 or more employees at a single site of employment."

I'm honestly not sure how this would apply for a remote workforce. Consult your friendly HR or legal team counterpart. :)

dirtyfrenchman• 4 years ago

As a manager who was forced to participate in this, it is all factually correct.

__derek__• 4 years ago

It looks like the tweet was deleted.

remram• 4 years ago

Tweet was deleted, it quoted https://twitter.com/Techmeme/status/1583119981134286849 which still exists.

Stripe is just trying to do layoff without paying severance

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