why are they laying off employees if company is beating earnings?
6 replies (most recent on top)
I know for a fact that many, many of those being laid off were not at managerial level. In fact, I know they are even adding more managers in some areas.
I don’t know the answer to this, but I’m confident they covered themselves legally. 3M was sued for age discrimination when McNerney came in and culled the herd about 20 years ago. Whether it’s employment matters or business disputes, the company is very cautious and conservative when it comes to litigation so they have probably been super careful with all these layoffs. Having said that, most of the people I know who have been affected have been very experienced and well compensated, with many of them on pension I or II.
Does anyone know the age group and pension portfolio of those losing their jobs? I am very curious. Myself and others I have talked to all seemed to be a bit too young to retire, but will take a hit from the portfolio that appears to be common. Wondering if they diluted the ages just enough to avoid a lawsuit?
McNerney ushered in lean six sigma and it took about 15 years for a cost cutting focus to k–l growth - reviewing the financials for MMM, there has been zero organic growth since 2014. The current methods of financial engineering began with Thulin. The problems with this company are not limited to PFAS or COVID.
A good CEO understands he/she must allocate capital (whether it is human or financial) in a way that his/her company compounds money at increasing rates. Roman has demonstrated in his 3.5 year tenure that his only key performance indicator (KPI) is stock selling price. He was giddy last week when the price rose after earnings, which in my opinion was simply wall street acknowledging the company gave a little forward guidance. They announced a new share buyback program, which means: 1. they've got nothing better to do with any cash the company generates (no further growth) & 2. they're trying to manipulate the EPS (earnings per share) number.
With a CEO so focused on stock price (after all it is a large percentage of his compensation), they're driving the company forward by looking through the rearview mirror. Under Roman, the company has overpaid for acquisitions (i.e Acelity) and has been underpaid for divestitures (i.e. body armor). Layoff announcements will continue with each underperforming quarter. The Board of Directors will not do anything as long as they continue to receive their yearly stipend.
Simple reason is that current 3M management team has no other new ideas to move the company forward with organic growth. 3M had little to no growth for the past 3 to 4 years. There is no notable new products in the pipeline, only old product extensions and tweaks.
The only way executives can beat EPS nos. and make sure they get million $ bonuses are cost cutting, and that is what is happening here.
Meanwhile every week or so you get office emails about 3M ethics, integrity, honesty, social justice and other such BS.
Whatever the euphoria was left after the brief stock price rise after Q4 earnings last week is now gone when the stock price nose dived again !
Expect more layoffs in the near future. This will be a regular feature moving forward. Zero real growth , only cost cutting to look forward to.
It’s a publicly traded company with pressure to consistently hit earnings targets. This is one of the ways they do it and it seems to be one of the pillars of the Mike Roman playbook. From what I’ve seen and heard, the company appears to be using layoffs to cull well compensated experienced managers below the director and VP level, regardless of their tenure and track record with the company.