Salesforce yields to activist pressure with harsh new policies for engineers, salespeople

As activist investors maintain their pressure on Salesforce, the business is exploring more means through which it might reduce its expenses. According to a report that was published by Insider today, the firm is reportedly instituting significantly more stringent performance standards for engineering, and certain salesmen are also being put under pressure to quit or submit to stringent performance policies of their own.

According to the information that has been provided to TechCrunch by our sources, this is accurate.

This could include performance assessments for engineers that are dependent on the quantity of code that they create. This is a faulty method of measuring engineering productivity because it emphasises quantity over quality. While salespeople are being put in a difficult position by being made to choose between accepting a leave payment or signing a stringent one-month performance improvement plan, they are being put between a rock and a hard place.

Salesforce provided the following reply in response to a question on this matter: “Our performance management process encourages accountability and rewards excellence.” Regarding the timing of this policy’s implementation and the specifics of its implementation, the corporation did not provide any additional information or answer any follow-up queries.

TechCrunch has also received information indicating that the company is requiring employees to report back to the office. A spokeswoman for Salesforce has stated that the decision is now in the hands of the managers. “Our hybrid approach gives leaders the ability to decide for their teams which jobs are best suited for remote workers and which should be performed in the office.”

This is an unusual mental adjustment for a corporation that has been pushing the concept of the “all digital, work-from-anywhere workplace” ever since the epidemic hit in the year 2020. The company refers to this concept as the “Digital HQ.” It was a significant factor in the leading CRM company’s decision to spend roughly $28 billion to acquire Slack in 2020.

However, this should not come as a surprise because CEO and chair Marc Benioff almost foreshadowed this development around the end of the previous year, when he suggested that people working from home were less productive.

There is a strong possibility that all of this is connected to the fact that activist investors, such as Elliott Management, Starboard Value, ValueAct, and Inclusive Capital, have been circling the company. These investors have unquestionably been putting a great deal of pressure on Benioff to boost productivity and reduce costs. These companies are a significant contributor to the decision made by Salesforce in January to announce that it would be laying off 10% of its workforce. The process of laying off workers has been poorly managed by Salesforce, with layoff notices coming in dribs and drabs, leaving employees anxious and uncertain.

Ray Wang, founder and principal analyst at Constellation Research, places the blame on Boston Consulting Group, which he claims was brought in at the behest of the activists to deal with the cuts and implement new performance review policies. Wang says that Boston Consulting Group was brought in to deal with the cuts and implement new performance review policies. In an interview with TechCrunch, Wang stated, “From what we know, BCG provided some substantial recommendations on how salespeople and developers should be assessed in order to boost productivity.”

According to Wang, the way you look at things will determine whether or not you believe that this strategy is a smart idea. He remarked, “If I were an investor, I would argue for this method, but if I were the owner-founder, I would want something less severe and more nuanced.” “If I were an investor, I would advocate for this strategy.”

The activists have been referred to as “vulture firms” by Wang, who does not approve of way this situation has been handled. Although he agrees with their claim that Salesforce overpaid for poor acquisitions, he feels that these businesses lack an understanding of how to run a company like Salesforce, and that as a result, they are ultimately causing more harm than good for the company.

According to Wang, “the vulture firms do not have a solid knowledge of the investment levels in R&D that are needed for innovation to continue.” Furthermore, “they did not comprehend what level of marketing spend Salesforce requires to remain top of mind for execs.”

They do not contribute anything of worth. “They just come in to make money on the arbitrage, and then they leave the companies in a worse state than they were in before they took them over,” he said.