Evaluate Your Data Notes on Tesla Assignment

ASSIGNMENT 2

Assignment 2: ‘Evaluate Your Data’ Notes

Introduction

Tesla is considered by many to be one of the most innovative companies today. The company is headed by Elon Musk – its CEO – and is presently headquartered in Palo Alto, CA. It operates in the automotive industry. In essence, Tesla happens to be one of the pioneers in electric vehicle manufacture. Its key competitors at present are inclusive of, but they are not limited to, Nikola Corp., Ford Motors Co., General Motors Co. and Li Auto Inc. Primarily, this write-up seeks to assess and evaluate one of the key business challenges that the company faces at present. In this case, I will be assuming the role of HR Partner.

Step 1: The Business Challenge

1a.

Like many businesses, Tesla faces a wide range of business challenges. Three of the most prominent challenges that the company faces will be highlighted below:

i. Competition from established automakers: This happens to be one of the most significant business challenge that Tesla faces at present. It is important to note that although the company had little competition a few years ago when it was just starting out as a small electric vehicle manufacturer, big players in the industry appear to have come to terms with the fact that electric vehicles are the future – especially given the push by environmental conservation groups and scientists to cut back on CO2 emissions. Traditional players in the automotive industry who have raided the electric vehicle market could give Tesla a run for its money given the extensive global networks and industry experience that they have gathered over time.

ii. Attracting top talent: According to Tillemann (2016), it has historically been challenging to find skilled and competent employees in certain high-demand fields. Indeed, in the words of the authors, “in high-demand fields like engineering, software development, and nursing, employers are fighting to find people with the specialized skills and qualifications necessary to perform the job at hand” (Tillemann, 2016, p. 216). This is a challenge that Tesla faces owing to the technical skills required to develop feature-laden electric motor vehicles. It is also important to note that as the company continues exploring opportunities for global expansion, it needs to find and hire a diverse pool of employees. This is especially important in as far as the promotion of cultural competence is concerned.

iii. High employee turnover: This is yet another significant challenge that Tesla grapples with today. In basic terms, employee turnover could be conceptualized as “the loss of talent in the workforce over time” (Sims and Bias, 2019, p. 95). Tesla’s employee turnover rate appears to be significantly higher than that of its peers in this particular industry – especially at the executive level. In one recent assessment of the company’s executive-level employee turnover rate, specifically in relation to executives who report directly to the CEO, it was found that in comparison to a cohort average, Tesla had a rather high turnover of 44% (Assis, 2019). The cohort average turnover was identified as 9% (Assis, 2019).

1b.

In the present scenario, I have been roped in to solve one of the problems highlighted above, i.e. high employee turnover rate. Towards this end, this is the specific problem that I will be addressing.

Step 2: The People Side of the Business Challenge

To a large extent, the problem highlighted is largely supported by top leadership of the company. This is more so the case given that the high employee turnover rate appears to be largely concentrated at the executive level. For instance, Matousek (2019) indicates that various data sources (such as analyst reports, executive profiles, and executive departure reports) indicate that executives who report directly to the company’s CEO are more likely to quit than is the case with executive employees who report to the CEOs of Tesla’s peers. This could be attributed to the leadership and personality of Elon Musk, the company’s CEO. More specifically, in the words of Matousek (2019), “reports from Business Insider and other publications have described Musk as an intelligent but demanding and temperamental boss.” Indeed, over the last decade, the company has lost key executives reporting to the CEO. These, according to Matousek (2019), are inclusive of, but they are not limited to; the head of global security, general counsel, and the chief accounting officer. Such a high turnover of key executives could have a negative impact on the company owing to the fact that it operates in a hugely competitive industry.

Step 3: Challenge/Problem Statement

In seeking to develop a succinct problem statement, the 5 Ws were taken into consideration. The 5 Ws framework has been highlighted by Waters, Streets, McFarlane, and Johnson-Murray (2018) in their informative resource on data evaluation. To a large extent, the 5 Ws came in handy in the development of the problem statement.

The 5 Ws

Who: The Company’s Board of Directors – lead by its chairman, Robyn Denholm.

What: High employee turnover.

When: Over the last 10 years

Where: At the executive level

Why: If the issue remains unaddressed, Tesla could gradually lose its ability to compete effectively in the electric vehicle marketplace going forward.

Problem Statement: The Board of Directors, led by its chairman Robyn Denholm is concerned about the high executive employee turnover over the last decade – specifically among employees who report directly to the company’s CEO. Loss of crucial talent affects the company’s ability to compete effectively in the electric vehicle marketplace, owing to loss of well-trained and highly skilled executives – which effectively means that the company’s bottom line could be negatively affected if the problem remains unresolved.

Step 4: Identification of the Relevant Data

Data Source

Relevant Data/Metric

Evaluation

Overall turnover rate [at the executive level]

· Number of executives (reporting to the CEO) who left

· Average number executives who report to the CEO [derived by adding the number of executives at the beginning of the 10-year-period with the number of executives at the end of the ten year period – divided by 2]

Pros

· The relevant data is easy to obtain

· Would help us determine the effectiveness with which Tesla is holding onto its top executives

Cons

· Does not capture company-wide employee turnover rate

· Would not mean much when used in isolation [meaning there would be need to establish what the turnover rate at other similar companies is]

Automotive industry average employee turnover rate [at the executive level]

· Turnover rates [at the executive level] of the 5 main competitors of Tesla – the sum of which will be divided by 5.

Pros

· The data will be crucial for comparison purposes – i.e. in seeking to establish how bad the situation is at Tesla

Cons

· Data may not be easy to obtain owing to the fact that in addition to the need to cover a specified period of time, the focus is on a specific organizational level (i.e. executive level).

Cost of turnover data [at the executive level]

· Costs associated with hiring a replacement

· Training and onboarding costs [for new executives to replace the departed executives]

Pros

· Provides the needed evidence to justify immediate interventions

Cons

· Might not necessarily capture difficult-to-compute or non-quantifiable factors such as the cost of decreased employee morale following exit of certain executives.

Step 5: Putting the Data in Context

It is important to note that in as far as internal benchmarking is concerned, I will be comparing the internal turnover at the executive level [i.e. amongst executives who report to the CEO] with the overall organizational employee turnover ratio. This will give me a good perspective of the extent of the problem at this particular level – i.e. in relation to whether high employee turnover could be an organization-wide problem or is largely limited to the highlighted executive level.

Next, when it comes to external benchmarking, I will be comparing the turnover rate of Tesla with the industry average within the 10 year period under consideration. This will help establish the extent of the problem at Tesla or paint a picture of how bad this particular problem really is.