1,200 of 33,000 employees amounts to 3.6% of the work force. This level of action, 1 in 25 employees, gives managers an opportunity to release employees that looked good in the interview but did not meet expectations. Whether Tesla conducted this in a proper manner is open to debate and perhaps details will emerge if/when any former employees pursue Tesla in court. But any company needs to address the inevitable hiring mistakes and I don't see evidence that Tesla is doing any more than that.
> I don't see evidence that Tesla is doing any more than that
If the lack of promised performance reviews is accurate, that's the obvious issue - it implies a labor force decision disguised as a performance decision. This is a pretty common move in e.g. game development, so it certainly isn't unthinkable.
The point about total workforce size is well taken, though; this still seems like it could be as simple as "times are tough so we're cutting more stringently than we might otherwise".
Would you say 3,6 % is that stringent though? I remember GE under Welch fired 10 % of the lowest performers every year, that seemed kind of stringent. But Tesla is fast-hiring and acquiring, so seem to have a larger need to fix hiring-errors than GE. At the end of 2015 they had only 14,000 employees! In light of that, 3,6 % seems completely reasonable to me. Low, even.
Concerning the performance review: would expect that after acquisition, SolarCity would adjust to Tesla's performance standards. So even if they were based on prior performance reviews, still seems like a reasonable action and level to me.
As much as I try to squint, I'm having troubles seeing the smoking gun here.
Although I agree with you, you are also making an assumption that certain managers are not hiring mistakes as well. Managers can be just as bad as employees. Especially in a big company, bad managers can hide behind smoke screens by shifting the blame on employees.
I think the assumption there was more that, for the purposes of that sentence, all employees are workers. Managers are just employees that are assigned to manage people.
Might be a narrative. One reason would be to push the stock price down. Currently down to 330 from 360 a month ago. Could be a good time to buy if you're long.
> 1,200 of 33,000 employees amounts to 3.6% of the work force. This level of action, 1 in 25 employees, gives managers an opportunity to release employees that looked good in the interview but did not meet expectations.
That level of "firing" is rather suspect for an "new" company that is supposed to be growing.
> But any company needs to address the inevitable hiring mistakes and I don't see evidence that Tesla is doing any more than that.
If you are making that level of mistake where you have to conduct mass layoffs, then it doesn't bode well for tesla.
It's so easy to hire bad apples. I've been through three rounds of layoffs at two separate companies: each time most of the people who were let go were poor performers, they either were bad salespeople or bad coders. The other ones were just lazy, working only 9-5, and taking frequent time off for silly reasons like "my rabbit is sick." As long as you're cutting less than 10% of staff you're cutting fat, not muscle (though you might hit a small amount of muscle by accident).
Sources said that HR department representatives told staff in one office they were being let go due to problematic "conduct with peers." When questioned, an ex-employee said, HR declined to specify any details about the alleged poor conduct, which had never been previously discussed.
I remember a while back some .com company laid off a bunch of their employees (more than 40%? 50%?). Firing that many people at once triggered a set of 'lay off' laws, which required certain behavior from the company (such as giving the employees X days notice, etc, etc).
This is pure speculation, but I wonder if Telsa is trying to do last-minute layoffs while avoiding whatever 'lay off laws' there are by claiming that each individual is totally being fired for totally legit individual reasons, for sure, yep.
Honest clarification request: Do you to suggest/worry that they are classifying "agitating for a union" as problematic "conduct with peers"?
(If so, I expect we'll hear if that's the case soon, with a chance of hearing that even if it's not the case. That is a storyline the media would be salivating to run.)
Basically yes. Perhaps "problematic conduct with peers" is poor wording or maybe it refers to some harrassment crackdown or maybe it's due to financial problems, really it could be any number of things but because it's Tesla the union connection is what comes to mind. Regardless it's obvious they're firing people for something they don't want to be connected to and using 'performance' as a smoke screen.
That wouldn't make much sense, though. The last thing you'd want to do if you were trying to keep out a union is behave in a way your employees would see as tyrannical.
For cause terminated employees don’t get unemployment.
My guess is that since Musk companies don’t feel constrained by rules, they figure they’ll save money in UI taxes by forcing workers to adjudicate their UI benefits. They get the benefit of cooking their balance sheet as an additional benefit.
No it's preempting going broke. Especially since Elon is one of the combined companies biggest creditors and has his own personal finances deeply entwined with that of the company. (See also Sears / Eddie Lampert)
It certainly is suspicious that people were fired "for performance reasons" when the company is unable or unwilling to provide the performance data that would support that assertion.
But, on the other hand, these employees were probably "at will", so the company does not need to give any reason, or even to publicly justify the firings in any way. So it could be that "performance" is the lie that they believe to damage ongoing recruiting efforts the least.
Or it could be that they have determined individual performance assessments to be useless in the face of the more objectively measurable department-wide performance numbers.
All I know for certain is that I won't be sending them any applications or resumes until they can elucidate their motives behind this.
The simplest explanation is that the company isn't making money and investors are getting antsy about bankruptcy.
You can fire people for any reason, but there are costs involved in laying people off.
HR is a cynical business. Requiring stuff like training your outsourced replacement is also a strategy here — the longer you hang on to “undead” employees, the more likelihood they will leave voluntarily.
The company does have to prove that they didn't fire someone for a restricted reason and basically if there's any hint of that it is viewed poorly by the govt/courts.
I imagine a lot of lawyers will gear up here and there will be a lot of eDiscovery.
California is at will but they do have specific laws and procedures for mass firings and layoffs. I think Tesla is trying to skirt these by calling them performance related instead of layoffs. (And to protect their stock price from having to admit they can't afford all their workers.)
“You make the rest of us look bad when you don’t donate your weekend to The Company. Wouldn’t you rather make Our Leader richer instead of being with your family?”
It doesn't seem impossible on the corporate side, but I'd be surprised if it was true and yet none of the newly-fired employees speaking anonymously to the media raised the point.
Couldn't Tesla / SolarCity just said, "Hey, company didn't do well, sorry, here's 2 weeks severance"? Why do this whole "bad performance review" nonsense.
That’s a great way to get sued. The point of performance reviews is to standardize rankings so that you can use them later to fire/promote without being sued for discrimination.
Isn't there a set procedure for companies to report performance (of the company's finances, not individual employeess)-based layoffs like this to the Feds?
What are they going to do, say "no, you owe these people jobs, go take out a loan?" Well, maybe if the company can't demonstrate that they actually need to drop so many people, but this sort of seems like they're being lazy and cheap, at best.
Y'know, it's starting to really seem like the market simply is not willing to accept how expensive things are.
> Being fired with cause impacts their ability to collect unemployment, which most these people deserve.
afaik, performance doesn't impact your benefits in the US, unless it's tied to 'willful misconduct'. if you're (for example) simply incompetent, but honest and good-intentioned, it's entirely the employer's fault for improperly filling the position per their own requirements.
'Company didn't do well' translates to some higher manager up the chain performing badly. Its always easier to shift the blame on somebody else, and have them take the fall for the big shots.
This doesn't really surprise me. A few years ago we had lead generation software that catered to the solar industry. We had some decent sized clients and it did really well for about 2 years. Once the tax credits started going away and the power companies started killing off their rebates, a lot of these solar companies were not able to survive.
One of our larger clients who was heavily funded went bankrupt this year and many of the smaller/mid sized clients have folded within the last year too.
It is risky basing too much of a business on tax credits and rebates.
I was thinking this myself. For all of Musk's braggadocio about not needing, and even being hurt by, subsidies, Tesla, whose profits only become more negative every quarter, has had its sales decimated in the countries that ended tax breaks for electric vehicles.
With the specter of a major tax overhaul and massive spending cuts, a major recall, and still not enough strength to stand on its own, Musk has to be at least a little worried about Tesla's future and the futures of his other pet projects.
If you purchase with a loan, you can get a much better deal and it can make sense.
A lot of the solar companies were selling their low interest $0 down lease programs and they themselves were benefiting from the credits/rebates not the homeowner. Homeowners didn't really have to have a great credit score either. Once the credits and rebates went away, the lease programs weren't sustainable for the solar companies.
That rate is much higher than I paid in Texas or pay in New Jersey. In fact, I can buy wind power from Green Mountain for less than your solar install cost.
> It is risky basing too much of a business on tax credits and rebates.
This is/was an open secret not only in the solar industry but the entire renewable/clean energy industry ( wind, geo, etc ). These solar companies existed solely because of government support and everyone knew that once the government support was pulled, these companies would immediately be bankrupt.
The first solar companies to fall were those based in germany/uk/spain when european governments pulled the solar subsidies. Followed by the solar companies in the US. Even the chinese solar companies are struggling now.
But the biggest problem going forward for the solar/wind/etc industry is low oil/gas prices. But even with the most optimistic projections, solar would be a relatively small portion of global energy source even by 2050.
Odd that he didn't have an objection to it when Tesla was benefiting from it.. but once Tesla 3 sales crossed that 200k threshold, and set the end date on the subsidy for Tesla... then Musk comes out and says 'We MUST end this subsidy for everyone immediately'.
It's mostly of note precisely because they are not layoffs according to Tesla. They were full on fired with cause. It's strange to say the least. What would trigger a mass firing like that. It's unusual.
I'm a SolarCity customer and absolutely despise them. Their customer service makes Comcast look like a saint. I can't help but cross my fingers this is a sign Tesla might be doing something about it. But I'm not getting too hopeful.
Because the purported reason for the firings don't add up. Usually in a merger, the combined company simply says what everyone already knows, there's redundancies.
I am pretty pro-union. However, in the case of Musk's enterprises, where there is this larger goal that is finally seeming to become possible, I am torn. I feel that anyone that works at these places should know and be a zealot for the Cause...but I suppose that Elon Musk probably should share his stakes with them a bit more, in that case.
edit: I believe workers should be treated fairly, but I also want us to go to Mars. If 1 prevented 2, I would be torn. Why should this earn a negative vote?
> edit: I believe workers should be treated fairly, but I also want us to go to Mars. If 1 prevented 2, I would be torn. Why should this earn a negative vote?
I assume because this same argument, if you took it to ridiculous extremes, could be used to justify a whole range of terrible shit. Watch:
"I believe workers should not be enslaved, but I also want us to go to Mars. If 1 prevented 2, I would be torn."
"I believe Musk should not torture underperforming workers, but I also want us to go to Mars. If 1 prevented 2, I would be torn."
I don't think you are actually willing to torture or enslave people so that humanity can get to Mars, but the way you constructed your argument leads in that direction, which is probably why it's being met with resistance.
I am not trying to create an axiom meant to generalize to all cases. I am just willing to be a little less pro-union (and this point has gotten lost here apparently) than I am usually when it comes to THIS set of companies, for very particular reasons. That is because I tend to think of these companies (at least SpaceX) more as causes than as companies. When you willingly work for a cause, you expect these things. If you are fighting to treat victims of war near battlefields, you might get be indanger, and the organization might not be able to do much about it, or provide you the kinds of benefits that would be deserving in a perfect world.
> However, in the case of Musk's enterprises, where there is this larger goal that is finally seeming to become possible, I am torn. I feel that anyone that works at these places should know and be a zealot for the Cause...
While critics often mock the “cult” of Musk, his defenders usually deny the characterization. You rarely see such an explicit acknowledgment and endorsement of it.
The honesty is refreshing, I guess, even if the content is appalling.
'Cult of Musk' suggests it is about Musk, and not about the cause (of going to Mars).
I think we can all agree that some types of work are dangerous and poorly paid, but people choose to do it because they believe in a cause. For example, relief work in war-zones. I just tend to think of Space-X as a geeky way of doing that.
Sometimes, indeed yes. Not always. If you want to live in a black and white world go ahead. Best of luck to you.
In any case, as I said, I am torn. That is why I advise that anyone that works for them be dedicated to the cause. Because while a lot of startups and the like profess to "change the world" Elon Musk's enterprises ARE changing the world to the kind of world I want to live in. Sometime visions need sacrifices.
That said, Elon Musk should probably offer non-insubstantial stakes in the company to every worker.
While I do commend Musk's role in getting change within industries, it can't be argued that his biggest strength over the last decade has been only PR (and I mean only!). Do some digging and see how he chooses to release news bits, diversions etc and holds on to the mastermind billionaire ideal that people bestowed upon him.
Any other company making false promises ("Auto"pilot), providing factually incorrect data (Model 3 "mass" production), mass firings ("performance" layoffs) would not survive in the world. Musk just dumbs down science to his cult and they swallow it up.
Remind you of anyone else? (hmmmm... Trump - different audience of course but similar cult following characteristics).
Tesla responding to lawsuits by former employees claiming they suffered racial discrimination and anti-LGBT threats (in The Guardian): “There is no company on earth with a better track record than Tesla.”
Trump, March 2016: "Nobody knows more about trade than me."
Don't think any other person/entity give out such absolute statements routinely.
> SolarCity employees say they were surprised to be told they were fired for performance reasons, claiming Tesla had not conducted performance reviews since acquiring the solar energy business.
Is it possible the performance reasons cited may have been in reference to performance in sales rather than performance in work? Otherwise it does seem odd to dismiss over employee performance if reviews has yet to be conducted by Tesla.
Readit News
If the lack of promised performance reviews is accurate, that's the obvious issue - it implies a labor force decision disguised as a performance decision. This is a pretty common move in e.g. game development, so it certainly isn't unthinkable.
The point about total workforce size is well taken, though; this still seems like it could be as simple as "times are tough so we're cutting more stringently than we might otherwise".
Concerning the performance review: would expect that after acquisition, SolarCity would adjust to Tesla's performance standards. So even if they were based on prior performance reviews, still seems like a reasonable action and level to me.
As much as I try to squint, I'm having troubles seeing the smoking gun here.
> "Mass layoff" is defined by the United States Department of Labor as 50 or more workers laid off from the same company around the same time.
That level of "firing" is rather suspect for an "new" company that is supposed to be growing.
> But any company needs to address the inevitable hiring mistakes and I don't see evidence that Tesla is doing any more than that.
If you are making that level of mistake where you have to conduct mass layoffs, then it doesn't bode well for tesla.
<tin foil hat> Is this pre-empting a union push?
This is pure speculation, but I wonder if Telsa is trying to do last-minute layoffs while avoiding whatever 'lay off laws' there are by claiming that each individual is totally being fired for totally legit individual reasons, for sure, yep.
Honest clarification request: Do you to suggest/worry that they are classifying "agitating for a union" as problematic "conduct with peers"?
(If so, I expect we'll hear if that's the case soon, with a chance of hearing that even if it's not the case. That is a storyline the media would be salivating to run.)
That's the way I read it.
My guess is that since Musk companies don’t feel constrained by rules, they figure they’ll save money in UI taxes by forcing workers to adjudicate their UI benefits. They get the benefit of cooking their balance sheet as an additional benefit.
For the most part this isn't true - only intentional misconduct is grounds for not receiving unemployment.
But, on the other hand, these employees were probably "at will", so the company does not need to give any reason, or even to publicly justify the firings in any way. So it could be that "performance" is the lie that they believe to damage ongoing recruiting efforts the least.
Or it could be that they have determined individual performance assessments to be useless in the face of the more objectively measurable department-wide performance numbers.
All I know for certain is that I won't be sending them any applications or resumes until they can elucidate their motives behind this.
The simplest explanation is that the company isn't making money and investors are getting antsy about bankruptcy.
HR is a cynical business. Requiring stuff like training your outsourced replacement is also a strategy here — the longer you hang on to “undead” employees, the more likelihood they will leave voluntarily.
I imagine a lot of lawyers will gear up here and there will be a lot of eDiscovery.
“You make the rest of us look bad when you don’t donate your weekend to The Company. Wouldn’t you rather make Our Leader richer instead of being with your family?”
What are they going to do, say "no, you owe these people jobs, go take out a loan?" Well, maybe if the company can't demonstrate that they actually need to drop so many people, but this sort of seems like they're being lazy and cheap, at best.
Y'know, it's starting to really seem like the market simply is not willing to accept how expensive things are.
What they did is basically slander with real economic consequences to those fired and they should sue.
Being fired with cause impacts their ability to collect unemployment, which most these people deserve.
It also puts a bad mark on their employment history, unless they lie about how they where fired.
afaik, performance doesn't impact your benefits in the US, unless it's tied to 'willful misconduct'. if you're (for example) simply incompetent, but honest and good-intentioned, it's entirely the employer's fault for improperly filling the position per their own requirements.
One of our larger clients who was heavily funded went bankrupt this year and many of the smaller/mid sized clients have folded within the last year too.
It is risky basing too much of a business on tax credits and rebates.
With the specter of a major tax overhaul and massive spending cuts, a major recall, and still not enough strength to stand on its own, Musk has to be at least a little worried about Tesla's future and the futures of his other pet projects.
I purchased PV because the cost with a 20-year loan comes out to be 13c kWh, meanwhile PG&E charges 29c kWh. And the loan interest is tax-deductible.
A lot of the solar companies were selling their low interest $0 down lease programs and they themselves were benefiting from the credits/rebates not the homeowner. Homeowners didn't really have to have a great credit score either. Once the credits and rebates went away, the lease programs weren't sustainable for the solar companies.
This is/was an open secret not only in the solar industry but the entire renewable/clean energy industry ( wind, geo, etc ). These solar companies existed solely because of government support and everyone knew that once the government support was pulled, these companies would immediately be bankrupt.
The first solar companies to fall were those based in germany/uk/spain when european governments pulled the solar subsidies. Followed by the solar companies in the US. Even the chinese solar companies are struggling now.
But the biggest problem going forward for the solar/wind/etc industry is low oil/gas prices. But even with the most optimistic projections, solar would be a relatively small portion of global energy source even by 2050.
Real principled stance there.
Not sure why this should be surprising in the case of Tesla + Solar City.
edit: I believe workers should be treated fairly, but I also want us to go to Mars. If 1 prevented 2, I would be torn. Why should this earn a negative vote?
I assume because this same argument, if you took it to ridiculous extremes, could be used to justify a whole range of terrible shit. Watch:
"I believe workers should not be enslaved, but I also want us to go to Mars. If 1 prevented 2, I would be torn."
"I believe Musk should not torture underperforming workers, but I also want us to go to Mars. If 1 prevented 2, I would be torn."
I don't think you are actually willing to torture or enslave people so that humanity can get to Mars, but the way you constructed your argument leads in that direction, which is probably why it's being met with resistance.
While critics often mock the “cult” of Musk, his defenders usually deny the characterization. You rarely see such an explicit acknowledgment and endorsement of it.
The honesty is refreshing, I guess, even if the content is appalling.
I think we can all agree that some types of work are dangerous and poorly paid, but people choose to do it because they believe in a cause. For example, relief work in war-zones. I just tend to think of Space-X as a geeky way of doing that.
In any case, as I said, I am torn. That is why I advise that anyone that works for them be dedicated to the cause. Because while a lot of startups and the like profess to "change the world" Elon Musk's enterprises ARE changing the world to the kind of world I want to live in. Sometime visions need sacrifices.
That said, Elon Musk should probably offer non-insubstantial stakes in the company to every worker.
Tesla responding to lawsuits by former employees claiming they suffered racial discrimination and anti-LGBT threats (in The Guardian): “There is no company on earth with a better track record than Tesla.”
Trump, March 2016: "Nobody knows more about trade than me."
Don't think any other person/entity give out such absolute statements routinely.
Is it possible the performance reasons cited may have been in reference to performance in sales rather than performance in work? Otherwise it does seem odd to dismiss over employee performance if reviews has yet to be conducted by Tesla.