Thread regarding McKesson Corp. layoffs

Within my BU, the cost cutting waves went exactly as described:

Over the last 6 months at McKesson (in my BU) in the following order:

1- Travel cutback

2- Elimination of open positions

3-Contractor cuts

4- PIP layoffs

5- Low Performer (based on annual review ratings, anyone with a "4" on a 1-5 scale was terminated,, 1 good 5 bad.. these were people who were about to be on a PIP)

6- Re-org layoffs... true layoffs that we've seen over the last several weeks.

@wtu it's mostly relationship based... Granted, performance rating and relationship are tightly correlated too...

Last poster was is it based on then?

I'd agree with most of it, however, "The weighting is probably 80+% based on performance in my experience" is probably not applicable...

Manager here who's been through this a few times... here's how it works if the company knows a layoff is coming, and they almost always do a few months ahead of time.

These things often seem out of the blue and rushed to employees who aren't paying a lot of attention to the bottom line, but managers and upper managers will tell you that in big companies these things get a TON of attention and planning. First, your senior execs will see you're not likely to make your next quarter's numbers and the forecast isn't better beyond that. They'll make a decision to basically prepare for a layoff. Accountants start running numbers. There's always a big up-front cost of laying people off in severance pay, at least with professional office type positions where people are seldom "laid off" as much as "let go" and aren't going to get a call-back in a few months if things turn around.

The first step from the engineering org's standpoint is that all of the managers and directors will get a request from HR and their bosses to force rank their employees. You'll often be asked to rank them in a couple ways. By performance, by potential, by criticality of their assignments. These may be weighted and combined, and at some point you have a final list. Every employee in your group ranked from highest to lowest. The weighting is probably 80+% based on performance in my experience. I as a manager may be in on a calibration meeting with my boss to combine my list with the other managers, I may not and he may do it himself. Either way, every budgeting org or group will have a combined list.

The GM's, VP's, and other senior executives will at some point make a decision about what percentage of the headcount needs to be let go. Usually these things need CEO approval, maybe even Board of Directors approval. From my understanding often they'll give a general approval and leave the finer details to the people closer to each business. Most companies won't do a layoff for less than 8-10% of headcount unless they're really big. They'll instead cancel any open reqs, cancel travel, cease 401k matching, force everyone to take an unpaid week off, or get much more strict on low-performers.

So the decision to lay people off is made and a target dollar amount of monthly salary or a percentage of the workforce is decided upon. Next the senior execs balance those numbers from department to department. Typically R&D will get a bit lighter pass than manufacturing and manufacturing support roles. If you're not making stuff you don't need people in manufacturing roles. Of course, if they decide to cancel an entire project or program R&D could be hit harder. So maybe the company decides to shed 10% of total headcount, and there's a percentage by group. Accounting will shed 10%, IT 12%, Marketing 8%, Purchasing 10%, R&D 8%, Operations 15%, etc. These numbers tend to be tentative until the very last days and they'll have a few scenarios.

Before you find out as a manager who's actually going to be laid off, HR and Legal will review the lists. They'll make sure that your forced ranking didn't single out the women in the department, the minorities, the near-retirees, etc. In a few rare cases I've seen people who should have been in the bottom list kept because they fit into a protected group or were considered likely to sue. (You can't lay off the woman who's 7 months pregnant without the threat of getting sued. You can't lay off the guy who's 63 and your department's only African American employee without the threat of getting sued.) Like it or not, the HR/Legal contribution here is to protect the company from litigation.

A day or two before the official layoff as a manager you'll get your list of people affected. You pretty much expected one head, you're hoping you don't lose two or three. You see it's only one. Sigh of relief. You also get your instructions on how and when it should be handled. You've known this may come for months, you've hoped the market would get better and there wouldn't be a layoff. You'll feel like sh-- and won't eat. You've dropped some hints to your group a few times that numbers weren't great and nobody should be making big financial decisions. For some reason the same dumbass you're about to lay off who never worked as hard as he could have went out and bought a new truck last month anyways. You like him as a person but he's the right guy to lay off if you have to let someone go.

So to answer you initial question, the first people to go are contractors, but most companies don't even consider letting contractors go a layoff. If you're getting to a "real" layoff the contractors are probably already gone. The next group to go is everyone on a PIP (performance improvement plan) or who was on one in the last year. Then it tends to focus on people in manufacturing and support roles like IT and accounting. Sales, R&D, and Marketing in my experience tend to get less cutting. More than anything though, it's low performers. The company will always say it isn't, but only an idiot would lay off their best people. It's why people laid off have such a hard time getting another job.