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Tesla is currently hiring over 800 workers for roles across the US, just months after CEO Elon Musk ordered mass job cuts affecting nearly 14% of its workforce.
The layoffs, which began in April with an initial 10% headcount reduction, eventually led to an estimated 19,600 workers losing their jobs, according to CNBC.
The company also froze all hiring, removing thousands of job listings. In May, only three jobs were posted on Tesla’s website.
Nearly every division in the company was affected as Musk cited the “duplication of roles and job functions in certain areas” and the need to “look at every aspect of the company for cost reductions and increasing productivity,” amid a period of growth for the electric vehicle manufacturer.
“There is nothing I hate more, but it must be done,” he stated.
And although workers may not have liked the execution, they could perhaps understand his logic. He argued that due to the company’s rapid growth over recent years, including opening new factories across the globe, the company had become oversaturated in some departments. Poor workforce planning in the past, granted, but hardly uncommon in corporate America.
Only now, just three months after the cull, the company is accelerating its growth in areas including AI and robotics, construction and facilities, and significantly in service, according to an analysis from Bloomberg.
This has no doubt left many of those who lost their roles wondering: Was my job cut truly necessary? Are they hiring for a role I could have done? Surely some of my skills could have been useful?
Reskilling could have helped prevent Tesla job cuts
Contrary to my earlier description, Musk and other executives have been keen to reposition Tesla as an AI, robotics, and sustainable energy company, rather than an EV maker.
This pivot has included a commitment of “well over $1 billion” on Tesla’s supercomputer, Dojo, and to the development of “Optimus,” humanoid robots that Musk has predicted could $20trillion to the company’s market value.
A lot of this work will require new skills, capabilities, and expertise to execute, hence Tesla’s move to begin hiring in these areas. Perhaps the company felt it did not have those skills in-house three months ago, meaning it would need to turn to the market.
But it seems hard to believe that of the nearly 20,000 workers laid off across April and May, none had the skills – or the capabilities to learn the skills - to fill these roles.
As Steve Woolwine, VP of Global Talent for Growth and Data-Tech-AI at Genpact has previously told HR Grapevine: “Reskilling versus a regular pattern of layoffs should be an aspirational goal for any organization that has scale.”
Indeed, there are several reasons why Tesla and Musk should have opted to reskill, rather than the knee-jerk reaction of widespread layoffs.
According to Woolwine, reskilling “mitigates the negative impact of employee morale and loyalty due to layoffs.” Many of Tesla’s staff felt let down by the approach to layoffs, with long-term and highly committed workers given the axe without warning.
He added that reskilling can help retain institutional knowledge. Losing the collective wisdom of 20,000 workers about the company’s product and services is a major loss – wouldn’t it have been better to retain that hard-to-acquire knowledge, the ‘soft’ skills that make someone a valuable Tesla employee, and to retrain workers on the harder skills that can arguably be more easily picked up?
Reskilling also “avoids expense due to severance packages, legal & administrative costs, and recruiting costs,” which Tesla will now have to stump up as it looks to bring in new talent.
Even Musk himself has acknowledged how costly it has become to recruit AI talent, so why not follow the likes of EY and Mastercard, and upskill workers in new areas to fill knowledge gaps in AI, as well as service, robotics, energy, construction, and the other areas in which Tesla is hiring?
Many employers have been, are, or will be in a similar place to Tesla in the coming months and years. Change is accelerating, skills expire faster than ever, and tough economic circumstances mean budgets need to be cut.
But while some workforces may feel this leaves them oversaturated in some teams and with layoffs as the only answer, Tesla’s example should serve as an argument in favor of reskilling. It may feel daunting to retrain rather than replace, and that job cuts are an easier option.
However, reskilling is not only the best approach for employee morale – it could also be the most cost-effective and give your company the best chance of ending up with the talent it needs to thrive.
