Elon Musk's internal email about laying off 9% of Tesla's staff was the right thing to do in a hard situation

  • Tesla says it is letting go about 9% of its employees, with the first round of layoffs beginning this week.
  • Tesla CEO Elon Musk sent an email to all employees announcing the layoffs.
  • The email adhered closely to career experts’ guidelines for conducting layoffs. For example, Musk gave legitimate, justifiable reasons for letting people go.

On Tuesday, Tesla CEO Elon Musk sent an email to the company’s staff announcing plans to lay off about 9% of employees, with the first round of layoffs beginning this week.

As Business Insider’s Mark Matousek reported, the email was leaked to media outlets, with Musk then posting it to Twitter.

“Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are difficult to justify today,” Musk wrote in the email. He also cited the need to reduce costs and become profitable.

The cuts will “almost entirely” affect salaried employees, and not production associates, the email said. As for those employees being laid off, Musk wrote, “Tesla is providing significant salary and stock vesting (proportionate to length of service).”

Toward the end of the email, Musk wrote that the company was “making this hard decision now so that we never have to do this again.”

Musk rightly addressed both the victims and the survivors of the layoffs

There’s no one, universally approved way to conduct mass layoffs – and certainly not one way that will avoid hurting people, financially and emotionally.

But career experts have cited certain guidelines for firing people, and Musk seems to have followed the most important.

As Ben Horowitz, a cofounder and general partner of the venture-capital firm Andreessen Horowitz, wrote in a 2010 blog post, it’s important for the CEO to address the entire company before going through with layoffs – something Musk did.

Horowitz cited advice from the Intuit founder Bill Campbell: “The message is for the people who are staying. The people who stay will care deeply about how you treat their colleagues.”

Andy Molinsky, a professor at Brandeis University’s International Business School, told Business Insider that when layoffs occur, the “survivors” will necessarily be thinking, “Could this have been me?” That’s why it’s important to show the people being laid off dignity and respect – in addition to offering them severance pay.

Molinsky added that the reasons for the layoffs should feel legitimate and justifiable. Otherwise, he said, that may colour the remaining workers’ perception of the organisation. It may even affect their level of commitment.

Musk appeared to check this box as well: He outlined several key reasons Tesla was conducting layoffs, including the need to be profitable.

Perhaps most important, Musk didn’t displace the blame for the layoffs.

As Guy Kawasaki, the chief evangelist of Canva who previously held that title with Apple, wrote in a 2006 blog post, “Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else.”

You can read Musk’s full email to Tesla’s staff here ยป

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