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I think for a company the size of Tesla it would actually be beneficial to have a well-organized worker council and union through which the employees could nego

I think for a company the size of Tesla it would actually be beneficial to have a well-organized worker council and union through which the employees could negotiate with the board of directors when things like this happen. Often this results in a better solution for everyone. When the recession hit Germany in 2008 most large automotive companies were also faced with a massive decline in orders and were forced to aggressively cut costs. As employees in these companies are heavily unionized they of course protested against this and the worker council started negotiating with the board of directors. They found a solution by reducing the work hours for a large percentage of their workers (with an accompanied pay cut) instead of firing a smaller percentage of them, which allowed them to retain almost everyone and at the same time reduce costs. When the economy sped up again they were able to just increase the working hours again. This was great for the employees (as they didn't lose their jobs) but also for the companies, because they didn't have to find and train new employees after the crisis was over. I'm wondering why Tesla isn't considering something like this as I imagine there's a lot of training involved in many jobs at their factory, and it's probably very costly to rehire and retrain new employees when the growth picks up again. Just my 2 cents.

300bps 8y ago
I’m wondering why Tesla isn’t considering something like this I’m thinking it’s because they aren’t firing people at random. They’re letting go their weakest performers. This is very common and has been encouraged in business for decades: https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-employees-every-year.html https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-...
- raesene9 8y ago
  That would imply that they're able to correctly identify their "weakest performers" with sufficient accuracy to do that. From what I've seen of large corp. performance appraisal systems, that's very rarely the case. Those systems tend to reward people who are good at self-promotion, not necessarily people who are good at their jobs.
- collyw 8y ago
  > They’re letting go their weakest performers. This is very common and has been encouraged in business for decades. Not in places that I have worked. Weak performers still have jobs years later, yet decent performers have been sacked quickly at other companies when they were struggling with money.
  - gaius 8y ago
    Because positions are made redundant, not people.
    - collyw 8y ago
      Not in the last case I was thinking about. But then management were pretty clueless about tech...
- matwood 8y ago
  In principle I agree that companies should always get rid of people who are not working up to some defined standard. I disagree that a company should stack rank and get rid of the lowest performers for no other reason than 'because'. Hiring and firing is hard, and very disruptive. If the whole team is better than the standard set by the company, the company should consider itself lucky and not screw it up. With that said, in large companies it can be very hard to determine just who is below whatever standard is set. Instead it becomes more of a game to be liked by your manager or claim credit for work. By the way, part of working at or above a standard also includes not being an asshole.
  - Xylakant 8y ago
    I also think stack-ranking is hard or even impossible to get right. The criteria often favor those people that produce visible work and tend to disfavor people that enable said work (think: producing new features vs. maintenance, writing high-profile code vs. doing the review for those, producing visible output vs. mentoring, ...) So stack ranking (or any kind of ranking by criteria) tends to nudge people into "let's do what the standard expects us to do" instead of "let's do what makes the team, company and product improve."
- maxxxxx 8y ago
  That's not how it usually works at large layoffs. They lay off whole departments regardless of performance.
- justin66 8y ago
  This is very common and has been encouraged in business for decades: https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-employees-every-year.html https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-... It's a short article so maybe a little leeway should be given, but it is nuts the way the author equates reviewing employees and firing employees: You don't have to a rigid rule, such as fire the bottom 10% every year, but you do want to be reviewing your entire workforce (at the very least) once a year, with an eye toward constantly improving it. You should be reviewing your employees a lot more often than once a year and it doesn't need to result in anyone getting fired. Reviews are a more effective process - especially in the small company environment the author is talking about - if nobody ever approaches them like that (with the expectation that people will be fired).
markonen 8y ago
Musk mentions in the letter that Tesla isn't able to provide a work-life balance on par with their competitors. I take that to mean that they expect you to work overtime. It probably isn't a good starting point for the sort of deal you describe.
majewsky 8y ago
One of the reasons why shortened work (Kurzarbeit) worked for Germany is that the government subsidizes it by paying the workers back some of their lost income, on the rationale that it's better to subsidize them for a short time rather than for them to become unemployed for a potentially long time. The maximum duration of this Kurzarbeitergeld was gradually extended through the 2007-2009 crisis from 12 months up to 24 months.
- mabbo 8y ago
  Health Care also plays into this. In the US, most companies are paying for their employees health care. You can cut hours, but that doesn't dent the health care premium per employee. In the rest of the modern world, health care is the problem of the government, so cutting back on hours is a more useful strategy.
  - cleeus 8y ago
    Things I don't understand about the US ... why does not most advanced western nation not have a socially fair health care system. E.g. in germany, the price of health care is proportional to income.
    - clouddrover 8y ago
      Ideology is part of it. Some Americans believe socialized health care is unjust: http://thefederalist.com/2016/02/19/why-socialized-health-care-is-unjust/ http://thefederalist.com/2016/02/19/why-socialized-health-ca... It's a position that doesn't make much sense in practical terms. Australia has universal public health care. Australia spends half as much per capita on health care than the US does and Australians have a longer life expectancy than Americans. Australia's paying half as much for better health outcomes. For me, universal public health care isn't socialism as much as it is a better business model.
      - ianhowson 8y ago
        Just addressing the Australia vs. US healthcare thing for a moment, I need to vigorously disagree with you on the implied superiority of the Australian system. I would argue that: 1. Quality of care is better in the US (totally subjective, but in the US we're waiting less and getting better treatment with less runaround/referrals/arguments; if you have insurance, you'll get whatever you want without a fight) 2. Cost is about on par with Australia (AUD3000/year for private health, plus 1000-3000 for Medicare supplement, plus whatever you pay in taxes; in terms of raw cash paid it's actually very close. But Australian PHI doesn't cover anything of value until you're hospitalised; urgent but non-life-threatening stuff is basically paid out of pocket. US has HSAs and practically everything is covered.) 3. US healthcare spend is measured in monopoly money and, assuming you have insurance, real costs are not easily comparable. I don't have any hard data on these, though, and so am very happy to be educated.
gaius 8y ago
This is a very German solution. A British union would have rather destroyed the company with a series of strikes ultimately costing everyone their jobs. That is why unions have a very bad reputation, but it’s not inherent to all unions, that’s what people don’t understand. It’s just specific to the UK, and that’s why we don’t have a domestic car industry anymore. If we ever unionised in tech it would have to be along German lines.
- FireBeyond 8y ago
  You probably thought the UK miners' strike was their fault, too, huh? https://en.wikipedia.org/wiki/UK_miners%27_strike_(1984%E2%80%9385) https://en.wikipedia.org/wiki/UK_miners%27_strike_(1984%E2%8...
  - gaius 8y ago
    You know, the mines were making a loss and Scargill could have said, sell them to us for £1 and we’ll run them as a collective and prove to you they’re a viable business and more importantly provide an income and dignity for the Workers. But he did not do that. He betrayed the Workers for his own political delusions. He just wanted to be the one who brought down a government, he didn’t give a stuff about the People. Why do you think the DUM split off from the NUM? That’s why he can never be forgiven. By the way the previous government to Thatcher had closed twice as many mines as she did, and not a squeak from Scargill. Doesn’t that strike you as a bit odd?
luckydata 8y ago
Elon HATES unions. He's a hard core Ayn Rand fan.
docker_up 8y ago
Making everyone take a cut instead of firing the lowest performers in your company is a bad idea. It hurts your top performers, and makes it more likely they will leave. I've been through this during the bust and top performers leaving is guaranteed to happen if they know they're getting a pay cut.
solatic 8y ago
> They found a solution by reducing the work hours for a large percentage of their workers (with an accompanied pay cut) instead of firing a smaller percentage of them, which allowed them to retain almost everyone and at the same time reduce costs. More companies don't do this because it's not in labor's favor, in aggregate. Regardless of economic conditions, companies always have an interest in paying their workers less, as this cuts costs and improves profit margins. In aggregate, companies can't continually cut wages because workers would leave for employers who would pay them market rate, and so employers are forced to lay off employees to cut costs - precisely because, in a low-trust environment, it's the only way to convince labor that the cost cutting is actually necessary, because the layoff hurts the company too by way of lost productivity. The upwards pressure is called "sticky wages", and it's one of the reasons why economies need at least a small amount of inflation to be healthy. German auto manufacturers could do it because a) they have much better labor relations on the ground and b) the 2008 recession was a real phenomenon that everyone knew about. Their trust allowed them to come to a more ideal solution, but for most companies around the world, real people and realpolitik get in the way of the ideal solution.

300bps 8y ago

I’m wondering why Tesla isn’t considering something like this I’m thinking it’s because they aren’t firing people at random. They’re letting go their weakest performers. This is very common and has been encouraged in business for decades: https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-employees-every-year.html https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-...

raesene9 8y ago
That would imply that they're able to correctly identify their "weakest performers" with sufficient accuracy to do that. From what I've seen of large corp. performance appraisal systems, that's very rarely the case. Those systems tend to reward people who are good at self-promotion, not necessarily people who are good at their jobs.
collyw 8y ago
> They’re letting go their weakest performers. This is very common and has been encouraged in business for decades. Not in places that I have worked. Weak performers still have jobs years later, yet decent performers have been sacked quickly at other companies when they were struggling with money.
- gaius 8y ago
  Because positions are made redundant, not people.
  - collyw 8y ago
    Not in the last case I was thinking about. But then management were pretty clueless about tech...
matwood 8y ago
In principle I agree that companies should always get rid of people who are not working up to some defined standard. I disagree that a company should stack rank and get rid of the lowest performers for no other reason than 'because'. Hiring and firing is hard, and very disruptive. If the whole team is better than the standard set by the company, the company should consider itself lucky and not screw it up. With that said, in large companies it can be very hard to determine just who is below whatever standard is set. Instead it becomes more of a game to be liked by your manager or claim credit for work. By the way, part of working at or above a standard also includes not being an asshole.
- Xylakant 8y ago
  I also think stack-ranking is hard or even impossible to get right. The criteria often favor those people that produce visible work and tend to disfavor people that enable said work (think: producing new features vs. maintenance, writing high-profile code vs. doing the review for those, producing visible output vs. mentoring, ...) So stack ranking (or any kind of ranking by criteria) tends to nudge people into "let's do what the standard expects us to do" instead of "let's do what makes the team, company and product improve."
maxxxxx 8y ago
That's not how it usually works at large layoffs. They lay off whole departments regardless of performance.
justin66 8y ago
This is very common and has been encouraged in business for decades: https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-employees-every-year.html https://www.inc.com/paul-b-brown/should-you-fire-10-of-your-... It's a short article so maybe a little leeway should be given, but it is nuts the way the author equates reviewing employees and firing employees: You don't have to a rigid rule, such as fire the bottom 10% every year, but you do want to be reviewing your entire workforce (at the very least) once a year, with an eye toward constantly improving it. You should be reviewing your employees a lot more often than once a year and it doesn't need to result in anyone getting fired. Reviews are a more effective process - especially in the small company environment the author is talking about - if nobody ever approaches them like that (with the expectation that people will be fired).

markonen 8y ago

Musk mentions in the letter that Tesla isn't able to provide a work-life balance on par with their competitors. I take that to mean that they expect you to work overtime. It probably isn't a good starting point for the sort of deal you describe.

majewsky 8y ago

One of the reasons why shortened work (Kurzarbeit) worked for Germany is that the government subsidizes it by paying the workers back some of their lost income, on the rationale that it's better to subsidize them for a short time rather than for them to become unemployed for a potentially long time. The maximum duration of this Kurzarbeitergeld was gradually extended through the 2007-2009 crisis from 12 months up to 24 months.

mabbo 8y ago
Health Care also plays into this. In the US, most companies are paying for their employees health care. You can cut hours, but that doesn't dent the health care premium per employee. In the rest of the modern world, health care is the problem of the government, so cutting back on hours is a more useful strategy.
- cleeus 8y ago
  Things I don't understand about the US ... why does not most advanced western nation not have a socially fair health care system. E.g. in germany, the price of health care is proportional to income.
  - clouddrover 8y ago
    Ideology is part of it. Some Americans believe socialized health care is unjust: http://thefederalist.com/2016/02/19/why-socialized-health-care-is-unjust/ http://thefederalist.com/2016/02/19/why-socialized-health-ca... It's a position that doesn't make much sense in practical terms. Australia has universal public health care. Australia spends half as much per capita on health care than the US does and Australians have a longer life expectancy than Americans. Australia's paying half as much for better health outcomes. For me, universal public health care isn't socialism as much as it is a better business model.
    - ianhowson 8y ago
      Just addressing the Australia vs. US healthcare thing for a moment, I need to vigorously disagree with you on the implied superiority of the Australian system. I would argue that: 1. Quality of care is better in the US (totally subjective, but in the US we're waiting less and getting better treatment with less runaround/referrals/arguments; if you have insurance, you'll get whatever you want without a fight) 2. Cost is about on par with Australia (AUD3000/year for private health, plus 1000-3000 for Medicare supplement, plus whatever you pay in taxes; in terms of raw cash paid it's actually very close. But Australian PHI doesn't cover anything of value until you're hospitalised; urgent but non-life-threatening stuff is basically paid out of pocket. US has HSAs and practically everything is covered.) 3. US healthcare spend is measured in monopoly money and, assuming you have insurance, real costs are not easily comparable. I don't have any hard data on these, though, and so am very happy to be educated.

gaius 8y ago

This is a very German solution. A British union would have rather destroyed the company with a series of strikes ultimately costing everyone their jobs. That is why unions have a very bad reputation, but it’s not inherent to all unions, that’s what people don’t understand. It’s just specific to the UK, and that’s why we don’t have a domestic car industry anymore. If we ever unionised in tech it would have to be along German lines.

FireBeyond 8y ago
You probably thought the UK miners' strike was their fault, too, huh? https://en.wikipedia.org/wiki/UK_miners%27_strike_(1984%E2%80%9385) https://en.wikipedia.org/wiki/UK_miners%27_strike_(1984%E2%8...
- gaius 8y ago
  You know, the mines were making a loss and Scargill could have said, sell them to us for £1 and we’ll run them as a collective and prove to you they’re a viable business and more importantly provide an income and dignity for the Workers. But he did not do that. He betrayed the Workers for his own political delusions. He just wanted to be the one who brought down a government, he didn’t give a stuff about the People. Why do you think the DUM split off from the NUM? That’s why he can never be forgiven. By the way the previous government to Thatcher had closed twice as many mines as she did, and not a squeak from Scargill. Doesn’t that strike you as a bit odd?

luckydata 8y ago

Elon HATES unions. He's a hard core Ayn Rand fan.

docker_up 8y ago

Making everyone take a cut instead of firing the lowest performers in your company is a bad idea. It hurts your top performers, and makes it more likely they will leave. I've been through this during the bust and top performers leaving is guaranteed to happen if they know they're getting a pay cut.

solatic 8y ago

> They found a solution by reducing the work hours for a large percentage of their workers (with an accompanied pay cut) instead of firing a smaller percentage of them, which allowed them to retain almost everyone and at the same time reduce costs. More companies don't do this because it's not in labor's favor, in aggregate. Regardless of economic conditions, companies always have an interest in paying their workers less, as this cuts costs and improves profit margins. In aggregate, companies can't continually cut wages because workers would leave for employers who would pay them market rate, and so employers are forced to lay off employees to cut costs - precisely because, in a low-trust environment, it's the only way to convince labor that the cost cutting is actually necessary, because the layoff hurts the company too by way of lost productivity. The upwards pressure is called "sticky wages", and it's one of the reasons why economies need at least a small amount of inflation to be healthy. German auto manufacturers could do it because a) they have much better labor relations on the ground and b) the 2008 recession was a real phenomenon that everyone knew about. Their trust allowed them to come to a more ideal solution, but for most companies around the world, real people and realpolitik get in the way of the ideal solution.