On Monday, WeWork CEO Marcelo Claure confirmed that layoffs are pending in an email to staff received by CNN Business. In the email, Claure said all hands scheduled for Tuesday would be moved to Friday "out of respect for the people who will be separated this week."
The specter of sweeping redundancies has hung over the company for much of the almost two months since it failed to pull off a stock exchange listing. Staff have repeatedly been told that cuts will come to the embattled coworking start, but details have been scarce.
The saga that is being developed highlights the risk of working for a high-flying technical start. While some employees once saw their paper wealth increase as WeWork's valuation rose as high as $ 47 billion in the private market, WeWork's valuation has since dropped to a fraction of that. WeWork reportedly delayed layoffs of staff because it could not afford to pay severance pay before accepting a massive rescue from SoftBank ( SFTBF ) .
In the email, Claure did not specify how many people to be laid off, only that "the necessary eliminations of jobs" will "begin in earnest this week in the United States." Several reports in recent weeks have said that WeWork could cut 4,000 jobs, if not more, with The New York Times reporting that many of these positions are part of its core business.
WeWork refused to comment on this story.
Given the scale of the business ̵
1; which was branched out into cohabiting buildings, a gym and a school – the affected could include a wide mix of professionals, such as engineers, architects, interior designers and cleaning staff. About 1,000 cleaners and building maintenance workers have already been told that their jobs will be outsourced, according to a new grassroots coalition of WeWork employees advocating for them.
Leading up to layoffs, leadership has been trying to alleviate concerns about the cuts by promising to prioritize treating those dismissed with "dignity and respect," Claure said in a separate company-wide email more than a week ago, which was also obtained by CNN Business. He emphasized that WeWork & # 39; s business is safe.
Claure will present an updated five-year plan for the company's board of directors on Tuesday, according to this separate email. The company plans to share the same document with staff, which will include financial restructuring, on Friday.
The company has previously stated that it will focus on its future core business, and wants to sell many of the new start-ups that they acquired over the years, as well as discontinue their own business operations including the school. Meetup, one of the newly started companies that WeWork acquired, began cutting employees earlier this month, according to several reports.
According to two sources, there are recurring calendar invitations involving human resources and lawyers using the word "Huxley", which is considered a code name for the terminations. The meetings began on October 28.
WeWork has framed its decision to cut jobs as an attempt to "increase the size" of its business and create a path forward almost after crumbling. At the end of October, SoftBank took majority ownership of WeWork as part of an agreement to pump $ 5 billion into the company following its disastrous IPO attempt. The new package valued WeWork at $ 8 billion.
But the upcoming layoffs have become a flash problem due to Neumann's golden parachute included in the SoftBank bailout. Despite numerous criticisms of increasing losses and poor corporate governance under his watch, Neumann was given the opportunity to sell up to $ 970 million in stock back to SoftBank, a $ 500 million loan to repay a credit limit and a $ 185 million fee to consult Softbank . Claure has said that the payment was necessary to take control of Neumann's operations.
A former WeWork leader previously told CNN Business that it was "disgusting" that Neumann could take so much money off the table while the fate of workers hangs in the balance. Neumann preached the importance of "community", a word that appeared 150 times in the company's IPO paperwork.
There is also clear frustration over the terms of severance pay – or lack thereof – for some employees. A newly formed group, called the WeWorkers Coalition, advocates on behalf of cleaners and building maintenance personnel in the US and Canada who were told that their work would be outsourced starting December 9, according to tweets from the coalition .
Cleaners and maintenance staff have been given less than pleasant conditions, the group said on Twitter. Last week, many of these workers received offers to work at real estate service company JLL, one of the outsourcing partners, which they must sign by Monday or they will involuntarily be terminated from their job at WeWork without resignation, the group said.
Employees will lose their 401,000 employer contributions because they will be terminated before the end of the year, including concerns, the group said. Those who choose not to accept the offer should be given severance pay as other dismissed workers according to the group.
"WeWorkers Coalition believes that the company does not live up to its promise to treat employees with" dignity and respect "during this restructuring process. Our hard-working colleagues deserve better than this," the group said in a tweet.