3 takeaways from Salesforce’s battle to balance workplace wellness and high performance

At the beginning of 2023, Salesforce executives announced they would be cutting as much as 10% of their workforce over the coming weeks and months. That’s about 8,000 employees around the world, mainly from the company’s sales and support departments.

These reductions are largely an effort to cut costs. Elliott Management and Starboard Value, two activist investors with stakes in the company, are pushing for greater efficiency, wider margins and more productivity. As a result, Salesforce has announced plans to cut up to $5 billion in costs by reducing staff, closing offices, and canceling the once-monthly free Friday that Salesforce employees had come to love. Salesforce’s subsidiary, Slack, also recently announced layoffs affecting its engineering teams and other employees. 

Company-wide changes like these have revealed Salesforce’s multiyear struggle to balance workplace wellness with high performance and organizational efficiency. While employees want greater flexibility, better working conditions and clearer communications about the company’s long-term plans, Salesforce is tightening benefits, pushing for performance and laying off thousands of new and tenured workers. And so far, it doesn’t look like Salesforce is winning. 

Here are three valuable lessons we can learn from Salesforce’s management of layoffs — and workplace culture.

1. Employee wellness and performance aren’t at odds — they go hand in hand

In several communications, Salesforce has made it clear they don’t see productivity and wellness as linked — and disregard the benefits of increased schedule flexibility. In their annual strategy planning document, the company wrote that during the pandemic, wellness culture eroded their high-performance culture, and as a result, managers may be hesitant to bring up performance issues. 

This comment, and ones like it, earned a negative reaction from Salesforce workers who argued wellness culture is performance culture. And the research agrees. 

According to Future Forum’s Pulse survey, which surveys 10,000 office workers around the world, flexible work improves productivity, trust and employee turnover. In their latest report, published in Q1 2023, employees with full flexibility with their schedule reported 39% higher productivity scores than employees with a rigid schedule. And location flexibility translated to an 8% bump in productivity, compared to workers required to work from the office full-time. 

A full 53% of workers who wish for greater flexibility at work also report feelings of burnout, while just 37% of workers with a flexible schedule report burnout. A lack of flexibility can hurt your company’s ability to find and hire great talent, keep your most valuable talent, and get strong performance from the talent you do have. 

2. Layoffs, when not orchestrated carefully, can erode even the best workplace culture

At Salesforce, January’s layoff announcement and vague communications about the future of the company created an uncertain and uncomfortable environment that left thousands of workers on edge. 

On a psychological level, the looming prospect of layoffs and major corporate restructuring significantly impact the health, culture and performance of a workforce. In one study by Google, low rates of psychological safety (the belief that you’re secure and freely able to express your opinions without facing retaliation) destroy creativity, ideation and performance. Teams with high levels of psychological safety implemented more diverse ideas, performed better and stayed at the company longer. 

Another study reported that feeling uncertain about the future of your job actually triggers stronger anxiety and has a more significant health impact than losing the job. Salesforce has allowed vague communications to stir anxiety, trigger workplace gossip and damage performance. But just a bit of clear communication and vision-casting could have a significant positive impact on their workforce. 

3. Maintaining open communication is difficult but necessary

Salesforce operates a Slack group where over 80,000 employees around the world can connect, communicate and collaborate. Channels like #airing-of-grievances give Salesforce team members a space to share their frustrations and get real-time feedback on what’s impacting them. And while it’s not easy for leaders to read the honest feedback shared in channels like this, especially in layoff season, this push for open communication is a long-term benefit for the company. 

Especially in seasons of volatility, keeping communication channels open — for both employees and leadership — is essential. But it isn’t enough to simply create a conversation space. Employees must feel that their opinions are heard and make a difference. 

In fact, a Gallup study revealed that, on average, only 30% of employees strongly agree that their workplace opinions count. But in companies where 60% of workers feel their opinions are taken into consideration, turnover dropped by 27%, safety incidents decreased by 40% and productivity jumped 12%! 

That’s a dramatic impact, just for creating a space that encourages two-way communication.

Key takeaway

Layoffs and restructuring are never easy tasks to manage. Even the best communication plans can leave some employees feeling uncertain, anxious or overlooked. 

But the lessons we can learn by watching Salesforce reduce and restructure their workforce apply to businesses in every industry. Prioritizing employee wellness does improve performance. Clear, helpful communication should follow every layoff and give surviving employees as much psychological safety as possible. And open communication that gives employees a space to share and be heard has a major impact on overall satisfaction. 

Want more? Escalon has helped over 5,000 companies across a range of industries to optimize routine business functions, like taxes, accounting, HR and payroll, and operate more efficiently. Talk to an expert today.