I don't know if it is different were Lenovo operates, bu there in Sweden if i get 100 in salary, the company has a cost of 200 because of social taxes, employment tax etc.. I guess also HR will have less to do, which contributes to the cost-save.
I'm not sure you can count what you get after taxes as salary, your personal taxes is normally considered part of your salary.
The "arbetsgivaravgift" (i.e. taxes that your employer pays) is about 30% of your salary, so if you're going to get a salary of 100 that costs your employer about 130. The cash you get in hand varies depending on your personal tax rate, but normally you would receive between 50 and 70.
Very true. There is a legal standard for "gross" pay which is not gross pay at all. In Northern countries gross pay is ~20-35% lower than the employer pays, and after that the employee also pays 40-55% on the "gross" amount after that.
(Example "non-gross" income tax: patronal national insurance tax, corporation closure insurance tax, tax on vacation pay, tax for employment of permanently disabled persons, ... It totals ~18% in Germany, up to 38.5% in Belgium, depending on the sector (specific sectors have specific taxes - yes really))
These sorts of measures make sure that taxation is a lot less visible for "normal" people (ie. voters) in Europe than it is in America. Employers have to advertise "net pay", which is the amount you generally negotiate for. Also, for instance, the prices displayed in stores have to be tax-inclusive (there's a VAT of 18-25% as well), the prices displayed at the pump include all taxes (not just VAT), tobacco and alcohol have to be advertised with prices including all taxes.
That means a European kid might very well not hear the word "tax" until they're 24-25 and get a real, first job, and will likely think they're only paying an income tax of 40-55%, when in fact they are paying a tax of 1/1.200.60.82 = 61% (and up to 76%) (money that they can spend divided by money that is paid for their labour, inverted). And that still doesn't include property tax, car tax, and the like.
Companies also have to provide services to employees. Less employees == less office space, less IT equipment, less IT support, less cleaning, less HR overhead, ... etc.
Many software engineers do. Considering how much value they create with their work, they are massively underpaid.
You could ask why? I'd argue it's anchoring to the magical 150k. For some reason SEs think that's peak engineering pay. It's not, and if you're doing meaningful work that adds top tier value you should be paid a lot more, or at a minimum given equity.
> Many software engineers do. Considering how much value they create with their work, they are massively underpaid
I hear this a lot, but what is your reference point that allow you to conclude that the engineers are underpaid. Do you use a percentage of profit generated from your contribution? (would you also pay the company for products that made a loss?)
Only if the market conditions can be described as such that are close to perfect competition. When top employers collude to prevent poaching of employees (Google, Apple, etc) the opposite happens. Compensation is artificially kept low in the interests of megacorps.
It's a lot more complex than that. Missing, but vital, variables in your oversimplification include: Market lag, value perception over actual, price anchoring.
> Leonovo is working REALLY REALLY hard to lose loyal technical customers.
They already lost me after Superfish, but now with this instead of passively not buying I'm going to actively recommend that others not. It's absolutely unacceptable.
Problem is, the only decent quality machines I've ever had have been ThinkPads. I'm afraid of paying big money for a high-end machine from some other brand and having it turn out to be somewhat of a lemon.
Of course there is always Apple, which has consistently high quality, but I prefer to run Linux, so that's out.
It's usually the opposite - the reasonable ones that were fighting this insanity are the first to go and the ones fully on board with whichever stupid idea from management will get their role strengthened...
And touchpad designers too. I have a Lenovo Thinkpad Yoga and the Touchpad is unusable. It has this mechanic click where the full touchpad lowers down, and while it is doing this the mouse moves slightly. Therefore it is hard to click precisely on something if during the click the mouse is moving. They probably never tested this before deciding to put this into a thinkpad or they tested it and nobody cared to hear what the testers said...
Worse. They market tested it on their best laptop (the X1 Carbon). It flunked on the market, with the 2nd gen X1 receiving appalling reviews. The 3rd generation X1 Carbon reverted to the old touchpad and its marvelous Thinkpad mouse buttons.
They can always hire even more incompetent batch than they had in the past 3 years. And my suspicion is that it was forced upon them from management that probably stays in place to make sure there is no improvement in the future either.
My vote is to sack the guy who decided that the AC/battery indicator only needed to be visible when the lid is closed. Maybe hire him again just so you can sack him again... 3200x over?
It doesn't bother me that much: (mine) beeps when you (un)plugin the AC adapter, and you can also consult your operating system for it's current state, in the few case you wish to access this data.
I only hope it doesnt push them even more to destroying thinkpad brand although there are some encouraging signs as shown in the release thinkpad p info
In my eyes, they've already destroyed their brand by selling Thinkpads with BIOS's which automatically compromise clean Windows installs by overwriting files at boot time. That and the fact they sold Thinkpads containing software which compromised all HTTPS traffic (Superfish).
Speaking as somebody who's current laptop is a Lenovo Thinkpad and who has had three other Thinkpads in the past: This will be my last.
I know Superfish was not included on Thinkpads. I am not sure about this latest breach. But that's not terribly important; the company showed that it can't be trusted. If they're so eager to sell out some of their customers, what's to stop them from going a step further in the future?
Much as I love Thinkpads, the only reasonable stance from here on out is to presume that every Lenovo computer is compromised by default.
Their quarterly profit was just $105m so it isn't exactly a high margin business. That number was a 51% drop compared to the same quarter last year. [0]
It is hardly surprising that they want to shed staff if the profit dropped that much. Nor was the 3% revenue increase anything spectacular.
It was still a profit, that is my point and your reply just sounds the typical MBA stuff I was mentioning.
A business is sound if it can pay its employees and running expenses with a little savings on the side, not trying to achieve increase multiplication factors in profit.
If their profit has decreased by 51% in this quarter, there is a chance that they will have even less profit in future, which means that they will need to lay off even more people than 3k. That's why they need to take measures now.
A very small profit in decline, if they do nothing about it they are likely to go into the red, which will end up causing even more lay-offs.
Even historically business have been motivated by profit and increasing said profit. This is nothing new and certainly has nothing to do with MBAs. No private (i.e. not state run) business has ANY obligation to employ more people than they need/want just for the sake of it.
The problem with such "MBAs" is that always the answer is to eat the seed corn, making the problem worse.
If Lenovo is to grow out of this, it will have to do it with the manufacturing and design/IT departments. Yet a voice within me seems to be very certain that these departments are going to find themselves cut down far more than the sales and general management departments. At one company, when this happened, they actually increased sales commissions while cutting engineering jobs. At that point, you know it's time to get out. Out of the company's stock, primarily.
>A business is sound if it can pay its employees and running expenses with a little savings on the side
And maybe, at the rate it's going, it won't be sound next quarter? Should it wait until the final hour, before it can't make payroll, then lock the doors and lay off the entire staff, like this genius plan?
A business is "sound" if it can make a profit. However, a business is only a good investment for the shareholders if it can make a profit large enough to be in line with the general cost of capital and alternative investments.
Lenovo's market cap at the start of this year was $13bn. A $0.4bn profit is a 3% return on equity, in the middle of a strong global growth phase. Normal ROE in the tech sector is 7-10%, so unless they can double or triple this, investors are better of selling up and putting their money in a bond fund (or Lenovo's more profitable competitors).
That's just silly though, if you see a bad trend, make adjustments to buck it? Just because you're "still making a profit" doesn't mean you're doing well or even that you aren't on the road to disaster. And unfortunately when you are a public company, your responsibility on this front is to your shareholders, not to your employees.
If it were a private company I'd agree to a certain extent, assuming that they could see an alternative way to stop this downward trend. However as a public company, constant growth is a must.
"And unfortunately when you are a public company, your responsibility on this front is to your shareholders, not to your employees."
I don't think it's as clear cut as that.
Isn't blindly cutting costs just effectively destroying company infrastructure?
"However as a public company, constant growth is a must."
But just laying people off does not guarantee growth.
That said, I have no idea how the company is structured or operates. Sometimes laying people off is kinda necessary, i.e. a company with a factory that manufactures product X, suddenly there is no market for X , and the factory cannot be reconfigured to create profit - yeah, that's clear cut.
IMO, generic sweeping statements like "removing n percent of personnel is necessary to cut costs" is impossible to gauge in negative or positive light without detailed understanding of the business or it's operations.
"There is no need to judge negatively or positively. It's the business' own business."
Free markets are nice - but there is a historically proven need for government control (pollution and child labour, etc). This means not all things are business' own business.
All actions have an ethical dimension into them. Financials are a very good indicator of the long term business prospects of an enterprise but they are not the only thing that matters when evaluating their impact in the greater human context.
Each business has a varying group of stakeholders who are impacted by the decisions made by the business - employees and shareholders are the obvious subgroups. The community where the business operations are situated is often a secondary stakeholder as well.
As an example before environment protection acts came along, companies polluted carelessly, thus causing a massive negative externality which impacted the surrounding communities. Flaming river? Not so nice.
The environmental effects were considered to be such a high impact problem that the companies were forced to modify their operations to seize pollution. Creating this legislation most assuredly required negative judging of the operations of a large number of business.
Like I said - I have no idea of this Lenovo business - but claiming all external judgement of third parties null by a blanket statement is not necessarily the best way to look at things.
Even if MBAs were the worst thing that happened to mankind, this has nothing to do with them.
It is simple arithmetic. Relax and get rid of that chip on your shoulder.
"in a move that should trim its wage bill by an estimated $1.35 billion per year."
$1,350,000,000 / 3,200 = $421,875
I need a payrise.