The Need for Strong Communications in Business

When you have a whole division to eliminate from your company payroll, do you:

A) Have the HR people descend upon the target and deliver the bad news in cold, concrete terms clearly designed to limit lawsuits;

B) Go down yourself (as CEO) to pass out severance checks and shake hands with everyone as they exit the building; or

C) Make a vague reference to your decision to eliminate their jobs in a blog post.

If you answered B, then you have the heart and guts of a Hemingway. On the other hand, if you answered C, then you fall into the category of Tesla Motors new CEO, Elon Musk. On October 15th, Musk, who is also the Chairman of the Board and Product Architect for Tesla, posted a blog post about his ascension to the CEO position, his vision for the company and, oh yeah, were shutting down operations in Rochester, Michigan, a suburb of Detroit. The relevant passage that announced to all and sundry in the Rochester office that most of them were soon to be unemployed (the remainder have to make their way, on their own dime, to San Jose), read like this:

One of the steps I will be taking is raising the performance bar at Tesla to a very high level, which will result in a modest reduction in near term headcount. To be clear, this doesn’t mean that the people that depart Tesla for this reason wouldn’t be considered good performers at most companies – almost all would. However, I believe Tesla must adhere more closely to a special forces philosophy at this stage of its life if we aspire to become one of the great car companies of the 21st century.

There will also be some headcount reduction due to consolidation of operations. In anticipation of moving vehicle engineering to our new HQ in San Jose, we are ramping down and will close our Rochester Hills office near Detroit. Good communication, tightly knit engineering and a common company culture are of paramount importance as Tesla grows.

Apparently, the good-performers-at-most-companies employees who got the pink-slip blog post aren't special enough for the special forces philosophy to which Musk subscribes during these hard economic times.

There is no argument with the lay-offs per se, sometimes you have to do things like that to remain competitive. The problem is in the way he chose to go about it.

The people in that division should have had at least a head's up that this was coming. These people were fired for economic reasons, not for cause, and they were blindsided by their new CEO when he did it. Blindsiding someone with termination, unless it is for cause, may be legal but it is certainly not ethical or fair, a fact that the Federal Government recognized in the Worker Adjustment and Retraining Notification Act (WARN), which stipulates that qualifying employees must receive 60 days’ notice before the closing of their workplace. Under WARN, a company does not have to give employees notice of their termination if it "could not reasonably foresee business circumstances" that led to the closing.

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