Elon Musk must cut one in ten jobs at Tesla. Some may already have an eye on the exit.
The Tesla boss’ intentions, conveyed in an internal email seen by Reuters, are rooted in what he described as his “super bad feeling”[ads1]; about the US economy.
Some of the nearly 100,000 people employed by the electric car maker may already be considering their options after Musk gave them a return-to-office ultimatum this week.
In an email sent to employees Tuesday night, Musk threatened to fire anyone who did not work in the office 40 hours a week, a stark contrast to the flexibility offered by Big Tech companies competing for the same talent pool.
The office’s edict, on top of a sharp drop in Tesla’s stock price this year – in part because of Musk’s costly pursuit of Twitter – and his public support for the Republican Party is a toxic mix for some employees.
“Tesla kicks off its own local Great Resignation,” said Stanford University economics professor Nicholas Bloom, who predicted that 60% of employees would return to the office full-time, around 10% would quit, and around 30% would look for a other. job.
Tesla did not immediately respond to a request for comment.
Some technology companies, which discovered an opening, were quick to turn around.
Scott Farquhar, Australia’s third richest man and co-founder of software maker Atlassian, tweeted about plans to expand and offer flexibility. “Are there any Tesla employees interested?” he added.
In the wake of the COVID-19 pandemic, more and more technology workers, accustomed to working from home or hybrid politics, are refusing to return to the office full time.
A former Tesla engineer told Reuters he recently took a job at Alphabet due to a lack of work-life balance, including pressure to enter the office during the pandemic.
At Google, he only has to come to the office three times a week, and some of his team members work remotely, he said. He said his friends who work from home “are not less productive, but significantly happier.”
Another former Tesla engineer said he had been under pressure to work in the office during the 2020 pandemic and received Covid twice – before moving to Apple.
Greater stock compensation
The threat of layoffs and the return-to-office order comes as Tesla engineers see their stock-based compensation fall. Tesla faces some of the same issues that plague other companies, such as shutdowns in China.
But investors are also worried that Musk’s $ 44 billion Twitter search is distracting him, despite Musk’s claim that he spends relatively little time on it.
Tesla shares fell 9% on Friday after Reuters published the plan to cut employees and Twitter said the Musk acquisition had passed the US antitrust review. The stock had already fallen around 30% since Musk announced its purchase of shares in early April, about double the fall of the Nasdaq index.
Graphics: Tesla vs Nasdaq and FANG
“If this continues, they will definitely have a storage problem. You have two things happening. You’ve got Elon Musk saying things that are controversial and not appealing to everyone. And you’ve taken the stock price a big hit,” said Michael Solomon. , founder of the Compensation Negotiation Advisory Service 10x Ascend.
Stock options are a larger part of Tesla’s management compensation than their peers, the company said in its securities filing this year. When the shares do not go up, that part of the compensation can be worthless.
Tesla employees receive annual bonuses in the form of shares, and generally receive lower cash salaries than their peers in large technology companies, according to former and current employees and data provided to Reuters from the job sites Blind and Glassdoor.
Tatiana Becker, who runs NIAH Recruiting, a recruitment company for startups, recently did an email marketing campaign for Tesla employees and received responses from 14%, compared to a normal top rate of 10%.
Admittedly, Musk’s cheeky personality has helped build the Tesla brand, allowed it to expand without marketing, and given many employees a sense of mission related to the man and his climate goals.
Long hours and unreasonable working conditions are the norm for some, said a former Tesla engineer: “That’s how we are wired.”
And other technology companies are cutting jobs or lowering or stopping employment due to weakened demand, potentially limiting some Tesla employees’ willingness to quit.
But Musk’s recent embrace of a new party political identity is offensive to some employees, especially liberal technology workers in Silicon Valley.
“He’s a very polarizing guy. Either you love the guy or you hate the guy,” said Will Hunsinger, CEO of recruitment firm Riviera Partners.
“Some people are big fans, and they will do anything to work for one of his companies. And others will say that I do not really agree with the way he runs the company.”
The billionaire has tapped his large Twitter following to attack Democratic lawmakers, used his bid on the microblogging platform to fight freedom of speech, including a promise to restore former President Donald Trump’s account, and has said he will vote Republican.
“There are people for whom this is very distasteful,” said recruiter Solomon. “These are people who have many choices about their employment options.”
Many Tesla employees will wait for the stock to recover, said a former Tesla boss, who described stock allocations as “golden handcuffs” that prevent employees from leaving.
“But if they think Tesla stock will stay low, they’re more likely to leave: their big bonus is not that big anymore.”
(Apart from the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)