Analysis-Elon Musk opens the door to a Tesla talent exodus | Investment News
SAN FRANCISCO (Reuters) – Elon Musk is to cut one in ten jobs at Tesla. Some may already have their eye on the release.
The Tesla chief executive’s intentions, expressed in an internal email seen by Reuters, are rooted in what he described as his “super bad feeling” about the US economy.
Some of the roughly 100,000 people employed by the electric car maker may already be considering their options after Musk gave them a back-to-office ultimatum this week.
In an email to staff Tuesday night, Musk threatened to fire anyone who didn’t work a 40-hour week in the office, a stark contrast to the flexibility offered by Big Tech companies vying for the same talent pool.
The office’s edict, in addition to a sharp drop in Tesla’s share price this year — in part due to Musk’s costly Twitter suit — and his public alignment with the Republican Party are a toxic mix for some staff members.
“Tesla is launching its own big local resignation,” said Nicholas Bloom, an economics professor at Stanford University, who predicted that 60% of employees would return to the office full-time, about 10% would quit and about 30% would seek another. work.
Tesla did not immediately respond to a request for comment.
Some tech companies, sensing an opening, were quick to rush in.
Scott Farquhar, Australia’s third richest man and co-founder of software maker Atlassian, tweeted about plans to expand and offer flexibility. “Interested Tesla employees? ” he 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 with Alphabet because of lack of work-life balance, including pressure to come into the office during the pandemic. At Google, he only has to come into the office three times a week, with some members of his team working remotely, he said. He said his friends working from home “are not less productive, but noticeably happier”. Another former Tesla engineer said he was under pressure to work in the office during the pandemic in 2020 and had Covid twice – before moving to Apple.
BIGGEST STOCK CLEARANCE
The threat of layoffs and the back-to-office order comes as Tesla engineers see their stock compensation cut. Tesla faces some of the same issues that beset other companies, such as lockdowns in China.
But investors also fear Musk’s $44 billion Twitter quest could distract him, despite Musk’s claim that he spends relatively little time on it.
Tesla stock fell 9% on Friday after Reuters released its workforce reduction plan and Twitter said the Musk acquisition had passed U.S. antitrust review. The stock had already fallen about 30% since Musk announced his stock purchase in early April, about double the decline of the Nasdaq index.
Chart: Tesla vs. Nasdaq and FANG – https://fingfx.thomsonreuters.com/gfx/mkt/gdvzyeegbpw/Pasted%20image%201654201453199.png
“If this continues, they will absolutely have a retention problem. You have two things going on. You have Elon Musk saying things that are controversial and not to everyone’s liking. And you have the price of l ‘action that takes a big hit,’ said Michael Solomon, founder of compensation negotiation advisory service 10x Ascend.
Stock options make up a larger portion of executive compensation at Tesla than at its peers, the company said in its securities filing this year. When the shares are not rising, this part of the compensation may be worthless.
Tesla employees receive annual bonuses in the form of stock and generally receive lower cash salaries than their peers at big tech companies, according to former and current employees and data provided to Reuters by job boards. Blind and Glassdoor.
Tatiana Becker, who runs NIAH Recruiting, a recruiting firm for startups, recently launched an email marketing campaign among Tesla employees and received 14% responses, compared to a normal peak rate of 10%.
Certainly, Musk’s brash personality helped build the Tesla brand, allowed it to grow without marketing, and gave many employees a sense of mission tied 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’re wired.”
And other tech companies are cutting jobs or slowing or suspending hiring amid weakening demand, potentially dampening the willingness of some Tesla employees to jump ship.
But Musk’s recent adoption of a new partisan political identity is off-putting to some employees, especially 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 recruitment firm Riviera Partners.
“Some people are big fans, and they would do anything to work for one of his companies. And some people will say, like, I don’t really agree with the way he runs the company. “
The billionaire has leveraged his large Twitter account to attack Democratic lawmakers, used his candidacy for the microblogging platform to defend free speech, including a pledge to restore former President Donald Trump’s account, and he declared that he would vote Republican.
“There are people for whom it is very unpleasant,” said scout Solomon. “These are people who have a lot of choice when it comes to their job options.”
Many Tesla employees will wait for the stock to recover, said a former Tesla executive, who described stock rewards as “golden handcuffs” that keep staff from leaving. “But if they think Tesla’s stock price will stay low, then they’re more likely to leave: their big bonus isn’t so big anymore.”
(Reporting by Hyunjoo Jin; Additional reporting by Noel Randewich; Editing by Peter Henderson, Nick Zieminski and Carmel Crimmins)
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