After sending an email to top managers in his company last week to demand that all employees return to the officeTesla CEO Elon Musk has indicated he wants to cut 10% of its workforce in anticipation of a severe recession.
Musk sent a follow-up email Thursday telling executives to “stop hiring worldwide” and said he planned to kill 10% of Tesla’s workforce, according to Reuters, who first received a copy of the message. The email was followed by another email the same day clarifying that the shots would target Tesla’s white-collar workforce.
“Tesla will reduce the number of salaried staff by 10% because we have too many staff in many areas,” Musk said in the email.
Peter Hirst, senior dean of executive education at MIT’s Sloan School of Management, said Musk has a vision of the work environment and culture he wants to create for Tesla. “There is some logic to that – they are a manufacturing company, there have to be some people to do that; it seems to be saying … everyone should (be present),” Hirst said . “It’s believable, and I think it’s appealing to some people who share that view and want to work in a culture and a personal environment.”
While the combination of office mandates and layoffs may be a significant distraction for Tesla and SpaceX staff, some workers will, over time, move toward companies that offer the conditions they need. It’s too early to tell whether Tesla will attract the talent it needs, Hirst said.
“… I think they will have no problem doing that,” he said.
The Tesla brand brings a certain amount of influence with it, and as a result, Musk feels more powerful to make whatever claims it wants, industry analysts said.
David Lewis, CEO of OperationsInc, an HR consulting firm in Connecticut, said when it comes to Elon Musk that you have to throw out the book on “traditional wisdom around public communication”.
“He works on the premise that he can do what he wants, and he does,” Lewis said. “It is suggested that some ‘evil genius’ actions are being taken here when the news is spread about the possibility of 10% of shifts being made, together with the announcement that all work is to take place in an office, where Musk could achieve the 10% reduction through racism – through volunteering. those who do not demand the cessation cease to return to office. “
Still, Lewis said: “It’s hard to understand how you maintain a culture that people want to be a part of when you shoot from the hip and that seems erratic. Yes, they’s Tesla. Yes, they are That’s where people want to say. That’s, there are limits to what employees will suffer before questioning the value of sticking to a sexy brand as opposed to looking out for their own future. “
Renowned vice president of Gartner HR practice Brian Kropp agreed with Lewis, arguing that an in-office work edict would have a triumphant impact on the employee base.
At the same time, in an environment where the stock prices of technology companies have plummeted over the past few months, many organizations are looking to competitors like Tesla in the hopes of stealing talent.
“Look, Elon Musk is a smart guy. 20% or 25% of employees may eventually leave, which may be the ones they want to leave, but many of those 25% are in demand by other companies, ”he said. Kropp said in an earlier email response to. Computer world.
On May 25, Gartner voted for 350 HR executives and leaders across the industry spectrum, most of whom are based in North America. Most (66%) indicated that their organizations expected to increase business revenue in the next quarter; only 4% indicated that they expect to initiate layoffs.
Sixty-four percent of those surveyed said their organizations have no plans to reduce staff numbers, while only 15% indicated they have plans to delay hiring for non-critical roles. Only 9% expected hiring to be delayed for all roles.
Even if the US economy falls into recession, only 31% of HR executives who polled said their organizations would delay hiring – and only 11% said their companies would start layoffs. In fact, 50% of those who vote are expected to see an increase in talent competition over the next six months despite the tough economic times.
Jack Gold, chief analyst with J. Gold Associates, said he expects some kind of slowdown in economic activity. “We’re already seeing it,” he said. “With rising interest rates, it becomes much more expensive to buy a new car – EV or gas-powered. So, planning for procrastination is probably the right measure. ”
But there is another factor involved. Musk and Tesla initially dominated the EV market, but what is now competing firms challenging the best spot has changed dramatically.
“There are big competitors – not just start-ups like Rivian, but also Ford, GM, Hyundai, etc. – who are now pushing their new EVs. That will affect Tesla’s sales, although it remains to be seen how much it will hurt them in the long run, “Gold said.
Tesla is opening major new EV production facilities in China and other countries, which could have an impact on corporate employment as jobs move to new locations, and wages may be lower, according to and Gold.
“It is difficult to estimate how much of this is part of the equation at this point, but it would be expected to have something to do with the hiring decisions,” Gold said. “And while Tesla is doing well in China now, there is a lot of local Chinese competition going on. It will be interesting to see if the Chinese view of ‘buying from local companies’ harms Tesla in the long run. “
Musk will regret its mandates and layoffs strategy, according to Lewis. It is promised to Tesla employees and their priorities will be very different from those of other organizations, “due to the simple fact that his desire to work for Tesla outweighs his desire for a better work – life balance. best. “
“In essence, it launched a massive advertising campaign announcing that Tesla is a ‘work-only office’ company, which could be a major problem for those looking to develop a candidate pipeline for them,” said Lewis. .
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Executing in-office work mandate is a major threat to Elon Musk
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