Why Has Elon Musk Taken Charge of New Tesla Hiring?

Thursday - May 18 2023, 03:36 UTC - 1 year ago

Tesla CEO Elon Musk has requested that he must personally approve all new hires, likely in an attempt to keep HR staff on high alert and pick suitable candidates, as well as competing with Tesla's main competition. The result of this move could be a hiring freeze for the company, as it has implemented in the past. Musk will soon be speaking to Tesla shareholders at the company's annual meeting held in Austin.

Various news outlets, including Reuters, have reported that Tesla's CEO, Elon Musk, has told his staff that he must approve all new hires for the company in a memo to relevant staff. This includes new staff members and contractors, according to the memo's wording seen by Reuters.

According to Reuters, Musk requested that any planned recruits be sent to him every week while warning Human Resources (HR) staff to "think carefully" before sending them to him. "No one can join Tesla, even as a contractor, until you receive my email approval," Musk said in an email on Monday. From the email's wording, it is also unclear how long Mr. Musk expects these weekly updates to be provided.

Given that Tesla recruits around 30,000 people every year, roughly 5,770 a week, it is unlikely that Elon Musk would have the time to review each candidate personally. So, what is the logic behind this move? As Electrek points out, the email's wording may be to ensure that HR staff is on high alert to pick only the most suitable candidates for the company.

"Workers are way more careful about things when they know the CEO will personally be taking a look. This looks like a similar approach with this email approval for hiring," Electrek explains.Tesla had performed a similar strategy before when, in 2019, he took charge of signing off any significant spending for the company. This included Chief Financial Officer Zach Kirkhorn, who also needed to authorize every piece of expenditure for Tesla at the time.

This news will likely lead to a hiring freeze for the company too. Again, this is something that Tesla has implemented in the past, with a hiring freeze seen in the summer of 2022 amidst a series of layoffs. However, hiring quickly resumed with about 127,000 employees, about a 28 percent increase, seen by the start of 2023.

According to various outlets, Musk's intervention is likely an attempt to compensate partly for its significant price cuts across the Tesla range in 2023 to better compete with Tesla's main competition. The company also recently reported its lowest quarterly gross margin in two years, falling short of market expectations. The company reduced prices significantly in both the United States and China to encourage demand and stay ahead of mounting competition.

On Tuesday, the billionaire is set to speak to Tesla shareholders at the company's annual meeting held in Austin, Texas, at its headquarters.