Marc Benioff, CEO of Salesforce, has said he has canceled dramatic plans to cut the bottom 5% of the company’s workforce each year, following protests from executives who deemed the proposal “triggering.”
Benioff spoke out in an interview with the Wall Street Journal this week a review of the Silicon Valley giant’s cost-cutting measures as it grapples with growth that has slowed dramatically in recent quarters.
Salesforce cut 8,000 jobs, or 10% of its workforce, in January and dramatically scaled back pandemic-era perks like wellness retreats and specialty baristas at its San Francisco headquarters.
“It’s a shame you have to say goodbye to people who are, in many cases, your friends and who you’re in a relationship with,” Benioff told The Journal. ‘But ultimately the success of the company must come first.’
Salesforce CEO Marc Benioff has said he has canceled dramatic plans to cut the bottom 5% of the company’s workforce each year, even as he implements other cost-cutting measures
Salesforce cut ties with Trailblazer Ranch, a 75-acre wellness retreat where employees enjoyed hiking and yoga in addition to exercise activities
Last month at an executive retreat, Benioff proposed a new ranking system to rate all employees based on metrics, including their impact on revenue, with the aim of selecting the bottom 5% each year.
However, he scrapped the ranking plan, telling the Journal that employees “made a very impassioned claim that this is not a culture they want to bring to Salesforce.”
Executives who had previously worked at companies with similar annual ranking systems, such as Microsoft, found the plan “triggering,” Benioff said.
Salesforce, an enterprise cloud software provider that experienced tremendous growth during the pandemic, has now pared down many of the wellness-focused benefits it offered in recent years as it faces slowing growth.
For the past several years, the company has offered sellers a “wellness day” of additional paid time off each year, a perk that ended in January.
Salesforce also cut some specialty baristas from its San Francisco headquarters, some of whom work there shortly after the 68-story tower opened in 2018
At Salesforce Tower, the company’s headquarters, some specialty coffee baristas have been laid off.
The company also cut ties with Trailblazer Ranch, a 75-acre wellness retreat where employees enjoyed hiking and yoga in addition to exercise activities.
The Journal also revealed that Salesforce pays actor Matthew McConaughey $10 million a year to serve as a “creative consultant,” despite the recent budget cuts.
McConaughey receives compensation in a mix of cash and equity.
Last year, Salesforce paid McConaughey $5 million to star in a Super Bowl ad that featured the actor in an astronaut suit aboard a hot air balloon.
When asked about the cost of hiring McConaughey, Benioff told the WSJ that his salary and compensation paled in comparison to his company’s 70,000-man payroll.
McConaughey’s compensation was significant enough to get the green light from Salesforce’s compensation committee.
Salesforce has started doing away with perks at its global headquarters in San Francisco – the 61-story Salesforce Tower
Benioff was once known for calling staff “ohana,” or family. “Layoffs are always difficult,” he told the WSJ.
“You can run a business with redundant staff, but that’s not healthy for the business,” he added.
“If you don’t have a performance culture and you don’t run the company with that kind of effectiveness, you’re not doing anyone a favor.”
In January, the enterprise software provider said that “the environment remains challenging and our customers are taking a more down-to-earth approach to their purchasing decisions.”
Salesforce hired aggressively during the first two years of the pandemic as companies bought products to transition to remote work. The company also acquired the popular work messaging application Slack at the time.
In recent months, several activist investors, including Elliott Management and Starboard Value, have expressed concern about slowing growth at Salesforce and pushed for changes.
On Wednesday, Salesforce surprised investors by forecasting first-quarter revenue above analyst estimates and doubled its share buybacks to $20 billion.
The optimistic forecast and fourth-quarter results that beat analysts’ estimates pushed shares of the cloud-based software provider up 13.8% for the week ending Friday.
They also got a boost from Benioff’s statement that the company would integrate artificial intelligence across its entire cloud, as well as Slack, data analytics platform Tableau, and MuleSoft platform.
“I think this (fourth) quarter gives Salesforce some time with the activists,” said RBC analyst Rishi Jaluria.