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Summary:

We’ve followed the ups and downs at electric car company, Tesla Motors, over the last year. We got hyped like everyone as the startup’s celebrity line-up and fattening coffers was chronicled across the blogosphere. (It’s $140 million in funding with a current “internal” round.) Tesla was […]

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We’ve followed the ups and downs at electric car company, Tesla Motors, over the last year. We got hyped like everyone as the startup’s celebrity line-up and fattening coffers was chronicled across the blogosphere. (It’s $140 million in funding with a current “internal” round.) Tesla was the first alt-fuel company sexy enough to warrant coverage in Vanity Fair!

But things haven’t gone well, at all, at Tesla. Product delays, 3 CEOs, turmoil. We have friends who’ve worked for, been fired from, or invested in the company. None of them has ever seemed very happy. This may explain why, when Inc. magazine named founder Elon Musk Entrepreneur of the Year in December, Elon let it slip in the interview that, at moments, he longs for the days at PayPal.

Today we caught up to Tesla’s current round of layoffs — and it’s a brilliant opportunity to study how NOT to handle such a developement.

The key information first leaked in this post, Stealth Bloodbath on ex-CEO Martin Eberhard’s Tesla Founders Blog. The departures list is a foreboding one: 15 new names, some of them senior, plus 11 (apparently) previous exits, bringing the total to 26 — about 10% of Tesla’s staff.

Eberhard gripes that the firings are high-level, random, come without severance for many, and have gone unreported in the press. He also criticizes the wisdom of Tesla’s current management in cutting back right before a product release, and when clean tech is so hot.

No one says a company must publicize a downsizing. The Found|READ lesson here is in Tesla’s response to media inquiries immediately following Eberhard’s leak of the news.

In an unfortunate lapse of good judgment, Tesla’s spokesperson Darryl Siry told VentureBeat there was no reason to worry and added, rather defensively, it seems:

“We’re letting go of people who are either not the best on the team, or are working on something that is not a priority,” he said in an interview.

‘eh hem.

TESLA’s LESSONS IN WHAT NOT TO DO:

ONE:
Don’t ever publicly diminish your outgoing staffers. Ever. You might think they’re not “the best” but don’t say so. Say nothing about those you’ve fired. Use the little time/space you have on the record with the press to focus on the positive forward movement that whatever change you’re making will have on your company.

For example: “We’re very enthusiastic about the upcoming release of [our product]. We’re grateful for the hard work of everyone who has helped [the company] come this far, including those leaving the company today. With this streamlined team we are better-organized to deliver [our product] successfully, and on time. Everyone at [the company] is reinvigorated for this challenge.”

TWO: Be proactive, especially when layoffs include key employees (or employees who could be perceived as such). ‘Not the best on the team?’ ‘Not working on priority projects?’ According to Eberhard, Tesla’s layoffs include “the world’s foremost EV motor engineer, trimming down the service organization before the job of opening the first service center is done, [and] ripping through the firmware team [which] are all hard to explain,” when Roadster isn’t done and Whitestar is about to launch.

The company’s new CEO is “holding people accountable at all levels, and that starts at the top,” Siry said of the executive departures. OK, but making changes ‘at the top’ is different from a downsizing. That is strategic and merits being proactive — this means a press release if you’re as high profile as Tesla (mandatory if you’re public). If you’re making the change for the right reasons, you’ve nothing to hide. Tell people why you’re doing what you’re doing.

THREE: When you don’t handle such developments in a straightforward manner, you end up with ex-employees with axes to grind, and who, like Eberhard, are only too willing to share their views with the world. Eberhard published the sentiments of several newly-fired Tesla workers under “what it feels like on the inside”. And this will create a whole new dimension of problems for you.

For more on Tesla’s state of affairs, definitely read Katie Fehrenbacher’s exclusive interview with Musk and current CEO Ze’ev Drori, at Earth2Tech, published Dec. 21: Tesla’s Chairman and New CEO Talk Transmission Snags and Raising Another $40M

  1. [...] How NOT to handle a layoff, via Tesla « FoundRead In an unfortunate lapse of good judgment, Tesla’s spokesperson Darryl Siry told VentureBeat there was no reason to worry and added, rather defensively, it seems: [...]

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  2. [...] How NOT to handle a layoff, via Tesla « FoundRead I agree completely: don’t give people a reason to take you down before you’ve even released a product. [...]

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  3. [...] Crisis management : On Jan. 12 we had a case study in How NOT to handle a layoff, courtesy of Tesla Motors. See the original Jan. 10 post by Tesla cofounder, Martin Eberhard, [...]

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  4. [...] How NOT to handle a layoff, via Tesla [...]

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