Badness abounds.
Like many (most?) software companies, DysfunctoSoft is goin’ through some hard times. Q3 sales sucked and then that whole October-through-now financial meltdown thing happened.
So the axe fell. And as it often does, the head-cutting machete hit Product Management extraordinarily and disproportionately hard.
(Out of respect for fallen comrades, the Cranky Product Manager will not be making any of her signature lame attempts at humor in this here blog post.)
The Cranky Product Manager had to lay off one of her team members. This really sucked. Big Time. The guy was a really good PM – he was absolutely fantastic with the Sales team, although less so with Development. But, alas, the Cranky Product Manager is also really good with Sales, and less so with Development. Thus, she needed to keep the dev-focused Product Managers instead.
(Lesson: If your strengths and weaknesses are the same as your boss, your boss will adore you and “get” you, but might lay you off more readily.)
When the dust settled after DysfunctoSoft’s Week of Carnage, one third of the entire product management team was gone. Much worse than Sales. Far better than IT.
All this badness got the Cranky Product Manager making lists and rating stuff. She now presents her list of software company job functions, ordered from most likely to be canned in bad times to least likely.
MOST LIKELY TO BE LAID OFF IN A BAD ECONOMY
- Recruiting
- Internal Training
- IT
- Customer Support
- Documentation
- Product Management
- Marketing (PR, Corporate, Events, Website, Lead Generation, Analyst Relations, …)
- Product Marketing
- QA
- Professional Services
- Development
- Human Resources (need someone around to help cut those heads)
- Telesales / Inside Sales
- Investor Relations
- Sales Reps & Sales Engineering
- Finance (because the CFO wields the axe but spares his own team)
- Legal
LEAST LIKELY TO BE LAID OFF IN A BAD ECONOMY
Conclusion: Product Management is cut much too early and too deeply compared to other functions, especially when you take into account how critically important good product management is to the success of the company. The Cranky PM is no finance expert, but she’s been told this is because PM often falls under the “R&D” cost bucket on the income statement, and thus competes with Engineering and QA for funds, even if Product Management does not report to Engineering and is in its own Products organization. In contrast, Marketing falls under the usually much bigger and more fungible “SG&A” cost bucket.
Is this right? The Cranky Product Manager would appreciate any corrections or comments on this.
{ 13 comments… read them below or add one }
I am in the middle of this right now too – such a bummer. I agree with your list except I would actually move Marketing closer to the top. For whatever reason, marketing budgets are the first to get cut and with no program dollars to spend, there is less headcount needed.
Now that I am totally depressed I will go back to what I was doing. Oh yeah, that’s totally depressing too. Sigh.
April
I’ve been in the same boat and it always feels bad to let someone go. In fact, if it stops feeling bad, you have to worry.
IMO, PM should always be a peer organization to Engineering and Marketing, not a subordinate to either. The “competing for resources” issue is certainly part of that, but it’s also vital for PM to own and drive product strategy — something that’s really hard to do within Eng or Mktg. IOW, PM needs to have its own, unique voice on the executive management team. Not always easy to accomplish — particularly if your CEO is a former sales, engineering, or marketing person (as he or she often is). This org structure is one of my primary considerations when looking for new opportunities.
I suspect that Product Managment is targeted too early because marketing communications is also targeted early — ad budgets (along with travel) are the easiest expenses in marketing to cut. And I would bet that a lot of CFOs are not too clear about the difference between marketing programs and product marketing… So there could be a Dilbert-esque PHB problem partially responsible.
Probably more important, though, is that implicit in a layoff driven by declining sales is the expectation that most sales will be coming from existing customers over the short to medium term. Another implicit assumption is that release schedules can be stretched out because competitors are also going to be wounded and thus competitive issues aren’t the root of the majority of deal losses (like they would be in a booming economy). Also, release schedules may have to be stretched out because of reductions in QA and downstream engineering. So add all that up and some bright-eyed bean counter figures that they can get rid of a few product managers and have the rest “double up.”
We just went through a similar exercise, and I have to say that your ranking of departments and the likelihood of being trimmed is spot on.
I have to definitely concur about your comments on Finance. That is one group here that seems to grow headcount, regardless of economic conditions.
We didn’t lose a PM (yet), but will likely by the end of the year. We did lose an open req to fill a critical gap in our product marketing role.
Two weeks ago, I took a chainsaw to my marketing communications budget to make our outward facing program spending line up with what my GM says the number will be.
It is ironic that groups like Sales seem to be immune from layoffs, even as a territory shrinks enough to not support the full complement of quotas. I wonder why that is…
2009 will be a bleak year. Putting my head down to try to make it all come together.
- GTA
April, Sorry for bumming you out. Suspect you came here looking for a few laughs and instead the CPM delivers glumnisity. Apologies.
Mark, the Cranky Product Manager believes that even if Product Management is in its own organization that reports to the CEO, that on the Income Statement Product Management salaries are allocated to the Research & Development expense bucket and not the SG&A bucket. And thus, if a goal is to hold R&D expense at a certain level, that PM competes with Engineering & QA resources no matter what.
Brent, the Cranky Product Manager thinks the second paragraph of your analysis (re: extended release cycles and competition) is spot on.
I gotcha, CPM, though I have seen PM budget be pulled from different “buckets”. There’s also the “everyone must suffer” kind of thinking that says every department must take a hit, regardless of size. Unfortunately, one headcount is a much greater % of PM than it is of dev and we are often affected (IMO) to an inappropriate degree. So few CEOs grasp what truly effective PM can get them….
Brent your second paragraph re the decline of sales and depending upon existing customers really hit home. I was affected by a RIF 2 weeks ago. They eliminated about 20% of the US operation (small group compared to overseas) or about 18 people. 50% of the PM/PMM team was let go leaving only the junior people. All Seniors let go. Quite a few cuts in Sales/SE team as well. I think what Brent outlined could be a philosophy that my company used in it’s decision on which depts took the hit. If you’re just depending on selling into existing customers with existing technology you’re not planning on wowing with new innovation. You also wouldn’t need much sales staff to reach out to new customers and markets.
FWIW – R&D didn’t get hit at all. Doc is part of R&D. Both offshore. Neither Finance, HR, nor IT though HR & IT are both bare bones. They just hired a new CFO a month ago.
I think when the numbers are off for whatever reason, CEO’s have to look at resources as they fit on a balance sheet. There are those that contribute to the bottom line (sales, engineering) and those that are a burden to it(marketing, product management). It’s sadly that simple.
Joh, the Cranky Product Manager understands how SALES contributes to the bottom line. But she doesn’t get your argument that Engineering contributes but Product Mgmt doesn’t – both functions are primarily concerned with building the right product. You could argue _neither_ contributes to the bottom line because R&D is an expense, not revenue, on the income statement.
And you could argue that both _do_ contribute because, after all, you need a product to sell to make money, but it would seem that BOTH PM and Engineering are needed for that, lest you build the wrong product which would then contribute nothing to revenue and be a big drain on profitability.
CPM,
Wait a second, you mean my arguement has to be *strong* to post here?!? I agree with your comments and you are right, engineering is also a burden. But engineering generates code (or hardware or both) and that’s what the company sells. PM generates nothing saleable the absense of PM does not guarantee failure, thus it becomes vulnerable. The PM function can be absorbed into engineering under certain circumstances for short periods of time. I’ve seen it happen first hand. Moreover, I can think of a couple of large-ish companies that still do not have a PM function. It isn’t pretty for reasons that are supported with just about everything you blog, but it is possible. My only point, albeit flimsy, is that when balance sheets go bad, CEOs and CFOs tend not to see the world through PM-colored glasses. Kind of like pulling the doors, hood and trunk off a car to improve gas mileage. It still gets from a to b for a while.
Related to John’s points and CPM’s reply, I’ve been in a software company where things went south after an ill-executed acquisition alienated all of ProdMgmt and we bailed — every one of us — while the company was making deep and regular layoffs across the board, too.
We were managing many new products in the pipeline, evangelizing them within our customer base, the market, and with engineering. Our customers, sales team, and even engineering was excited to see us break out some fresh products because our software company had a long track record of versionitis — content on releasing one version after another with little innovation.
Almost two years later, the company continues to release incremental versions, even choosing to upgrade both versions of two competing products that were never consolidated after a merger four years ago. The company is hanging on via maintenance revenue, while most of the good people have left (or been laid off), and the parent company lost its window to flip the company profitably.
My point is that getting rid of hard-charging product managers is the death knell for any strategic hope. Coveting back room maintenance engineers is a recipe for status quo infinitum. To keep (and attract) engineering rockstars, you need top-notch, visionary executive management and the product management team to translate the vision into a solid, actionable product plan. Without PM, the vision won’t fly.
The right type of product manager may take take a year or two to get seasoned — learn the market, the company, and the products, figure out what’s needed, and get the right plan together. But once that PM is committed, if they’re good, they will be invaluable and indispensable. Are all PM’s great? Heck no, and the bad ones weigh the company down and should get the axe if they’re not contributing. But a good one is golden and will be highly specialized and attuned to the needs of the market and the company.
Interestingly and somewhat ironically, an experienced engineering manager should spend a good deal of time hedging his/her bets that any engineer could leave on any given day. Thus, the manager must ensure that cross-training happens and that any departures (both voluntary and involuntary) won’t leave a gaping hole in production and release commitments. So by design, engineers should be much more replaceable than PMs. Likewise, a decent engineer should be ready and able to go from coding office applications to coding web commerce back-ends pretty quickly so that any shifts or downturns in demand make her/him fairly recession-proof.
Great list but it also depends on your idea of IT vs Development maybe. In general I thought that companies were keen to keep developers / IT in tough times since they are forced to create greater efficiency through technology and thus are able to cut more jobs?
Nodding my head with the latest from The CPM – why is PM under R&D & one of the first to go when times are tough? http://tinyurl.com/5hhmdh
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