Tesla Fired Hundreds….To “Improve Morale”

RJ Morris Corporate America, Employee Relations, in the news, Outmatch, RJ Morris 3 Comments

When you geek out on talent like the folks here at FOT, it’s fun to sit back and watch high profile companies make big talent decisions.  Intrigue, strategy and risk are all embedded in public leadership transitions, succession planning, business strategy pivots, acquisitions, mass firings….wait, what?

Mass firings?  Who announces those and makes them public?  Well, Tesla does.  Backstory intro from Fortune:

Electric automaker Tesla Motors fired hundreds of employees this week…as it tries to solve production problems for its recently released Model 3.  An estimated 400 to 700 people were dismissed this week…

There are usually three reasons why you announce major employee discharges:

  • Scandal—Think Wells Fargo. People did stuff wrong, and we are firing them for doing it.  Please don’t crush our stock.
  • Layoffs—We know we need to take costs out of the business, so we are doing it.  Please don’t crush our stock.
  • You don’t send me flowers anymore—Topeka offered us some top-tier incentives to move our HQ.  You didn’t.  Please don’t crush the mayor before we leave, but we are out.

Other than those three reasons, most companies don’t put out a press release saying that they fired a bunch of people.  Well, unless you want to send a crystal-clear message to the survivors.  Which is what Elon just did.  From The Mercury News:

“Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period… As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures.”

Earlier this month, Tesla reported that it produced 260 Model 3 cars in the third quarter, of which it has delivered 220. That figure is far less than CEO Elon Musk’s prediction that Tesla would produce more than 1,600 of the vehicles by September.  Tesla said the performance-based departures were not considered layoffs and not subject to state notifications. It also said the moves have generally boosted worker morale, as high-performing employees have been rewarded. (emphasis mine)

Not a layoff, not a business change, not a relocation, not a scandal.  We said we were going to build 1,600 cars by September 31.  We built 260.  The beatings will continue until morale improves.  Carry on.  Dang…

FOT Note: This rant is brought to you by the good folks at OutMatch who like us enough to be an annual sponsor at FOT for all content in our Talent Selection and Employee Development track (and don’t expect that we run any of this by them ahead of time). 

Comments 3

  1. Doesn’t make sense that these employees were fired for missing the production target. A miss that size sounds like a systems/process issue, not performance.

    1. Couldn’t find the article to reference this AM, but, the manhour per vehicle is multiple times anyone else in the industry, cutting 10% won’t even get them close to competitive.

  2. Pingback: Tesla Fired Hundreds….To “Improve Morale” True Wage | Compensation & Benefits, Salary Data

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