Intel CEO Calls Recent Layoffs A Need Under ‘Meritocracy’ [REPORT]

Intel LogoBy The original uploader was VD64992 at English Wikipedia [Public domain], via Wikimedia Commons

Intel CEO Brian Krzanich responded to angry employees after the company’s earnings call, stating that this is the way a “meritocracy works.” In a room full of employees, Krzanich sensed the unhappiness among them but took the side of the company, says a report from Oregonlive.

Intel employees confused

Krzanich faced light questions during Intel’s conference call on Wednesday. Analysts asked various questions related to inventory forecasts, capital spending allocations and the outlook for the PC market. However, back home, Krzanich had a tough situation in dealing with the distressed workers. The employees are not miffed with last month’s layoffs as the chip maker has laid off several employees over the past decade, and now they are getting familiar with the ups and downs.

Instead, they were confused because the layoffs were not conveyed to them in advance. Also the chip maker changed its criteria for deciding who would stay and who should exit. Further, the employees were discontent that the chip maker has shut down all the options for the laid-off employees to be hired again if things improve.

Replying to the employees’ concerns, Krzanich said, “I know from my email people feel like they got caught or surprised, but this is the way a ‘meritocracy works,’” and hr added that Intel will keep on following the same strategy in the future as well.

Why is Intel quiet on layoffs?

Intel did not release any further information on Krzanich’s encounter with employees on Wednesday. The Oregonian, citing postings on internal blogs, said employees argued that this time Intel changed its layoff policy as the performance-based layoff policy was not in play this time. Krzanich, in a memo to employees last month, informed them that Intel will balance the cuts with hires in other segments. The company said the global work force will remain the same at approximately 106,000 this year.

As of now, Intel has not provided any details on the latest round of layoffs, which were first noted by The Oregonian/ Oregon Live last month. But an employee who is part of the team handling the layoffs said the layoffs form around 3% of the company’s total workforce. Intel has 18,600 employees in Oregon.

Sales at Intel are dropping, which is why the chip maker is lowering its employee count. At the beginning of this year, the company forecast 5% growth, but on Wednesday, it said annual revenue will be down 1% this year.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

23 Comments on "Intel CEO Calls Recent Layoffs A Need Under ‘Meritocracy’ [REPORT]"

  1. Internal statistics show that across about 1500 employees in the US, a statistically measurable and disproportionate representative population of engineers over 45 were laid off relative to the overall population that was not impacted. In the meantime, the same building lobby where employees were being escorted to sign their lay off papers, new employees were awaiting their first day of orientation. Truly horrible. There is a dirty secret on why Intel’s average worker age is over 10 years younger than the US population. This is a simple and shut EEOC age discrimination case. If the EEOC looks at the data, there is no way Intel can defend its actions without calling into question age discrimination practices. It can disguise the recent layoffs as ‘performance based’, but then it needs to explain why older employees suffer from greater ‘performance issues’ relative to younger employees, on a metric (stock grant level) that was not defined as successful/unsuccessful until last months lay off announcement. You can run database queries and data mine, cherry picking, until the query returns the desired results, in this case, targeting older, likely higher paid employees, and disguise the action as performance based. It is unfair that employees that gave their lives for 20 years to Intel are being taken out like trash. I recognize Intel is an at-will employer, but where are their ethics, and humanity in treating their staff? A key internal blog by a laid off employee described him getting lower than average stock during a year of double kidney transplant, after a successful 20 year career. Really, is this Intel inside? Shame on Intel. Shame on BK.

  2. Intel does not care what their employees think, they are to busy making their external reputation look good. They boast about “diversity” and being an ethical company. In reality they continue to work under the ” good ole boy” system. If you are “in” you can pretty much be as unethical as you want without retribution. They have pushed ” diversity” so far to the left that they are the ones that are now discriminating against certain groups not deemed as needing that extra hand up. What happens inside of Intel is Not what is being portrayed on the outside. Only a fool would see differently.

  3. The Board probably did that to Paul Otellini.

  4. Why do you think Paul Otellini took an early retirement?

  5. The unfortunate side effect of this lay off methodology is it will stifle creativity by forcing people (employees) to take less risk. If someone has a really great idea that requires some level of risk they will most likely choose self preservation and take the easy road, thus Intel loses. Laying people off in this manner will create hostility and anger among the workforce, true talent will choose a more conducive working environment and leave, thus Intel loses. Predictably, incoming hire groups will consist of higher percentages of “foreign” workers, it will not take a genius to read the writing on the wall. Intel is no longer a growth company and is cannibalizing itself by utilizing cheaper labor and performing painful cost cutting measures to maintain a respectable profit margin. This is not a long term sustainable plan. We are witnessing the self destruction of a great American company. Company founders are now passing on in life and will not be here to see this aberration take place first hand. Take notes all and learn from their mistakes for they will be frequent and plentiful. Cheers.

  6. That is the real reason. Where I last worked, they eventually “laid off” every person who was born in the USA except for a few in upper management. Same thing going on at other companies too. Industry is falling all over themselves to lie about it, and say they cant find workers, and government is okay with it because on paper it makes us appear more competitive globally. Politicians are okay with it because they get huge payoffs from industry for it.

  7. “only the paranoid survive”

  8. Oddly enough INTC’s brand new Fab 42 in AZ remains shuttered, and has been for almost 2 years now…I wonder what BK is doing about this…

  9. I left Intel years ago because 1) The constant management shuffle made it impossible to establish the necessary relationships to conduct good business 2) The company is extremely two faced in regards to it’s so called “meritocracy” which is really nothing more than little fiefdoms of blatant favoritism where only the duplicitous survive.

  10. I worked at Intel for several years and Intel is most definitely not a meritocracy. Never was, never will be.

  11. As employee who has worked at Intel for many years, I rarely speak out on these matters. But I can’t help it this time. I have to say, this new way of laying off employees has created an environment with much less trust.People are a new kind of paranoid. I have never heard so much negative talk in the hallways. I really hope BK knows what he is doing here.

  12. Which chips the CEO was referring to at the time, I have no idea, probably mobile. I am trying to remember an article from over a year ago. Either way, every market but mobile (tablets and phones) has been a seller. Those chips haven’t moved well.

  13. And if AMD could get a better deal by out-of-country manufacturing they would in a heartbeat. That’s how it works. And if no one expected this of the semiconductor manufacturing after what occurred in the auto industry, they aren’t too bright. It’s been conclusively proved that industry, regardless of who is in leadership position, will cut high cost manufacturing and drive to low cost manufacturing with a post sales support increase. Deal with it.

    On the China FAB front, that was the cost of doing business in China. Any company that doesn’t have a big presence in China will not get sales there. Period.

  14. Yeah, he can’t say that now

  15. Actually Intel manufactures and sells more than 120M chips. Processors alone were in the 180M when I worked there in 2004!

  16. While Intel may call it a Meritocracy it is really an Opinionocracy. It’s all about the perception of ones performance.

  17. He does not care, deploy the golden parachute for meritacracy sake..

  18. Islands in the stream | Jul 17, 2015, 3:35 pm at 3:35 pm |

    BK This is crap…..you laid off people with “SATISFACTORY” and stock level 4…and you told those people they got a lower than average stock level because they were highly compensated in their grade scale but wanted to give them something to balance out those that got smaller salaries.

  19. Tru

  20. Someone should have asked him how many cheap labor H1B1’s were laid off……..

  21. Picture a moment in the future when Mr. Krzanich is removed from his position by the Board of Directors. The memo simply states, “‘This is the way meritocracy works.”

  22. Intel built a Billion $$ Fab plant in China one of the Largest in the World, and there is talk now of another one being built. Gee why do they need Americans NOW. I will not Build or Buy from Intel because of this. At least AMD builds chips in America in New Jersey where their new Fab Plant at not China.

  23. I took a buyout from Intel last year, they spoke about producing 40 million chips for desktops, laptops, servers, tablets and phones. Then 60 million the next year and then 80, 100, 120. Fine and dandy to be optimistic, but unless you can prove and guarantee the consumer need and want is there, you can’t do this and not expect things like this to happen. Windows 10 doesn’t raise the minimum requirements, so there is no need for a new PC (desktop or laptop), Intel chips aren’t taking over the tablet market, and the phone market isn’t using Intel much if at all. All 3 consoles are AMD and most chips outside PCs and servers are ARM. Intel is making a killing in the server market and Internet of things. Cpus don’t fail like hard drives and hardly need replacing except for upgrades. Layoffs were going to happen due to upper management’s screw ups. Why are employes at the lower level laid off but we don’t see upper management taking the blame and cuts themselves? They should be taking the financial hit.

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