Tesla and “Performance Reviews”

The titles of articles in the press this weekend included:

Tesla Fires Hundreds of Workers After Their Annual Performance Review* 

Tesla fires hundreds of employees after ‘performance reviews’**

Tesla tells hundreds of its employees they’re not good enough to work there***

Indeed, “a Tesla spokesman would not confirm that number but told Fortune that the move follows its annual performance reviews, which typically involve both involuntary and voluntary departures. “Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period,” a Tesla spokesman said in an emailed statement. “This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.””*

I have always admired Elon Musk and his advances in technology.  Tesla cars, Paypal, SpaceX and Tesla’s Solar Roofs have all found a place in our world; he is considered a global game changer, and sees solutions to difficult problems in an innovative, large picture, achievable way.

Therefore, I was very surprised to see that Tesla is using performance reviews in such an old-fashioned way, as a direct way to determine who should stay and who should go. So much for performance reviews being the time that an employee and their manager get together to discuss goals achieved (and missed), future goals and development opportunities.  Knowing that there is a > 0% chance that you (and a lot of your colleagues) could be fired directly after a performance review discussion encourages a culture of fear, apprehension and low morale.

Now, I’m not saying that Tesla selected the wrong people to fire.  Or that companies should not let poor performers go.  But I think that should be done using different conversations consistent with the feedback obtained in a performance review.  Use continuous feedback, document shortfalls, and use PIPs (performance improvement plans) throughout the year.  Base firing on missed objectives.  Being let go should never be a surprise as it seems to be at Tesla****.

And next year at performance review time?  Let’s hope that Tesla becomes as progressive in their employee feedback process as they are in their technology.

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