Jack Dorsey has announced major changes to his new technology venture Block, including the elimination of performance improvement plans.
Three weeks ago, the company announced it would cut hundreds of employees over the next year to reduce its workforce to 12,000 – a reduction of as much as 10 percent.
The company owns Square, whose Square Register system powers iPad checkout screens in restaurants and cafes that ask customers to leave a tip.
In a letter sent to employees on Tuesday, Dorsey highlighted part of the restructuring plan.
“I want us to build a culture of excellence,” Business Insider’s message begins. ‘Excellence in service to our clients, excellence in our profession, excellence in our respective disciplines, and excellence in relation to each other.
Jack Dorsey, co-founder of Block (and previously of Twitter), announced major changes at the technology company in a letter on Tuesday
Three weeks ago, the company announced it would reduce the number of employees by 10 percent to reduce its workforce to 12,000 people.
Dorsey criticized the company’s previous method of evaluating employee performance and announced that they would be doing away with performance improvement plans
“We want to help everyone achieve excellence here at Block. And if that isn’t possible for one person, we want to acknowledge that and part ways without delay (which is a fine and honorable outcome).
“Our current performance management practices are not helping us achieve this.”
Dorsey criticized the way the company has provided feedback to employees in the past, writing: “Performance should be continually evaluated and feedback should not be queued.”
He announced that Block would no longer implement “performance improvement plans” or “PIPs.” These plans are intended to provide employees with a detailed explanation of their shortcomings and a roadmap of ways to make improvements.
Dorsey called PIPs “a lazy and often surprising approach that we can avoid with immediate and consistent feedback.”
According to the letter, Block leadership will now rely on “milestones” such as product launches or completions in an effort to make feedback more personal.
Employees who do not meet expectations can be terminated or terminated immediately, without having to wait for formal feedback during an appraisal cycle.
Other changes to be implemented next year include the introduction of performance ratings of ‘exceeds’, ‘meets’ or ‘falls below’.
“We will not tolerate mediocrity or low performance from our leads,” Dorsey warned in the note. “You have my promise that we will set the bar very high for all of them, and act extremely quickly when things clearly aren’t working out.”
He also announced the creation of a new role to oversee the company’s technical strategy and shared technology platforms across business units.
Dhanji Prasanna, a longtime Block employee and chief scientist, was named CTO.
Block is home to the Square Register checkout system, whose blue-and-white screens on iPad and iPhone cash registers ask customers how much they want to tip
In the note, Dorsey also announced the appointment of Dhanji Prasanna to the company’s new CTO role
Despite Square’s profits tripling between 2018 and 2022, Dorsey told staff the number of employees had “much accelerated” growth and performance
Block, originally called Square, was founded by Dorsey and Jim McKelvey in 2009. According to Forbes, the men have a net worth of $4 billion and $1.3 billion respectively.
In 2021, the company was renamed, but the branch that manages the digital Point of Service systems has retained its original name.
Square makes money every time a restaurant adds a tip, although a representative previously told DailyMail.com that the income equates to “just a penny.”
Despite profit tripling in the past four years, Dorsey sent a note to staff earlier this month claiming that headcount had achieved growth and performance “much faster.”
“In fact, I believe it is slowing us down and frustrating everyone,” reads the letter obtained by Business Insider.
“So by the end of next year, Square will be smaller than it is now.”
Dorsey added that executives would “not take any action, but would look critically at everything we do and act thoughtfully.”
The letter ended: “You may not agree with our decisions, but we will do our best to explain why we think they are right.”