Elon Musk Is Bad at Human Resources Management: HR Experts

“Desperate situations call for desperate measures,” Musk told CNBC’s David Faber in May 2023. “So there’s no question that some of the people that got fired probably shouldn’t have been fired.”

It has been suggested that this firing-and-rehiring tactic was a deliberate ploy by Musk.

In an interview with Rex Friedman, Musk biographer Walter Isaacson said the Twitter layoffs were part of Musk’s “delete, delete, delete” approach to running companies, and that his CEO believed “if he didn’t eventually bring back 20% of the people he deleted, he was too timid to delete enough people in the first round,” he said.

Since founding his first company in the late ’90s, Musk has risen to become one of the most prominent entrepreneurs of the 21st century, and arguably one of the busiest. In addition to Tesla and X, Musk also runs SpaceX, Neuralink, and AI startup xAI., He also owns an underground tunnel company. His business ventures have made him one of the richest people in the world.

Still, critics say Musk isn’t particularly good at running these companies.

“Organizations can be poorly run and still survive financially,” Alec Levenson, a senior research scientist at the University of Southern California’s Marshall Center for Organizational Studies, told Business Insider.

“If you have healthy margins and strong customer loyalty, you can still do well,” Levenson added, “but I guarantee you you can do even better if you improve your management practices and do it without hurting your bottom line.”

A culture of mistrust

As for Musk’s fire-and-rehire approach, Levenson told BI that the tactic is an ineffective way to manage organizational growth and may only sow distrust within the company.

“If you have good management practices and good leadership from the top to the bottom of the organization, people in different leadership positions will know who are the better employees in terms of contribution and who are not,” he said.

Musk’s other management practices have been criticized before and, in some cases, accused of violating labor laws.

At Tesla, for example, Musk told employees that he personally approved all new hires, according to emails obtained by Business Insider.

HR Professional They argued that the practice was an inefficient use of the CEO’s time and communicated to workers in charge of hiring talent that their work could not be trusted.

“For someone who is one of the most successful entrepreneurs and runs two very important organizations to be bothered with this kind of detail is a waste of his time,” Levenson said of Musk’s role at X and Tesla. “It just goes to show that you don’t trust the people who sit in the C-suite, all the layers between you and them.”

Musk is also known for firing employees who disagree with his decisions.

A few weeks after acquiring Twitter (now known as X), Musk had his team sift through internal company messages to identify employees he believed to be disobedient, and later fired them. The New York Times report.

Several former employees who previously spoke with Business Insider’s Kari Hayes also said they believe they were fired because of their views on Musk.

Similar incidents have occurred at SpaceX, where Musk was fired shortly after a group of employees wrote an open letter to the company’s management in 2022 saying his behavior had been “frequently a source of confusion and embarrassment for us.”

The National Labor Relations Board has filed a lawsuit against Musk, the CEO of SpaceX, accusing him of illegally firing employees.

Levenson told BI that one way to address employee concerns and disagreements, at least internally, is to establish open lines of communication where employees can voice issues internally.

In March, the NLRB also accused Musk’s SpaceX of forcing fired or furloughed employees to sign illegal severance agreements that barred them from speaking out against the company or participating in class-action lawsuits.

Musk’s management methods are also being challenged in court.

Former cleaners at Twitter’s New York offices sued Musk in June 2023, claiming that they had not been paid “hundreds of thousands of dollars in back wages.”

Other former Twitter employees and executives are suing Musk for unpaid severance pay.

“This is Musk’s modus operandi: he keeps money he owes to others and forces them to sue him,” the lawsuit filed by four former Twitter executives states. “Even if he loses, Musk is able to impose delays, hassle and expense on others who cannot afford it.”

Spokespeople for Musk, Tesla, X and SpaceX did not immediately respond to requests for comment.