Intel CEO Brian Krzanich is upsetting a lot of employees with an apparent shift in his layoff policies, which he explained in an internal meeting as “the way a meritocracy works,” The Oregonian’s Mike Rogoway reported on Thursday.
The report says employees have been complaining about the way Intel laid off some people based on “the level of performance-based stock grants they received” from last year, as opposed to its standard annual review-based layoff process. Also, many employees are upset that once they’re laid off, they’re not eligible for rehire at Intel, which is a policy most employees were not aware of.
The report says Krzanich addressed these issues at an internal meeting on Wednesday, shortly after the earnings call, telling the employees both policies have been in place at Intel for years.
“The problem is we haven’t, with discipline, applied it. So we said: We’re trying to build a different company. You don’t orchestrate change by doing things the same way,” Krzanich was quoted as saying.
Krzanich had already warned the employees in an internal email last month that Intel would be going through a restructuring plan affecting hundreds of employees in each of its offices worldwide. He didn’t specify how many workers would be let go, but the Oregonian reports roughly 3% of its total 106,000 employees would face possible layoffs.
“This is the way a meritocracy works. Expect that in the future we’ll probably do similar types of things,” Krzanich told employees in an internal meeting, according to the Oregonian.
Krzanich also hinted that a lot of the job cuts will come from the PC division as PC sales continue to decline. “If we’re selling fewer PCs, if the PC market’s shrinking at a faster rate, we should spend less money there…We’re trying to move that spending into areas of growth,” he said.
Intel had a surprise earnings beat on Wednesday, sending its shares up by as much as 8% in after hour tradings. The sales decline in its PC business was offset by big jumps in the data center and Internet of Things divisions.
Intel declined to comment on this report.
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