As Salesforce continues reducing its workforce by 10% (possibly more – more on that later), some employees are being wedged between a rock and a hard place. According to Business Insider, salespeople are being forced to choose between a PEP – Prompt Exit Package – or a PIP – Performance Improvement Plan. If neither of those sound appetizing, it’s because they’re not. PIPs are common parlance in the tech industry – it’s usually a step taken before terminating someone. A PEP, on the other hand, amounts to voluntarily quitting, but with three months less severance than if you had been simply laid off, according to an email viewed by Business Insider.
So far, more than 4,000 people have been laid off from Salesforce, according to Insider, but the company has not confirmed that it’s finished with layoffs, so remaining employees are anxiously awaiting news of whether or not their job is safe.
While the economy is partly to blame, activist investors, who have been attaching themselves to Salesforce left and right, usually push for cost-cutting measures, focusing on profitable activities over pursuing growth no matter the cost. That was certainly the case with Starboard, an activist investor that approached Salesforce last summer. In November, Salesforce cut a few hundred salespeople for “accountability” reasons, according to Insider.
Attention from these activist investors is compounding the anxiety faced by current staff, as they are worried even more layoffs could be on the horizon. Salesforce insiders have said that the company is already contemplating this scenario, possibly laying off as much as an additional 10% of the workforce later this year.
Productivity (or supposed lack thereof) is clearly top of mind for Salesforce executives at the moment: "We don't have the same level of performance and productivity that we had in 2020 before the pandemic. We do not," said CEO Marc Benioff during an all-hands meeting in January. Employees who spoke to Insider are worried that all the recent focus on productivity will leave more people with the hard choice of taking a PEP or a PIP.
Laid-off workers will be offered a minimum severance of five month's pay and possibly more depending on tenure and other benefits, while those taking a PEP only receive eight weeks of severance and company-sponsored healthcare benefits.
According to an internal email viewed by Insider, once offered a PEP, employees have two business days to accept – otherwise, they have to start the 30-day PIP plan within 3 days of declining the PEP offer. In some cases, these PEP offers are happening concurrently with mass layoffs.
"It's a shady optics play," one Salesforce employee who was given this choice told Insider last month. "From an outside perspective, it looks like these people quit." This feeling of being driven out isn’t helped by the fact that many salespeople at the company felt set up to fail when they were asked to hit unachievable quotas based on previous performances artificially inflated by a pandemic boom in cloud software. "The markets we all work in are only so big," a recently laid-off Salesforce sales executive told Insider.
Though the PIP vs. PEP choice seems mad from the outside, apparently there’s a method to it. According to a former Salesforce executive who spoke to Insider, the acceleration of the company's PIP system, which began in the fall, was in response to a common complaint among Salesforce managers: that the system made it too difficult to fire underperforming workers, even legitimately “terrible” ones. "This is a classic enterprise performance improvement plan, but faster," this person told Insider, speaking of the new PIP system. However, sales employees told Insider that this system is in fact backfiring by pushing out strong performers along with the “terrible” ones.