Tesla Motors Gets It All Wrong
For those that don’t know Tesla Motors, they are a startup automobile manufacturer, based in Silicon Valley, touting the first electric sportscar. The car looks sharp and the features they are touting are quite impressive:
- 100% electric
- 0-60 in under 4 seconds
- 135 mpg equivalent
- 220 miles per charge
- less than 2 cents per mile
Sounds pretty cool…if they can ever get there.
Yesterday, the company announced a significant reduction in force, or as one of the co-founders suggests, “a bloodbath”. I’m cool with that (not the “bloodbath” part)…startup companies often readjust their business which results in downsizing.
What I am not cool with, though, is the manner in which the situation has now become a story. In part, because of how the executive team, and specifically the VP of sales, have handled the situation. Here is what I find wrong with it all…
1. Hoover’s lists the company at 65 employees. They just axed 23 employees or over 35% of the workforce. Mr. VP of Sales…that is a layoff!
[CORRECTION - The company has approximately 250 employees which make the layoff…yes layoff…approximately 10% of the company]
2. The VP of Sales said, “…it’s really about performance management”. That couldn’t be further from the truth. If a third of their employees are bad eggs, they have a catastrophic HR problem…recruiting, employee engagement, leadership, training…I can go on! Performance management is not about “punishment” either . Its about productivity, engagement, honest communication, etc. The executive team should look in the mirror.
3. Put yourself in the position of any current and prospective employee. If I am reading this story in the Mercury News today I am probably reconsidering the future of the company. Good luck filling those 39 open positions!
4. Imagine what customers are thinking. If I was one of the 600 or so who dropped 5 large ($5,000) to get on the wait-list so I can spend another $100K to purchase the car, I sure wouldn’t feel confident I’m going to even see the wheels this year. Heck, I would even be worried about ever seeing my 5 grand again.
Tesla got this one wrong. And a note to any company out there including Tesla Motors — DO NOT HAVE THE VP OF SALES AS YOUR COMPANY SPOKESMAN!
Technorati Tags: Tesla Motors, performance management, layoff, HR
15 Comments Add your own
1. Darryl Siry | January 11th, 2008 at 9:33 am
I’m open to any criticisms but you need to get your facts straight. He have over 250 employees, not 65. I think that invalidates your whole article. But in addition - you suggest that the executive team should look in the mirror, but you neglect to mention that there were many changes at the top as well, so in this case, accountability is indeed starting at the top.
Last - you are making assumptions about me. I may oversee sales, but I also manage marketing, service, and corporate communications. I think you are stereotyping what a typical “VP Sales” is and not actually looking at the message. In looking at my background, would be a fairer criticism to say that you shouldn’t have your corporate communications person as your VP sales.
i agree with what you say about performance management, but your facts are all wrong.
2. Zoli Erdos | January 11th, 2008 at 10:07 am
Although secondary to your bigger point, but it’s also worth looking at the positions of those let go: VP Manufacturing, Lead Engineer if the motor team..etc. Pretty scary for a company whose product still needs to materialize.
3. Jason Corsello | January 11th, 2008 at 10:42 am
Darryl-
Thanks for your comments. My apologies for the error. My “facts” came from Hoovers, a recognized source of information. I would recommend you update your Hoover’s listing.
Second, I think you are right…you shouldn’t have your corporate communications person as your VP sales. To be very honest, your comments came off as a “VP Sales”, not a seasoned corporate communications person who knows not to comment on workforce issues such as layoffs, reduction-in-force, etc.
4. Rick Ranger | January 11th, 2008 at 11:24 am
I find Darryl’s “defense” very entertaining.
Darryl - in situations like this, it’s usually best to stay quiet - otherwise you just make yourself look even more foolish. Maybe Tesla should invest in some training for you - that is if they’re planning to keep a VP of Sales, Marketing & Service around that appears to be unneeded and entirely lacking in skill.
By the way, lots of people know the truth about your professional background. A title doesn’t equal qualification, competence or necessarily requisite experience.
5. Jason Corsello | January 11th, 2008 at 11:41 am
I would recommend the discussion stay above the belt. The post was not directed at Darryl specifically but how the company seems to have mishandled the entire situation. My apologies Darryl.
Jason
6. Darryl Siry | January 11th, 2008 at 12:08 pm
Jason
You raise a very interesting point around what is common practice vs. what is appropriate in this situation. Since its inception, Tesla has been very transparent with customers, employees and media. If I were to follow the usual “we don’t comment on HR matters” it would be received very poorly by all. Transparency is a great thing but get can tricky with these matters.
Rick - if you are going to attack someone personally with no basis of fact you should have the courage to identify yourself and your connection to me, if any. I’ll stand by my record in Sales and Marketing for Tesla and you’ll have to wait for me to demonstrate the service side.
7. vinnie mirchandani | January 11th, 2008 at 2:21 pm
Jason, tough one…traditional HR/legal response is to clam up about layoffs/fires etc. So, it is good to see Dave talk to you relatively openly about it…though I do not understand the “performance” angle he puts on it unless he is talking about corporate performance being sluggish - which is a good reason to trim…and not unusual for a start up
Having said that as a founder I struggled with my first layoff, got all emotional about it, and did not cut deep enough…and I followed HR/legal advice about talking to the leavers and survivors in separate groups. If I had to do it again, I would have called each person individually and explained why we needed to do it and handled it mano a mano
8. Dennis Howlett | January 11th, 2008 at 3:06 pm
It seems that Jason is riffing on the different caps that Dave wears and I agree. Sales people always put on entertaining spin. Comms is an art form few manage to master and ‘transparency’ adds a layer that is very new.
We do our customer support and some development in a transparent manner but it doesn’t mean I’m going to tell the world and his dog just how we’re doing stuff.
9. Jason Corsello | January 12th, 2008 at 7:30 am
With all due respect, Darryl, there is a big difference between transparency and good corporate communications!
Thanks Den. Well said!
10. Ian Alexander | January 12th, 2008 at 10:24 am
Getting back to HCM: When you say performance management is “not about “punishment” either . Its about productivity, engagement, honest communication, etc.,” I guess I just want to point out a fact that the industry and many HR practitioners get wrong.
While not about “punishment,” performance management is very, very much about letting people go. In fact, it could be argued that understanding when people are wrong for their job and letting them go, or reassigning them, is the most important part of performance management.
However, this is the not so pretty side. So we talk more about “developing” employees. Great managers and great companies understand that many of the competencies they value can’t be “developed.” They are behavioral traits that are solidified (or not) early in life and there is little hope of developing them if they are not there in adulthood.
That’s why you hire for competencies and train for skills. Having marketed performance management software for 13+ years, I can tell you that companies would be much better off if they focused 1/10 as much of their PM efforts on identifying ill-fitting employees and dealing with them, as they do on trying to “develop competencies.”
I have no idea whether Tesla was truly purging their ill-fitting employees, but it seems like it kind of got dismissed out of hand that firing is part of performance management. It is ABSOLUTELY a part of performance management. Again, it may be the most important part. It’s just not the part that people like to talk about.
11. Ben Toy | January 13th, 2008 at 7:07 pm
Extreme growth has a huge potential of hiring ill fitting. Saw much of that at several companies in that kind of growth.
I think the basic architecture vs market segment was wrong and ill timed.
The fact that there was a transmission is one key reason I didn’t apply.
Series DC electric motors can be over driven and do not need a transmission for ‘most’ applications and this is one of them. Towing or working hard all day long would not be a good app for this. Transmissions were invented for automotive because internal combustion engines (ICE) ‘need’ help getting it going at the low end.
Having tranny problems like this says to me, that the certification testing and/or the specifications were not met. Maybe the provider of the component/system, but that is taken care of in the spec & certification testing (both during vendor qual to agency testing).
The other issue has to do with the battery tech available. Mainly the recharge rate and the percentage discharge without reducing it’s longevity. There are none for this type of vehicle (performance).
From the outside, it looks like the growth was planned for an IPO based on a large backorder and volume shipments (for this market sector).
Didn’t happen and finger pointing with the fall out we now see (my guess from a ‘been there, done that’ point).
Also a side note. The various metrics are a bit oblique and misleading/out of context for an all electric, even a hybrid.
MPG is out of context. MPB is better and normalized for all. Miles Per Buck. A gallon of gas, a gallon of diesel, a full charge from the wall outlet. Alcohol for the on board generator. ETC, etc all have whatever purchased to do that charge. All based on a buck. Premium, regular, etc will be normalized down to a buck per some volume.
The miles per charge needs some sort of time metric. Not much good if it takes 24 hours vs a gasser which takes, say 20 minutes to fill up. A quick change battery system with the spare constantly being recharged would level this.
Bottom line is that it looks like the company staffed up for volume. Then component & systems issues popped up. Then the backers pulled the strings…
12. Ben Toy | January 13th, 2008 at 7:11 pm
Forgot to mention this on the transmission.
It is a complex assembly/system. Automatic transmissions on automotive are the most complext assembly on vehicles today.
With no transmission, there would be less losses (MPB increases), less weight and more room for more batteries.
13. Michael | January 14th, 2008 at 12:48 pm
This story doesn’t look like a good move, but if the Whitestar hits market before the other big players I think that we shall leave all this behind. Everyone makes mistakes, and nobody should forget that each company struggles to find it’s way at the beginning. The customers wait for the best car Tesla can make and if they fail to deliver it, I think this will be a big step behind for the EV future.
14. Tuyen | January 14th, 2008 at 6:54 pm
Hey Darryl,
The news of the staff reduction are alarming whether it’s performance related or a lay-off (actually lay-off’s are not that big of a deal). As a person who is your ideal Whitestar customer (can’t afford the Roadster), I’m a little concerned about the production schedule for that model. I haven’t seen much news regarding it and now to hear that a key person on the Whitestar team is no longer with the company doesn’t sound good. Can you shed some light on the status of the Whitestar project?
Tuyen
15. bob finn | January 17th, 2008 at 11:50 pm
Hey Darryl,
I have a friend who was on the Whitestar program in Detroit. I know him well, he was very dedicated and worked as a contract Engineer. If Tesla is serious about building cars, then why did they let go of 12 of their top Catia guy’s on that program.
Keep the car guy’s if you really want to build cars!
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