Reuters analysis: Elon Musk opens the door to an exodus of talent from Tesla
Elon Musk has to cut one in ten jobs at Tesla. Some may already have their eye on the exit.
The intentions of the CEO of Tesla, transmitted in an internal e-mail seen by Reuters, are rooted in what he described as his “super bad feeling” about the US economy.
Some of the nearly 100,000 people who work for the electric car maker may already be considering their options after Musk issued them a ultimatum to return to office this week.
In an email to staff Tuesday night, Musk threatened to fire anyone who did not work in the office 40 hours a week, in stark contrast to the flexibility offered by Big Tech companies competing for the same talent. .
The edict of the office, in addition to a sharp drop in the price of Tesla shares this year, in part due to Musk’s costly Twitter search, and his public alignment with the Republican Party are a mix toxic to some employees.
“Tesla is launching its own Great Local Resignation,” said Stanford University economics professor Nicholas Bloom, who predicted that 60 percent of employees would return to office full-time. 10% would leave and around 30% would look for another one. work.
Tesla did not immediately respond to a request for comment.
Some tech companies, upon detecting an opening, rushed quickly.
Scott Farquhar, Australia’s third richest man and co-founder of software maker Atlassian, tweeted about plans to expand and offer flexibility. “Any interested Tesla employees?” added.
In the wake of the COVID-19 pandemic, more and more tech workers, accustomed to working from home or hybrid policies, 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 a pandemic.
At Google, he only gets to the office three times a week, with some of his team members working remotely, he said. He said his friends who work from home “are no less productive, but significantly happier.”
Another former Tesla engineer said he had been pressured to work in the office during the 2020 pandemic and had Covid twice, before moving to Apple.
Higher stock compensation
The threat of layoffs and the order to return to office comes when Tesla engineers are seeing their stock-based compensation go down. Tesla faces some of the same problems that plague other companies, such as blockades in China.
But investors are also concerned that Twitter’s $ 44 billion search may be distracting him, despite Musk’s claim that he spends relatively little time on it.
Shares of Tesla fell 9% on Friday after Reuters published its plan to cut staff and Twitter said Musk’s acquisition had passed the US antitrust review. Shares had already fallen 30% since Musk announced its stock buy in early April, about double the fall in the Nasdaq index.
Chart: Tesla vs Nasdaq and FANG
“If this is maintained, they will have an absolute retention problem. You have two things going on. You have Elon Musk saying things that are controversial and not appealing to everyone. And you have the stock price. A big hit,” Michael said. Solomon, founder of the 10x Ascend Compensation Negotiation Advisory Service.
Stock options are a larger share of compensation for Tesla executives than their peers, the company said in its stock presentation this year. When stocks don’t go up, that part of the compensation can be useless.
Tesla employees receive annual bonuses in the form of shares and generally receive lower cash salaries than colleagues in large technology companies, according to past and current employees and data provided to Reuters from Blind and Glassdoor.
Tatiana Becker, who runs NIAH Recruiting, a startup recruiting company, recently ran an email marketing campaign for Tesla employees and received 14% responses, compared to a normal maximum rate of 10%. .
Musk brand
Undoubtedly, Musk’s cheeky personality has helped build the Tesla brand, allowed it to expand without marketing, and given many employees a sense of mission tied to man and his climate goals.
Long working hours and unreasonable working conditions are the norm for some, a former Tesla engineer said, “That’s how we’re wired.”
And other tech companies are cutting jobs or slowing down or stopping hiring amid weak demand, which could slow down the willingness of some Tesla staff to launch.
But Musk’s recent embrace of a new partisan political identity is disappointing to some employees, especially the liberal tech workers in Silicon Valley.
“He’s a very polarizing guy. Either you love the guy or you hate him,” said Will Hunsinger, CEO of the hiring company Riviera Partners.
“Some people are big fans and will do anything to work for one of their companies. And others will say, like now, I don’t really agree with their way of running the company.”
The billionaire has used his big Twitter follow-up to attack Democratic lawmakers, used his offer on the microblogging platform to defend free speech, including the promise to restore former President Donald Trump’s account, and has said he will vote Republican.
“There are people for whom this is very unpleasant,” recruiter Solomon said. “These are people who have a lot of choices about their job choices.”
Many Tesla employees will wait for the shares to recover, said a former Tesla manager, who described the stock awards as “golden handcuffs” that prevent staff from leaving.
“But if they think Tesla’s stock price will stay low, they’re more likely to leave: their big bonus isn’t that big anymore.”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated channel.)