No-One to Vouch for you? You're Out! Tesla gets Tough with Contractors

Tesla’s Elon Musk has stirred controversy over the last month by announcing that all contractors must be vouched for by a permanent member of staff, or see their contracts terminated the following Monday.

A general focus on efficiency at the company has led to specific concerns regarding the use of contractors and sub-contractors – Musk refers to the problem as a “Russian nesting doll of contractor, subcontractor, sub-subcontractor etc before you finally find someone doing actual work”. This is not an uncommon issue for large firms, particularly hi-tech and high-end engineering companies, but is Musk’s hard-line approach a little too harsh?

An email sent earlier this month by Musk to all employees read thus:

 

Elon Musk Tesla Contractors email

 

It is not difficult to understand Musk’s motives – no company wants to have layer upon layer of sub-contractors, muddying the lines of report and making it difficult to track efficiency and productivity. It’s also entirely understandable to want to ensure that you have only the very best contractors working for his business – no-one wants to have underperforming workers hiding behind 2 or 3 other people.

However, asking current staff members to “put their reputation on the line” for contractors seems to be a very harsh way of assessing the situation, and could cause damage to Tesla’s reputation as an employer amongst the contingent workforce, a growing concern.

It is my opinion that this controversial move is a sort of knee-jerk reaction to a bigger problem – that Tesla are not managing their contingent workforce correctly or efficiently for their purposes – and that this could have negative ramifications moving forward, especially if they need to hire further contingent or contract workers in the future.

If the company finds itself with multiple layers of sub-contractors and a lot of time and material contractors, where the intention is to have fixed-fee, deliverable work, it would imply that Tesla does not have control of their contingent workforce, and it is not being effectively managed and monitored.

Implementing a proper Contingent Workforce Management Program could help prevent problems like this in the future, providing clear oversight and ensuring the proper classification of all workers and work, as well as maintaining the suitable split of the workforce between time & material, and Statement of Work contracts.

 

If you'd like to learn more about how to implement such a program within your organisation, please feel free to give me a call for a chat on +44 1737 236 816 or send me an email at will.dennis@voltconsultinggroup.com

 

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