As anticipated ever since its IPO attempt melted down, WeWork has begun laying off a significant portion of its workforce: roughly 2,400 workers out of 12,500 total.
That’s roughly 20 percent of the beleaguered company’s workforce, and that’s potentially not the end of it: according to The New York Times, another 1,000 “building maintenance employees” will end up transferred to a third-party contractor, while 1,000 employees from “noncore businesses” will also eventually depart.
One anonymous source told the Times that “as many as 5,000 to 6,000 employees” could ultimately leave. WeWork’s executive chairman, Marcelo Claure, suggested in an email to employees that these layoffs would make the firm “stronger and better able to generate even more opportunities over the coming months and years.”
Whether or not “stronger” is even possible—it may take a truckload of business geniuses to untangle WeWork’s massive financial losses and hairball of a management structure—the company’s employees aren’t leaving without voicing their grievances. In an open letter, a group that dubbed themselves the “WeWorkers” asked for fair severance and a continuation of healthcare, among other points. You can read the entire document over at Gizmodo, but here’s a key excerpt:
“In the immediate term, we want those being laid off to be provided fair and reasonable separation terms commensurate with their contributions, including severance pay, continuation of company-paid health insurance and compensation for lost equity. We are not the Adam Neumanns of this world — we are a diverse work force with rents to pay, households to support and children to raise. Neumann departed with a $1.7 billion severance package including a yearly $46 million “consulting fee” (higher than the total compensation of all but nine public C.E.O.s in the United States in 2018). We are not asking for this level of graft. We are asking to be treated with humanity and dignity so we can continue living life while searching to make a living elsewhere. In consideration of recent news, we will also need clarity around the contracts our cleaning staff will be required to sign in order to keep their jobs, which are being outsourced to a third party. Those of us who have visas through WeWork need assistance and adequate time to find a new employer to sponsor our respective visas.”
Just for comparison’s sake, if you took Neumann’s $1.7 billion severance and divided it among 5,000 laid-off employees, they’d each get $340,000. It seems unlikely that their actual severance—if they all get severance—will come anywhere close to that number.
It’s also questionable whether WeWork will try for another IPO. “We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong,” new WeWork co-CEOs Artie Minson and Sebastian Gunningham wrote in an October statement. “We are as committed as ever to serving our members, enterprise customers, landlord partners, employees and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
That being said, SoftBank, WeWork’s primary investor, would like to make its money back at some point, and eventually going public is probably the most straightforward way to do so. But after everything WeWork has gone through, will prime talent want to jump aboard for any attempt at resurrection?