Summary: Case Study on Elon Musk’s Twitter Acquisition and HR Practices
Background
Acquisition: In October 2022, Elon Musk acquired Twitter for $44 billion after legal disputes
regarding fake accounts. Twitter was delisted from stock exchanges and made a private
company.
Twitter’s Financial History: Since its founding in 2006, Twitter struggled with profitability. By
2022, the company faced declining revenues and was valued at $10–$12 billion, but Musk
overpaid by approximately $20–$30 billion.
Funding the Deal: Musk financed the acquisition with $13 billion in debt and equity sales,
including $4 billion from Tesla shares.
Key Changes and Controversies
1. Management Overhaul:
o Fired top executives, including the CEO and board members, cutting $3 million in
costs.
o Appointed himself as the sole board member.
2. Mass Layoffs:
o Musk fired 50% of Twitter’s workforce (about 3,750 employees) immediately after
the acquisition.
o Further reductions led to a total workforce shrinkage to one-third of the original size.
3. “Hardcore” Work Culture:
o Introduced “Twitter 2.0,” requiring long hours and a high-performance culture.
o Employees unwilling to comply were offered severance pay.
4. Operational Decisions:
o Brought Tesla engineers to lead Twitter’s technical operations.
o Fired teams focused on algorithm bias, accessibility, ethical AI, and customer service.
o Eliminated teams responsible for fixing bugs and maintaining core systems, risking
platform stability.
5. Content Moderation:
o Reduced content moderation standards, leading to increased hate speech and
advertiser loss.
o Critics claimed the decision harmed Twitter’s reputation and brand value.
Impacts and Challenges
Employee Morale: Layoffs were perceived as chaotic and poorly managed, eroding trust and
morale.
Knowledge Loss: Departures of experienced staff created technical and operational risks.
Advertiser Exodus: Over 62% of top advertisers left by February 2023 due to concerns about
the platform’s direction.
Brand Reputation: Musk’s actions raised questions about Twitter’s employer branding and its
ability to attract talent.
Financial Pressures: Twitter faced challenges in repaying its $13 billion debt amidst declining
ad revenues and user engagement.
Industry-Wide Downsizing in Technology
1. Google:
o Fired 12,000 employees.
o Severance included 16 weeks' salary, two additional weeks per year worked, and six
months of healthcare.
2. Microsoft:
o Laid off 10,000 employees.
o Provided 60-day salary continuation, above-industry-average severance, six months'
health insurance, and job placement services.
3. Salesforce:
o Let go of 5,000 employees.
o Offered five months' salary and extended health benefits.
4. Meta:
o Cut 11,000 jobs.
o Provided 16 weeks of pay, six months of health insurance, and immigration support
for employees on work visas.
Employer Brand Reputation of Twitter
Employees criticized the sudden, large-scale layoffs and chaotic communication.
Negative reactions led to concerns about Musk’s leadership:
o Many professionals in HR felt demotivated to work for or recommend Twitter as a
potential employer.
o A survey showed 73% of HR professionals wouldn’t work for Twitter.
o Only 15% saw a potential bright future with the company.
Comparative Management of Layoffs
Nokia’s Bridge Program (2011):
o Supported laid-off employees with internal and external job placements.
o Assisted with career coaching, resume workshops, and entrepreneurship grants (up
to $26,000).
o Resulted in high employee engagement and $3.55 billion from new product
revenues.
Honeywell International:
o Avoided layoffs through unpaid or partially paid furloughs.
o Preserved 20,000 jobs during economic downturns.
Summary of Twitter’s Work Culture Transition Under Elon Musk
Work Culture Before Musk's Acquisition:
Positive Work Environment: Twitter employees ranked work-life balance highly (4.4/5.0
stars). Managers emphasized employee well-being and community.
Flexible Arrangements: Remote work and “rest days” were implemented during the COVID-
19 pandemic, with promises of continued flexibility.
Collaborative Decision-Making: Focused on achieving consensus, fostering inclusivity and
slower decision-making.
Post-Acquisition Changes:
Hardcore Culture: Musk imposed a 24/7 work model with intense deadlines, reminiscent of
practices at Tesla and SpaceX.
End of Remote Work: Musk mandated in-office attendance, reversing Twitter’s remote work
policy.
Ultimatum to Employees: Workers were asked to commit to the “hardcore” culture or
resign. Over 50% opted to leave, shrinking the workforce by 73%.
Focus on Performance: Strict measures emphasized exceptional output, with no increase in
pay to compensate for extended work hours.
Legal and Ethical Challenges:
Violation of WARN Act: Mass layoffs without proper notice led to lawsuits.
Discrimination Risks: High-pressure culture alienated employees with disabilities or special
needs, raising potential legal claims.
Employee Severance Issues: Promised severance pay was not formalized, creating further
dissatisfaction and legal complications.
Comparison with Other Companies:
Other Silicon Valley firms, including Meta and Amazon, also laid off workers in 2022 but
followed organized processes.
Companies like Netflix balanced demanding cultures with competitive pay and high
employee satisfaction.
Global Perspective:
Work cultures in countries like Japan and India historically suffer from poor work-life balance,
with long hours normalized.
Impact of Musk’s Leadership:
Internal Unrest: Many employees stayed out of job insecurity rather than commitment to
Musk's vision.
Loss of Expertise: Rapid layoffs risked losing critical institutional knowledge.
Advertiser Concerns: Uncertainty and turmoil under Musk's leadership impacted revenue.
Conclusion
While tech companies adopted empathetic HR approaches, Twitter's abrupt and drastic
actions damaged its employer brand.
Lessons from Nokia and Honeywell highlight the value of strategic and supportive HR
practices during crises.
Musk’s drastic measures aimed to transform Twitter into a profitable and efficient
organization. However, the approach caused widespread criticism for being reckless and
unsustainable, leaving questions about Twitter’s future viability and Musk’s leadership style.
