After sending an email to top executives at his company last week demanding all employees return to the office, Tesla CEO Elon Musk has signaled that he wants to cut 10% of his workforce in anticipation of a bad recession.
Musk sent a follow-up email on Thursday telling executives to "suspend all hiring globally" and said he planned to cut 10% of Tesla's workforce, according to Reuters, which first obtained a copy of the message. The email was followed by another the same day that clarified that the layoffs would be directed at Tesla's administrative workers.
"Tesla will reduce the salaried workforce by 10% because we are overstaffed in many areas," Musk said in the email.
Homa Bahrami, tenured professor and faculty director at the Haas School of Business, UC Berkeley, California, said Musk's original mandate to return to the office may have been an attempt to more organically downsize Tesla's workforce. .
Brian Kropp, distinguished vice president of Gartner's human resources practice, agreed with Bahrami, saying an executive order on white-collar work would have a screening effect on the employee base.
At the same time, in an environment where tech company share prices have fallen sharply in recent months, many organizations are eyeing competitors like Tesla in an effort to steal talent.
"Look, Elon Musk is a very smart guy. There may be 20% or 25% of the employees that end up leaving, and those may be the ones he wants to leave, but a good part of that 25% is in demand in other countries ". companies,” Kropp said in an earlier email response to Computerworld.
On May 25, Gartner surveyed 350 HR executives and leaders in a variety of industries, most of them based in North America. The majority (66%) indicated that their organizations expected to increase revenue from their business in the next quarter; only 4% said they expected layoffs.
GartnerSixty-four percent of respondents said their organizations had no plans to downsize, and only 15% said they planned to reduce hiring for non-critical positions. Only 9% expected a slowdown in hiring for all roles.
Even if the US economy falls into a recession, only 31% of HR managers surveyed said their organization would reduce hiring, and only 11% said their company would lay off. In fact, 50% of those surveyed expect the competition for talent to increase in the next six months despite economic headwinds.
Jack Gold, principal analyst at J. Gold Associates, said he expects some type of slowdown in economic activity. "We see," he said. "And with rising interest rates, it's much more expensive to buy a new car, an electric vehicle or a gas-powered vehicle. So planning for a recession is probably the right move."
GartnerBut there is another factor at play: Musk and Tesla initially dominated the electric vehicle market, but there has been a sea change with rival companies now challenging him for the top spot.
“There are big competitors, not just startups like Rivian, but also Ford, GM, Hyundai, etc. – which are now powering their new electric vehicles. This will have an effect on Tesla's sales, although how much it will hurt them in the long run remains to be seen," Gold said.
Tesla is opening new electric vehicle production facilities in China and other countries, which may affect corporate hiring as jobs move to new locations, and potentially with lower wages, Gold noted.
"It's hard to judge how much of that is part of the equation right now, but I expect it to affect hiring decisions," Gold said. "And while Tesla is doing well in China now, a lot of local Chinese competition is building up. It will be interesting to see if the Chinese 'buy local' mentality hurts Tesla in the long run."
GartnerMusk will regret his terms and firing strategy, Lewis said, because he is betting that his employees and their priorities will be very different from those of other organizations, "for the simple fact that their desire to work for Tesla outweighs their desire to work for Tesla." work for Tesla." of a better reconciliation of working life.
"He just launched a massive advertising campaign that Tesla is a 'clerk only' company, which could prove very problematic for those trying to build a pipeline for them," Lewis said. .
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