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Tesla executives who report directly to Elon Musk have much higher turnover rate, says report

There’s renewed scrutiny of Tesla’s executive departures as a new report shows stats that highlight the turnover rate for execs reporting directly to Elon Musk is much higher than for other CEOs.

Analyst Toni Sacconaghi from Bernstein released a new note to clients today claiming that the turnover rate for executives who report directly to the CEO is “dramatically higher” at Tesla.

Based on their research, Sacconaghi claims that the annualized turnover for execs reporting to Elon Musk at Tesla is 44%, which he says is “dramatically higher than the turnover of CEOs’ direct reports at comparable companies.”

He claims that the average turnover is 9% at other companies in Silicon Valley.

Here’s Tesla’s turnover rate compared to other tech companies:

The second-highest turnover rate for execs reporting to the CEO is at Lyft.

Interestingly, Lyft poached many executives from Tesla over the last year. Most notably, they hired Jon McNeill, former Tesla president, as their new COO, and the ride-sharing company recently announced that McNeill would be leaving.

Based on Bernstein’s research, Tesla’s general executive turnover is also higher than the competition:

“Our analysis indicates that Tesla’s annualized executive turnover level has been 27%, notably higher than the cohort average of 15%,” but not “outlandish.”

Sacconaghi is worried about the higher turnover rate:

While one could argue that (Tesla’s) high turnover reflects its unique and demanding culture, we worry that such turnover not only causes instability… but could also reflect more significant concerns among senior leaders about the company’s direction or workplace practices.

Recently, Tesla lost many high-ranking executives.

Several production executives left in recent months, including the head of production in charge of all vehicle manufacturing at Fremont factory, Peter Hochholdinger, earlier this summer.

The most notable recent executive departure was announced just last month when CTO and cofounder JB Straubel confirmed that he was leaving his operational role at Tesla.

Electrek’s Take

I have often defended Tesla’s exec departures since it is not uncommon in Silicon Valley, but there are several departures that have concerned me more recently, including Straubel and Hochholdinger.

In 2017, Tesla defended its turnover rate:

Tesla’s ability to attract and retain talent has been one of our biggest assets. In 2016, the attrition rate across Tesla was below industry average for technology companies. The length of tenure on the senior leadership team has been especially strong. Of Tesla’s most senior executives, 75% have more than three years of tenure, 60% have more than six years of tenure, and 20% have more than a decade of tenure. Of everyone who has had a leadership position at Tesla over our 14-year existence, nearly 60% are still with the company today. In a number of cases, including most recently with our CFO, Deepak Ahuja, and another one of our most senior leaders, Jerome Guillen, they left Tesla to take a break, only to return a short time later. They came back because they deeply love the company. Furthermore, our senior leadership team continues to expand with new hires, which include over the past couple of years senior executives to lead manufacturing, global sales and service, and Autopilot, just to name a few.

But I am not sure those numbers still hold up two years later. Also, Ahuja has since left the company again.

I’d like to see if Tesla can defend the turnover rate again. I think Bernstein’s report might not be completely accurate, but I wouldn’t be surprised if the numbers are indeed worse than they were in 2017.

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