WeWork is preparing to cut at least 4,000 people from its workforce as it tries to stabilize after the company's staggering growth has caused huge losses and it took on the verge of collapse, two people with knowledge of the matter said.
The cuts are expected to be announced later this week and will occur throughout WeWork's extensive global operation. Under the plan, the company's core business of leasing office space will lay off 2,000 to 2,500 employees, one person said. 1,000 more employees will leave when WeWork sell or close unimportant businesses, like a private school in Manhattan that WeWork created. In addition, approximately 1,000 building maintenance personnel will be transferred to an outside contractor. Together, these employees would account for about a third of the 12,500 people WeWork employed at the end of June.
But one person said the company could lay off 5,000 to 6,000 employees.
Staff reductions will be included in a five-year plan to revise WeWork, which could be presented to employees later Tuesday, said people, who spoke on condition of anonymity to discuss layoff plans.
The layoffs represent the human cost of a remarkable reversal in WeWork's fortunes. Under its co-founder and former CEO, Adam Neumann, the company racked up billions of dollars in an erratic expansion that included the addition of large offices in the world's most expensive cities, offering discounts to attract tenants and buy other businesses. WeWork, which leases owners' office space, refurbishes it and rents it out to its customers, filed plans for an initial public offering in late September after investors were delayed by the company's losses and had doubts about its corporate governance.
SoftBank, the Japanese conglomerate that is WeWork's largest external shareholder, announced last month a plan to bail out the company and is now trying to stabilize the business. But it is unclear how far the plan, which is based on selling billions of dollars in new WeWork securities to investors, has progressed. Prices of the company's existing bonds have fallen in recent days, a sign investors are concerned about its prospects.
Last week, WeWork reported losing $ 1.25 billion in the three months to September, more than double the company's in the same period last year. A corporate presentation provided to investors revealed that WeWork opened almost half of its locations in the 12 months ending September. Many of these locations are losing money and are likely to run out of WeWork money, which was $ 2 billion at the end of September.
Neumann, who has agreed to cede control over WeWork after stepping down as chief executive in September, expects to receive a $ 1 billion exit package. As part of this, he will receive a consulting fee of $ 185 million for four years and may sell nearly $ 1 billion of his shares in the company to SoftBank. The soft landing for Neumann deepened the anger among the staff as the layoffs approached.
During the recent turmoil at the company, employees formed a group, The WeWorkers Coalition, which, among other things, is pushing for compensation packages for equitable employees.
Beginning December 9, WeWork cleaning and installation work will be outsourced to JLL, a real estate services company or one of its partners, according to an email sent to affected employees last week, which was reviewed. by The New York Times. WeWork has assured employees that all members of its cleaning and facilities teams will retain their jobs and receive the same level of compensation and comparable benefits. But employees who choose not to relocate will lose their jobs and receive no compensation, according to a document provided to employees that has been reviewed by The Times.
The changes have angered many employees, according to worker interviews and Slack messages analyzed by The Times, raising fears that some team members will lose benefits or be forced to work at different times.
In Slack's messages, a WeWork staff member said hearing about outsourcing was like being informed of a death in the family. Another employee said the decision showed that management was not concerned about workers' welfare and was making decisions based on what would save the company the most money.
David Yaffe-Bellany contributed reporting.