D&D General WotC Founder Peter Adkison On Hasbro's Layoffs

Peter Adkison, who owned Wizards of the Coast until it was sold to Hasbro in 1999, oversaw the relaunch of Dungeons & Dragons with D&D 3rd Edition. Today, he commented on this week's round of Hasbro layoffs, which have ripped through WotC. Adkison left WotC in 2000 and currently runs a production company called Hostile Work Environment.

Like many of you, I'm saddened to learn about the layoffs at Hasbro.

Caveat: I have no idea of what’s happening behind the scenes at WotC. If you’re asking who’s at fault, or to what extent it was or was not justified, that’s outside the scope of my knowledge. This post is about my own reflections.

When I read about the layoffs at Hasbro my immediate feeling was shame. Shame for when I did the same thing, at the same company (WotC, before we sold it to Hasbro).

I have made lots of mistakes, tons of them, more than I can even remember. And while I regret those mistakes, and I’m sad for those hurt, I realize it’s part of learning and it’s part of being human.

But layoffs, when handed poorly, or when they are unnecessary, aren’t just mistakes. They are failings of character. Those times when I had a failure of character, those are the moments that haunt me.

 

[Scribe]

 

[MGibster]

Bolded for emphasis. That word means something. Most notably, NOT everyone.

So now you're gatekeeping?!

I had no idea that Hasbro bought WorC in 1999, I thought that was kind of recent.

I don't blame you. Up until a few year ago, I kind of forgot myself.

 

[Eyes of Nine]

Hot take here - but maybe the real culprit is GAAP (edited to add: GAAP == Generally Accepted Accounting Principles) that treats payroll as an expense, full stop.

If employee value showed up on the Asset side of the ledger, with payroll seen as an investment in that asset, then laying off employees would be seen as a poor strategic choice...

 

[TheSword]

I don't blame you. Up until a few year ago, I kind of forgot myself.

Time, Time a kind of rhythmic rhyme.

 

[nerfherder]

This is probably a good time to remind people that severance is a courtesy and not require by law. And even when severance is paid, it's usaully based on how many years you've been with the company. If you've only been with teh company a year or two, your severance probably isn't all that great.

You're right. But sometimes we just like to nitpick these little points for some reason instead of whatever the main topic is.

Just to nitpick but the layoffs are global, and redundancy pay is law in some countries. As you say, it is usually based on number of years with the company. In the UK the statutory calculation is detailed here: https://www.gov.uk/redundancy-your-rights/redundancy-pay.

 

[cranberry]

So he isn’t actually paid $9m cash is he? The majority is bonus through stock options which are tied to the success of the company and couldn’t be used to pay for employee salary either way.

Don’t get me wrong I’d say $1m is still an outrageous amount to earn for a yearly salary for any person but I think folks have to look at the market. Presumably Chris has some skills and experience that makes Hasbro’s board feel they will see that money back and then quite a bit extra and that it was worth them paying it.

Regarding the bonus element, the company I work only has 50% of bonus paid on financial performance, 25% is based on hitting carbon/energy reduction targets, and 25% is based on Employee engagement/satisfaction. That’s a more ethical way of paying bonuses in my opinion.

Stock options grants employees the right to buy shares of the company at a set price after a certain period of time. Since there is no cost to the employee, it's essentially free money regardless of when it's exercised. How much the employee makes from the purchase depends is the difference between the "set price", and the market price of the stock.

Typically, companies establish the "set price" of the issued options well below the current market value at the time of issuance so the employee will always be in a net positive position. (...unless the stock price crashes through the floor)

 

[cranberry]

They do.

Millions of them.

Often in the form of bonuses for laying people off and making the line go up for a few hours.

Yea, and that's a big part of the problem.

 

[cranberry]

Say we assume an average annual cost to Hasbro of $100,000 per employee. (That's not just salary; it also includes benefits, the employer's share of payroll taxes, 401(k) matching, HR and admin, et cetera -- the full cost of keeping someone on the payroll.)

Then $9.4 million would cover six months of severance, with benefits, for 188 people, or about 17% of those laid off.


Agreed.

Layoffs are usually (though not always) a sign of executive failure: Either the executives hired too many people for the company's operations, or else they are weakening the company's long-term prospects to juice short-term profit margins. For leadership, cutting your own salary is a way of doing what you can -- small as it may be on an individual level -- to reduce the pain your mistakes have caused. It is also a way of holding yourself accountable, not allowing yourself to profit from failure.

And finally, it shows the remaining employees that you take this really seriously and you are going to try hard not to let it happen again. The survivors of a layoff are generally demoralized and scared. Even setting aside the moral considerations, doing anything you can to assuage those feelings is good business -- right now is when you need the remaining workers to be at their best, since they have to take up the slack of those who were let go.

It was a rhetorical question. I can do the math myself, I just didn't have my calculator handy.

BTW, I still have my original HP 12C. Do you?

 

[Horwath]

Just to nitpick but the layoffs are global, and redundancy pay is law in some countries. As you say, it is usually based on number of years with the company. In the UK the statutory calculation is detailed here: https://www.gov.uk/redundancy-your-rights/redundancy-pay.

in Croatia it's similar,
1/3rd month salary per year worked at the company, capped at 6 monthly salaries.

 

[LordBP]

The upper class pays little tax and performs little of the required work.

Middle class pays most of the tax, performs most of the work.

Lower class exists to terrify the middle class.

Would say the data doesn't hold with that premise.