How Twitter Threw Employees Under The Bus (And Elon Musk Ran Them Over)

OBSERVATIONS FROM THE FINTECH SNARK TANK

The story of how Elon Musk tried a takeover of Twitter, tried to again out of that takeover, and was then in the end pressured to finish the deal has been effectively advised within the press (together with right here on Forbes).

A brand new examine, nevertheless, sheds new mild on the acquisition’s influence on Twitter staff and the way Twitter’s key executives and board deserted the social media platform’s mission assertion and core values.

The examine, titled How Twitter Pushed Stakeholders Beneath The Bus, claims that:

“When negotiating the deal, Twitter’s company leaders selected to focus solely on the pursuits of their shareholders and the personal pursuits of company leaders themselves. Regardless of their stakeholder rhetoric over time, Twitter’s company leaders basically selected to push their stakeholders beneath the (Musk) bus.”

How A lot Did Twitter Insiders Make On The Deal?

With Musk’s provide to accumulate Twitter at a 38% inventory worth premium, it’s not shocking that Twitter’s high 4 executives made some huge cash on the deal.

From a inventory worth premium perspective, the highest 4 execs reaped a $74.3 million windfall from the shares they held. Positive aspects weren’t restricted to the worth premium. Restricted and efficiency inventory items (RSUs and PSUs) added $138 million to the chief group’s payday.

Eight non-executive administrators additionally made out effectively, incomes $68 million in share worth appreciation, $20 million from inventory choices, and $5 million in RSUs and PSUs.

Hypocri-twits In The Twitter Boardroom

What did the chief group and board do to guard Twitter staff’ pursuits? Not a lot. In line with the examine:

“On condition that any acquisition may be adopted by layoffs, and that this threat was clear and current within the case of the Twitter acquisition, it may be anticipated that employee-oriented company leaders would search to make use of some a part of the excess created by the deal to cushion staff who stood to lose their employment.”

Not a superb expectation on this case.

The settlement positioned no limitations relating to the size and velocity with which Musk might hearth his new “tweeps” (the corporate’s time period for its staff). Not solely did the deal fail to vow compensation or financial advantages to laid-off staff, it really precluded Twitter from offering staff with such guarantees between the signing and shutting of the deal, in line with the examine.

The examine’s authors identified:

“Worker-oriented company leaders might have declined to tie their arms from amending the phrases of worker contracts. Given the small measurement of this financial dedication relative to the deal premium or acquisition worth, retaining the board’s energy to make such guarantees to staff ought to have been anticipated to not preclude the deal however at most require a minor adjustment in different deal phrases.”

Reuters reported that, in April 2022, Twitter CEO Parag Agrawal reassured staff there have been no plans for layoffs, whereas Twitter’s board chair advised them that the settlement prioritized “working continuity.”

[Note: The board chair’s comment wasn’t misleading. Twitter appears to be operating just fine with half the staff it had pre-takeover.]

Was Twitter required to take steps to alleviate or reduce the ache of impending post-deal layoffs? No. But it surely was hypocritical of them to not.

Folks First, My Foot

This was the corporate, bear in mind, that had a webpage devoted to “Tweep Life” that claimed “We put individuals first. Collectively we’re making a tradition that’s supportive, respectful, and a reasonably cool vibe.”

The corporate’s careers web page advised potential staff “we handle the entire you—from bodily and psychological to monetary {and professional}. So no worries, we received you.”

A lot for that promise. Total, the authors of the examine conclude that:

“The Twitter deal means that the significance connected to objective and mission statements is misplaced. Twitter’s company leaders had lengthy engaged in pro-stakeholder rhetoric relating to the corporate’s mission and functions. Nonetheless, they disregarded these statements and connected little if any weight to defending the mission, objective, and core values to which they’d publicly been dedicated to.”

Musk Drove The Bus

For his half, Elon Musk didn’t do a lot to assist the plight of Twitter staff—laid off or retained. In line with the tutorial examine:

“Workers who used to earn a living from home earlier than the acquisition had been reportedly additionally focused for the layoffs. Musk allegedly declined to simply accept a suggestion from Twitter executives to conduct a variety and inclusion evaluation to make sure the cuts wouldn’t disproportionately have an effect on individuals of coloration.”

After the deal was accomplished, Musk mandated 80-hour work weeks from Twitter staff and required them to be within the workplace at the very least 40 of these hours. Exceptions would require Musk’s private assessment and approval.

A couple of weeks later, Musk required Twitter staff to commit—through a Google type—to staying with the corporate with the understanding that they must work lengthy hours at excessive depth or depart the corporate.

Paying The Fare On The Musk Twitter Bus

Did Musk actually run over Twitter staff who had been thrown beneath the bus or did he simply cost them a steep fare to get on it?

Not too way back, it wasn’t uncommon for individuals constructing a brand new firm or perhaps a new profession to place in lengthy hours (attorneys and Wall Streeters will again me up on this one).

So was Musk actually incorrect in asking for commitments to arduous work (I shudder on the thought)?

Maybe the larger downside—and impetus for Musk’s actions—was Twitter’s administration group’s incapacity to effectively handle its workforce and their proclivity to coddle Tweeps with feel-good bromides that had been by no means reasonable.

Stakeholderism Past Twitter

Stakeholderism—the concept company leaders ought to look past shareholders and try to serve all of an organization’s stakeholders (e.g., staff, neighborhood members, and so on.)—has gained forex over the previous few years.

Critics of the development level out that company leaders usually have incentives to not shield stakeholder pursuits past those who additionally serve shareholder pursuits.

Twitter and Elon Musk did stakeholderism a disservice.