WeWork is preparing to cut at least 4,000 people from its workforce, while trying to stabilize after the company's brackish growth has caused heavy losses and led to the brink of collapse, two people with knowledge of the case so.
The cuts are expected to be announced as early as this week and will take place across WeWork's sprawling global operation. According to the plan, the company's core business of leasing office space would lay off 2,000 to 2,500 employees, one person said. Another 1,000 employees will leave while WeWork sells or closes non-business establishments, such as a Manhattan private school that WeWork created. In addition, approximately 1
But one of the people said that the company could throw as many as 5,000 to 6,000 employees.
The staff reductions will be included in a five-year plan to review WeWork that can be presented to employees as early as Tuesday, said the people, who spoke on condition of anonymity to discuss the layoff plans.
The resignations represent the human costs of a remarkable reversal of WeWork's fortunes. Under its co-founder and former CEO, Adam Neumann the company piled billions of dollars into an erratic expansion that included adding huge office space to the world's most expensive cities, offering discounts to lure tenants and buy other businesses. WeWork, which rents out office space from landlords, refurbishes it and leases it to customers, staged plans for an initial public offering in late September after investors were cut off by the company's losses and had questions about the company's governance.
SoftBank, the Japanese conglomerate which is WeWork's largest shareholder outside, announced last month a plan to bail the company and is now trying to stabilize the business. But it is unclear how far the plan, which rests on selling billions of dollars of new WeWork bonds to investors, has come. The prices of the company's existing bonds have fallen over the past few days, a sign that investors are worried about the outlook.
WeWork reported last week that it lost $ 1.25 billion in the three months ended September, more than twice the company lost in the same period the year before. A corporate presentation given to investors revealed that WeWork opened nearly half of its locations in the 12 months ended in September. Many of these sites are losing money and are likely to drain WeWork cash, which amounted to $ 2 billion at the end of September.
Mr. Neumann, who agreed to relinquish control of WeWork after retiring from the top job in September, will receive a $ 1 billion exit package. As part of that, he will receive a $ 185 million consulting fee for four years and can sell nearly $ 1 billion of his shares in the company to SoftBank. Mr. Neumann's soft landing deepened anger among the staff while the layoffs hit.
During the recent increase in the company, employees formed a group, WeWorkers Coalition, which, among other things, is pushing to get severance pay packages for laid-off employees whom they consider fair.
As of December 9th. , WeWork cleaning and plant jobs will be outsourced to JLL, a real estate service company, or one of its partners, according to an email sent to affected employees last week reported by The New York Times. WeWork has assured employees that each member of the cleaning and construction team will keep their job and receive the same salary level and comparable benefits. But employees who choose not to transfer will lose their jobs and receive no severance pay, according to a document provided to employees reported by The Times.
The changes have made many employees nervous, according to interviews with workers and Slack messages reviewed by The Times, while he fears some employees will eventually lose benefits or be forced to work different schedules.
In the Slack messages, one of the WeWork plant employees said that hearing about outsourcing was like being informed of a family death. Another employee said the decision showed that management was concerned about workers' well-being and made decisions based on what would save the company the most money.
David Yaffe-Bellany contributed reporting.