Why Tesla is promoting executives from within; Elon Musk faces challenge as management talent leaves

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SAN FRANCISCO — Tesla Inc. and its demanding leader Elon Musk are notorious for churning through top managers with impressive résumés.

Executives who’ve left this year had joined the electric-car maker in an age when it lured talent away from the likes of Apple Inc. and BMW AG.

But lately, former splashy outside hires have largely been replaced by moving existing personnel higher up the org chart. The trend continued last week, when J.B. Straubel, a Tesla co-founder and the chief technology officer since 2005, handed the baton to Drew Baglino, a vice president who climbed the engineering ranks for 13 years.

Tesla’s pivot to promoting from within could be a natural progression for a 16-year-old company that’s prioritized talent development as it’s matured. It’s also possible Musk, 48, is having a harder time hiring than he used to after building a reputation for being a challenging boss and stoking chaos.

“It’s tough to get big names to work at Tesla because it’s such an intense environment,” said Gene Munster, managing partner at venture capital firm Loup Ventures, who sees talent acquisition and retention as one of the company’s greatest risks. “Tesla’s view is that if you’re not up for this environment, we don’t want you. Tesla’s culture is put-out or get-out, and the people who are there are true believers who are willing to put in the time.”

Moves out, then up

Before Straubel’s exit and Baglino’s promotion, other departing executives who’ve been replaced by a promotion from within this year include Deepak Ahuja, Tesla’s CFO, and Dane Butswinkas, the general counsel.

Ahuja, who aside from a 14-month gap had worked for Musk since 2008, joined Tesla from Ford Motor Co. He was succeeded by Zach Kirkhorn, who joined Tesla in his mid-20s and at 34 became one of the youngest CFOs in corporate America.

Butswinkas worked at Tesla for all of two months before leaving. The company promoted Jonathan Chang, who’s been with the carmaker since 2011, to be the new general counsel.

In March, Tesla appointed Vaibhav Taneja, its corporate controller since May 2018, to be chief accounting officer. His predecessor, Dave Morton, had been hired away from Seagate Technology Plc, but resigned after less than a month, citing the level of public attention on Tesla.

Promoting from within comes with several benefits, said Joe Riggione, the co-CEO of recruiter True Search.

“You know they’re a fit culturally, you have a record of success and you eliminate the risk of disenfranchising someone who’s really good and might leave otherwise,” Riggione said. Executive searches can last several months and don’t always pan out, and delays can have costly ripple effects inside a company, he said.

Mystery jobs

Tesla also hasn’t announced replacements for a number of other executives who’ve departed this year.

Steve MacManus, the vice president of engineering who played a key role in navigating Tesla out of what Musk called “seat hell,” parted ways to join Apple this month as a senior director. His résumé includes stints at Aston Martin, Bentley Motors and Jaguar Land Rover.

Jan Oehmicke, vice president of Europe, also has left Tesla, according to a report by German business magazine WirtschaftsWoche. He joined a year ago from BMW.

And Peter Hochholdinger, vice president of production, left for electric-vehicle upstart Lucid Motors, which announced his hiring this month. He had spent two decades at Audi before joining Tesla in May 2016.

Tesla didn’t respond to a request for comment for this story.

HR turmoil

One explanation for Tesla’s dearth of major outside hires lately is that Musk has tried to cut costs, including by slashing headcount. He announced reductions of about 9 percent in June 2018 and 7 percent in January.

In February, Tesla’s global recruiting staff was told in an internal memo that all hiring requests would need Musk’s approval, Business Insider reported. The following month, Tesla laid off half the recruiting team, according to the blog Electrek, which cited people familiar with the matter.

All the while, Tesla’s human resources division has been in flux. Gabrielle Toledano, the former head of the team, went on leave last summer and left for good in September. Cindy Nicola, vice president of global recruiting, exited in February and doesn’t appear to have been replaced. Both had worked for Electronic Arts Inc., and Nicola previously led recruiting for Apple.

Toledano’s replacement, Kevin Kassekert, demonstrates Musk’s tendency to pile more responsibilities onto the plates of high-performing executives. When promoting him in September, Musk praised the “insanely badass” job Kassekert did leading construction of Tesla’s Nevada battery factory. He’s now vice president of people and places, with responsibility for HR, facilities, construction and infrastructure development.

President on preference

In the wake of the week that Tesla lost Toledano and Morton, the chief accounting officer, Musk announced a series of internal promotions, including the elevation of Jerome Guillen to president of automotive.

Earlier this month, Guillen told manufacturing employees in an internal memo the company is committed to career development.

“It is our strong preference to promote from within!” he wrote, adding that 2,451 associates and technicians had been promoted this year.

Guillen was echoing a message his boss delivered months before. Musk, who’s been CEO since 2008, said at the January groundbreaking for Tesla’s factory near Shaghai that a successor may already be in his midst.

“Somebody who joins today as a junior engineer in Tesla could one day be CEO of Tesla worldwide,” he said. “They could have my job one day.”

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