eBay Layoffs - What effect will it have on you?

Speculation is building that eBay may be laying off up to 1500 workers soon. Barron's has reported it, and Reuters has repeated it. AuctionBytes, and Randy Smythe have mentioned it. And Scot Wingo at the eBay Strategies blog has asked what the impact on sellers might be. Will the layoffs really happen? Well, when there's this much smoke...

eBay Strategies primarily discusses where the cuts might be made. I think a lot of people may wonder what effect it will have on them personally as sellers and buyers.

Effects on the eBay Community

Laying off 10% of the employees may not have a direct effect on the average eBay user. However, it will continue the deterioration of the eBay business through perception. eBay may say they're "refocusing" or "reorganizing" or striving for "operational efficiency," but it won't pass the sniff test on Main Street. Layoffs are only considered good by Wall Street, most people think of layoffs as a sign of trouble.

First is the perception of the ex-employees. Laying off 1,500 people will sow the seeds of a thousand blogs. There will be people who have really worked hard to make eBay better. And they'll feel like they've been thrown under the bus for the sake of a misguided strategy. They'll be bitter. And they'll blog. They'll be sought out by newspapers. They will join other companies and work against eBay.

Second, the perception of the existing community. "Is eBay really doing that poorly?" "Can I trust eBay with my business?" Sellers will back off even more. Less sellers, less merchandise.

Third, consider how the general public will perceive it. Will eBay be able to persuade people to join and sell their stuff? No one wants to board a sinking ship. Perception is reality to many many people.

As a seller - things won't likely get better for you. The problem with eBay is not too many employees. The problem is that it's broken.

As a buyer - you won't feel as comfortable buying on eBay when news reports and blogs are speaking negatively about it. Also, with fewer sellers, there will be less selection. We only have so much time. So we'll go where we can shop, find what we want, buy it, and get out. It's what eBay wants to be, but they're not pulling it off.

Why the Layoffs?

eBay's stock price is about at record lows. Barron's reported that eBay's business is "deteriorating." In that situation, Wall Street likes layoffs. But it's a short-term fix. The stock may get a bump, but the problem remains. Management is on a course that seems to be running eBay in the ground. And there is no sign they'll change course.

Part of the situation reminds me of Yahoo's "Peanut Butter Manifesto" from 2006. The "leaked" memo talked about Yahoo's internal problems. One of the problems the author pointed out was:

Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like - rather than a leadership team rallying around a single cohesive strategy.

Sounds like eBay. People who don't really sell on the site, making decisions that affect people who do. Those decisions are often based on business school theories, and executive experience gained at brick and mortar enterprises.

Will eBay get rid of the right people? Ask yourself - have they made the right decisions over the past 18 months? More from the Yahoo "peanut butter manifesto:"

We have lost our passion to win. Far too many employees are “phoning” it in, lacking the passion and commitment to be a part of the solution. We sit idly by while - at all levels - employees are enabled to “hang around”. Where is the accountability? Moreover, our compensation systems don’t align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren’t adequately recognized for their efforts.

As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.

The brain drain at eBay has been profound over the past year and a half. When I heard we wouldn't recognize eBay after the management got through with it, I thought they were predicting something better. Not this.

In any case, layoffs are for Wall Street - not Main Street. If layoffs occur, the cost will be greater than the gains in the arena of public perception.

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