Elon Musk piles up a threat of dismissal on top of his office tenure

After sending an email to senior executives at his company last week demanding that all employees return to the office, Tesla CEO Elon Musk has signaled that he wants to cut 10% of his workforce in anticipation of a bad recession.

Musk sent a follow-up email on Thursday telling executives to “suspend all hiring globally” and said he planned to cut 10% of Tesla’s workforce, according to Reuters, which first obtained a copy of the message. The email was followed by another the same day clarifying that the layoffs would target Tesla white-collar workers.

“Tesla will reduce the salaried workforce by 10% because we have become overstaffed in many areas,” Musk said in the email.

Homa Bahrami, a senior lecturer and faculty director at the Haas School of Business, UC Berkeley, Calif., said Musk’s original return-to-office mandate may have been an attempt to more organically reduce the workforce. work of Tesla.

Brian Kropp, distinguished vice president of Gartner’s HR practice, agreed with Bahrami, saying an executive order on office work would have a winnowing effect on the employee base.

At the same time, in an environment where stock prices of tech companies have fallen dramatically in recent months, many organizations are watching competitors such as Tesla in an effort to steal talent.

“Look, Elon Musk is a very smart guy. There may be 20% or 25% of employees who end up leaving, and those may be the ones he wants to leave, but a good chunk of that 25% is in demand in other companies,” Kropp said in a previous email response to Computerworld.

On May 25, Gartner surveyed 350 HR executives and leaders across a range of industries, most of them based in North America. Most (66%) indicated that their organizations expected to increase revenue for their business in the next quarter; only 4% said they expected layoffs.

poll hr garner 2 Gartner

Sixty-four percent of respondents said their organizations had no plans to downsize, and only 15% said they planned to slow down hiring for non-critical positions. Only 9% expected a slowdown in hiring for all roles.

Even if the U.S. economy falls into a recession, only 31% of HR managers surveyed said their organization would slow down hiring — and only 11% said their company would make layoffs. In fact, 50% of respondents expect competition for talent to increase over the next six months despite economic headwinds.

Jack Gold, principal analyst at J. Gold Associates, said he expects some sort of slowdown in economic activity. “We already see it,” he said. “And with rising interest rates, it’s much more expensive to buy a new car – an electric or gas-powered vehicle. So planning for a downturn is probably the right decision.

hr gartner survey 4 Gartner

But there’s another factor at play. Musk and Tesla initially dominated the electric vehicle market, but there’s been a sea change with rival companies now challenging it for the top spot.

“There are major competitors – not just startups like Rivian, but also Ford, GM, Hyundai, etc. – who are now pushing their new electric vehicles. This will have an effect on Tesla’s sales, although it remains to be seen how much it will hurt them in the long run,” Gold said.

Tesla is opening new electric vehicle production facilities in China and other countries, which may impact corporate hiring as jobs move to new locations, and potentially at lower pay , noted Gold.

“It’s hard to judge how much of that is part of the equation at this point, but I expect it will impact hiring decisions,” Gold said. “And although Tesla is doing well in China now, there is a lot of local Chinese competition building up. It will be interesting to see if the Chinese mentality of ‘buying from local businesses’ hurts Tesla in the long run. term”.

Gartner HR survey 3 Gartner

Musk will regret his strategy of terms and layoffs, said David Lewis, CEO of OperationsInc, a Connecticut HR consulting firm. He bets that Tesla employees and their priorities will be very different from other organizations, “for the simple fact that their desire to work for Tesla outweighs their desire for a better work-life balance.

“He just launched a massive ad campaign that communicated that Tesla is an ‘office work only’ company, which could prove very problematic for those trying to develop a pipeline of candidates for them,” Lewis said. .

Copyright © 2022 IDG Communications, Inc.

Jose C. Birney