The Tesla layoff saga continues, with a manager leaving the company after 7 years. But this time, the manager wasn’t laid off, but rather left on his own volition due to the effect that layoffs had on morale.
It seems like every few days there’s another notice of new layoffs at Tesla. It started with Tesla laying off “more than 10%” of its global workforce in mid-April, a layoff round which had been rumored for some time.
In the wake of that first announcement, we’ve heard of many entire teams that have been cut, many seemingly for rather petty reasons.
Tesla’s entire ad team was cut just a few months after being formed because CEO Elon Musk said the ads were “too generic.” And Tesla’s entire supercharging team felt Musk’s wrath after its standout head, Rebecca Tinucci, apparently did not satisfy Musk’s desire for more cuts – so instead, he axed the entire team, despite it being one of the most-successful within the company.
Tesla also laid off several workers in software and service earlier this week, despite service still being a necessary department to grow as more Tesla vehicles hit the road and continue to age.
The layoffs haven’t just included rank-and-file employees, but many high-ranking executives, leading observers to notice that Musk seems to be trying to isolate himself at the top. Currently, Tesla only has one C-level executive other than Musk himself listed on its corporate governance page – CFO Vaibhav Taneja, who was elevated to that role in September. Tom Zhu is still listed as head of automotive, despite Electrek reporting that he’s been demoted back to head of China earlier this week.
The layoffs are affecting morale, with many employees wondering when the bleeding will stop and if their division might be next to fall to the CEO’s frantic whims. And observers can’t help but wonder why Musk is continuing to take such destructive actions to his own company.
The low morale associated with these layoffs claimed one victim this week, as a Tesla manager decided to leave the company amid the chaos, saying that Tesla “has taken its pound of flesh.”
Rich Otto, head of product launches, resigns from Tesla
Rich Otto was the Head of Product Launches at Tesla, having worked at Tesla for 7 years and previously working at Faraday Future.
Otto started in Tesla’s communications team, working with Tesla’s fleet of vehicles for press and reviewers, and went on to manage that team. He was the person responsible for getting cars to tech reviewers.
After that, Otto moved on to be the head of product launches, acting as the program manager for Tesla’s launch events. He managed the events for the first deliveries of Model S Plaid, Model Y and Cybertruck, and Tesla’s Cyber Rodeo at Gigafactory Texas. He also worked on other aspects of Tesla’s customer-facing communications.
Otto said in a LinkedIn post that he loved the collaborative working environment within Tesla, and most of all loved the people working there.
But now, with the effects of the layoffs on morale, not only are some of the “great people” formerly working at Tesla no longer there (like Daniel Ho, head of Vehicle Programs, who worked with Otto on vehicle launches but was laid off alongside the supercharging team), but those still working there are wondering what the path forward is. In his post, Otto said it’s “hard to see the long-game” of these decisions.
Why leave? It’s a company I love and that has given me so much, but has also taken its pound of flesh.
Great companies are made up of equal parts great people and great products, and the latter are only possible when its people are thriving. The recent layoffs that are rocking the company and its morale have thrown this harmony out of balance and it’s hard to see the long-game. It was time for a change.
-Rich Otto, Former Head of Product Launches at Tesla, on LinkedIn
Otto says that he sent his resignation last week, and that he’s going to take some time off before figuring out what to do next.
Electrek’s Take
We’ve said time and time again that the nature of how Tesla is conducting these layoffs would affect morale, and this is just one example of a high-ranking veteran employee who decided they’d had enough.
Maybe some will consider this a good thing, because if headcount reduction is the most important thing for Tesla right now, then getting people to leave voluntarily can only help in the headcount reduction goal.
However, a company should have a more structured method to its layoffs. This does not seem to be an example of an employee who already had bad morale leaving – it’s an example of an employee whose morale was negatively affected by the chaotic actions of current management, and seemingly unending rounds of layoffs, responding and thinking that he could do better elsewhere away from the unnecessary stress being imposed on everyone in the company by the CEO himself.
If the goal of layoffs is to eliminate low performers, this isn’t how you do it. And if the goal is to eliminate those who already have bad morale, making employees’ morale worse is not the way to do it.
As a contrast, we also saw VW undertake some layoffs in Germany at the start of this month, and that hasn’t led to nearly as chaotic a situation within that company.
Instead of firing entire teams because of personality conflicts with their successful leaders, VW offered contract buyouts to its workers. This means that low-morale workers, or workers close to retirement, can depart on good terms. And current workers can remain secure in their jobs, thus affecting overall morale a lot less (and maybe even positively, as low-morale workers are likely the first to take the buyouts).
And VW still gets its desired money savings from trimming headcount. But it doesn’t have to deal with the poor PR of chaotic layoffs, or of post-employment chaos like sending incorrect severance packages and having no idea which suppliers they’re working with, as Tesla has.
Maybe it would be good for Musk to take some notes from a real CEO, especially while he’s currently trying to convince shareholders to give him $55 billion – enough to pay the 14,000+ employees he’s laid off six-figure salaries for ~40 years – amidst the chaos his part-time management is causing.