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Salesforce CEO Marc Benioff has said he has canceled dramatic plans to cut the bottom 5% of the company’s workforce each year, following protests by employees who found the proposal ‘triggering’.
Benioff spoke in an interview with the Wall Street Journal this week, describing the Silicon Valley giant’s cost-cutting moves as it grapples with growth that has slowed sharply in recent quarters.
Salesforce cut 8,000 jobs in January, or 10% of its workforce, and has slashed pandemic-era benefits such as wellness retreats and specialty baristas at its San Francisco headquarters.
“It’s an unfortunate part that you have to say goodbye to people who, in many cases, are your friends and have relationships with,” Benioff told the Journal. “But ultimately, the success of the business must be paramount.”
Salesforce CEO Marc Benioff has said he has canceled dramatic plans to cut the bottom 5% of the company’s workforce every year, even as he pushes other cost-cutting measures.
Salesforce cut ties with Trailblazer Ranch, a 75-acre wellness retreat where employees enjoyed hiking and yoga along with training activities.
At an executive retreat last month, Benioff proposed a new ranking system to rate all employees based on metrics including their impact on revenue, with the intention of weeding out the bottom 5% each year.
However, he dismissed the classification plan, telling the Journal that workers “made a very passionate case that that’s 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 saw tremendous growth during the pandemic, has now scaled back 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 salespeople an additional “wellness day” of paid time off each year, a benefit that ended in January.
Salesforce has also laid off some specialty baristas from its San Francisco headquarters, some of whom are seen working there shortly after the 68-story tower opened in 2018.
At Salesforce Tower, the company’s headquarters, some of the specialty coffee baristas have been laid off.
The company also severed ties with Trailblazer Ranch, a 75-acre wellness retreat where employees enjoyed hiking and yoga along with training activities.
The Journal also revealed that Salesforce is paying actor Matthew McConaughey $10 million a year to serve as a “creative consultant” despite recent cuts.
McConaughey is receiving cash and principal compensation.
Salesforce paid McConaughey $5 million to star in a Super Bowl ad last year, which 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-person payroll.
McConaughey’s compensation was so significant that it required a green light from Salesforce’s compensation committee.
Salesforce has begun removing benefits at its world headquarters in San Francisco: the 61-story Salesforce Tower.
Benioff was once known to refer to the staff as ‘ohana’ or family. “Layoffs are always difficult,” he told the WSJ.
“You can still keep a business going with excess employees, but it’s not healthy for the business,” he added.
“If you don’t have a culture of performance and you don’t run the company with that kind of efficiency, 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 measured approach to their purchasing decisions.”
Salesforce aggressively hired during the first two years of the pandemic as companies bought products to move to remote work. The company also acquired the popular work messaging app Slack at the time.
In recent months, several activist investors, including Elliott Management and Starboard Value, have raised concerns about slowing growth at Salesforce and have been pushing for changes.
On Wednesday, Salesforce surprised investors by forecasting first-quarter revenue above analyst estimates and doubled its share buyback to $20 billion.
The upbeat outlook and fourth-quarter results that beat analyst estimates lifted shares of the cloud-based software provider 13.8% for the week ending Friday.
They also got a boost from Benioff’s statement that the company would integrate AI throughout its cloud, as well as Slack, the Tableau data analytics platform, and the MuleSoft platform.
“I think this (fourth) quarter gives Salesforce some time with the activists,” said RBC analyst Rishi Jaluria.