The layoffs announced by Tesla, Inc. (NASDAQ:TSLA) this week included the elimination of several top managerial positions, reportedly tightening CEO Elon Musk's grip over the electric vehicle maker.
What Happened: According to a report by Information, at least 35 executives now directly report to Musk following the removal of two of his direct reports, Andrew Baglino and Rohan Patel, as part of the job cuts.
The newly added executives include key figures overseeing energy, public policy, and business development, as well as the head of sales for North America and a senior content specialist, Viv Hantusch, who manages Tesla's account on X.
Additionally, global sales teams, previously under the leadership of Tom Zhu since his promotion last April, have now been placed back under Musk's oversight.
Commenting on the report, Bob Sutton, a professor of management science at Stanford University School of Engineering and organizational psychologist, expressed concerns.
"A recipe for CEO overload and being a bottleneck," he said. "This MIGHT work for CEOs who delegate, trust underlines, create psych safety, and have a strong shared culture and agreement on strategy. That Elon?"
Elon Musk now has 35 direct reports at Tesla.
— Bob Sutton (@work_matters) April 18, 2024
A recipe for CEO overload and being a bottleneck.
This MIGHT work for CEOs who delegate, trust underlines, create psych safety, and have a strong shared culture and agreement on strategy.
That Elon?
.
Why It's Important: The development comes when Tesla stakeholders are unduly worried about Musk's full involvement in his flagship EV business. This is flagged as a key risk as to why institutional ownership in Tesla is relatively less vis-a-vis other mega-cap stocks.
Musk is also at the helm of his space venture SpaceX, the Boring company, which is an infrastructure and tunnel construction service, and Neuralink, which is engaged in the manufacturing of implantable brain-computer interfaces. His late-2022 purchase of social-media platform Twitter, which he has since then renamed X, also takes much of his time, given it is finding it difficult to rake in advertising dollars.
As Sutton said Musk's leadership style is exacting. His biographer Walter Isaacson described his management style as one characterized by a hands-on approach, often described as "nano-management," where he involves himself deeply in the details of his companies.
The additional burden on Musk comes at a time when Tesla is facing a host of fundamental issues, which has pushed its stock down to its lowest level in over a year.
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