WeWork prepares to lay off at least 4,000 employees as it seeks to stabilize after the company's rapid growth has caused high losses and brought to the brink of collapse, two individuals with knowledge of the Thing said.
The cuts are expected to be announced later this week and will be held throughout WeWork's worldwide operations. According to the plan, the company's core business of subletting office space would lay off 2,000 to 2,500 employees, one respondent said. Another 1,000 employees will leave the company when WeWork sells or closes noncore companies (19459004), such as a private school in Manhattan founded by WeWork (1
However, one respondent said the company could lay off 5,000 to 6,000 employees.
The downsizing will be included in a five-year WeWork overhaul plan that could be submitted to employees on Tuesday, people said, who talked about the redundancy plans on condition of anonymity.
The layoffs represent the human cost of a remarkable reversal of WeWork's fortune. Under his co-founder and former CEO Adam Neumann, the company put billions of dollars into an unpredictable expansion, adding huge office space in the world's most expensive cities, the Offering discounts to tenants and buying other houses included companies. WeWork, which leases office space from landlords, refurbishes and leases them to its customers. IPO plans were dropped at the end of September after investors were deterred by the company's losses and had questions about corporate governance.
SoftBank, the Japanese conglomerate, which is WeWorks largest outside shareholder, announced a plan to rescue the company last month and is now trying to stabilize the business. However, it is not clear to what extent the plan, which is based on the sale of billions of dollars of new WeWork bonds to investors, has progressed. The company's existing bond prices have fallen in recent days, a sign that investors are worried about the outlook.
WeWork announced last week that it lost $ 1.25 billion in the three months ended in September, more than twice as much as the previous year, and had lost a year earlier over the same period. A company presentation to investors revealed that WeWork opened nearly half of its locations in the twelve months ended in September. Many of these locations are losing money and are likely to run low on WeWork's cash, which stood at $ 2 billion at the end of September.
Mr. Neumann, who after resigning from the management in September agreed to relinquish control over WeWork, receives an exit package worth approximately $ 1 billion. As part of that, he receives a $ 185 million consulting fee for four years and can sell nearly $ 1 billion of his shares to SoftBank. The gentle landing for Mr. Neumann deepened the anger among the employees as the layoffs threatened.
During the recent turmoil in the company, employees formed one group, the WeWorkers Coalition, which, among other things, insists on severance packages for outgoing workers, which it considers to be fair. As of December 9, cleaning and equipping jobs at WeWork will be outsourced to JLL, a real estate services company or one of its partners, according to an e-mail sent to affected employees last week, which was reviewed by the New York Times. WeWork has assured employees that each member of the cleaning and facility team retains their jobs and receives the same compensation and benefits. But employees who choose not to change lose their jobs and receive no severance pay. This is evident from a document made available to employees who have been tested by The Times.
The changes have upset many employees, according to interviews with workers and slack messages reviewed by The Times fears that some employees will eventually lose benefits or be forced to follow different schedules.
In the Slack News, an employee of the WeWork facility said that listening to the outsourcing was similar to reporting a family death. Another employee said that the decision shows that management does not care about the well-being of employees and makes decisions based on what would save the company the most money.
David Yaffe-Bellany contributed to the coverage.