Salesforce CEO Marc Benioff.
According to an internal Salesforce Slack message seen by Insider, the company’s CEO Marc Benioff has revised its annual strategic plan, which includes policies to implement a mandatory return to work and a staffing system called Stack Ranking. The change was made in mid-February 2023 after soliciting feedback from employees on the original plan, the message said.
Even though the new draft has a softer tone, Salesforce insiders say the company is still moving toward a more results-focused approach.
Salesforce’s new year’s annual strategic plan “V2MOM” (Vision, Values, Methods, Obstacles, Measures) shared with employees via Slack in mid-February. An early draft called for managers to fire “low performers” with a target of 5% per year.
However, in a memo to Salesforce employees posted on Slack’s internal channel on the evening of February 20, Benioff said he intends to soften the proposal for a rating system known as Stack Ranking.
The amendment, obtained by Insider, removes the 5% annual target, stating that “managers should value their employees, reward high performers, expel low performers, and create a prosperous new future for us.” to ensure that In a Slack post, Benioff also said he was “completely” removing the concept of “ranking” from performance reviews.
Some employees are wary of the word change, saying it doesn’t materially change the idea of Stack Ranking, which forces a certain number of people to be labeled as poor performers.
A Salesforce employee who read the amendment told Insider:
“He still promotes a performance-oriented culture.
New obligation to return to office
Benioff also mentioned a mandatory return to office. This was also revised after listening to the opinions of employees. Currently, employees are required to come to work three days a week, and “customer-facing” employees four days a week. Engineers will be required to work in offices for 10 days each quarter, down from the original 20 days.
About a year ago, Benioff criticized other companies for imposing strict return-to-office mandates.
However, the tone has changed significantly in the last few months. Salesforce is under pressure from a group of activist investors. They cut costs for the company, curbed flashy, expensive acquisitions, and, above all, boosted the stock, which has nearly halved amid waning demand for enterprise software and slowing quarterly growth. I want you to let me.
“Improving our profit margins is more important than revenue growth,” says the revised V2MOM. At its 2022 investor briefing held in September 2022, the company pledged to achieve an operating margin of 25% by fiscal 2026 through reductions in expenses and acquisition costs.
Ask Bain for “restructuring” support
According to its strategic plan, Salesforce has engaged Bain to help execute its restructuring to “drive solid operating margin improvement and sustained growth.”
The announcement that Bain has been hired to help with restructuring may signal that more layoffs are on the way than the company has previously announced.
Salesforce has continued to cut headcount since it cut hundreds of salespeople in November 2022. The company announced a restructuring plan to lay off about 7,000 people, or 10% of its workforce, in January 2023 and sell some of its office real estate.
Since then, thousands of employees have been laid off under its 10% cut plan. Remaining employees are feeling increasing pressure to perform better, with some being pressured to quit with less severance pay than those who were laid off.
Salesforce has not yet disclosed whether it has notified all 10% of employees included in its formal restructuring plan. Insider previously reported that the company was scrutinizing the need for another 10% job cut in January, citing a person familiar with the matter.
During the pandemic, demand for Salesforce’s enterprise cloud software products grew as more people moved to remote work. In November 2021, the company’s stock price hit an all-time high of over $300 per share (approximately 39,000 yen, converted to $1 = 130 yen). According to the company’s full-year financial statements, sales in fiscal 2022 rose 25% to reach $26.5 billion.
In 2021, Salesforce will acquire Slack Technologies for $27 billion (approximately ¥2.9 trillion at the time of the acquisition), the most expensive acquisition ever made by Salesforce. Increased staff from 57,000 to 73,000.
In fact, Salesforce has long been known for its “Ohana” culture, which encourages employees to treat the company like family. Benioff mentioned Ohana in a Slack message late Thursday night, noting that it will be a factor in performance reviews going forward. “Evaluation considers how work is done, not just performance,” he writes.
But those words no longer seem to resonate with employees reeling from Benioff’s public remarks about mass layoffs and declining productivity at the company.
As one employee previously posted on the Slack channel, another wrote:
“Can an executive promise never to call a Salesforce employee ‘family’ again? There’s no way he’d fire his family to make up for his own mistakes.”
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(Edited by Sayuri Daimon)
Source: BusinessInsider
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