Xero Making Stealth Redundancies - this will impact your service and system stability
Using a throwaway account to avoid any comeback, as I am one of those leaving, but Xero is currently going through what feels like a round of stealth redundancies.
Anyone who's followed the company over the last few years will probably have noticed how much the culture has changed. Since the current CEO took over, the focus has shifted away from the people-first approach that once applied to both staff and customers. It's now far more numbers-driven: deliver faster, hit targets, and deal with the consequences later.
I'm sure plenty of customers have already noticed the effects. Account management has been scaled back to a much smaller team handling hundreds of customers each, while support staff are no longer trained as specialists in particular product areas. Instead, they're increasingly expected to rely on AI tools that sometimes provide the right answer, but just as often don't.
Internally, the company also introduced a new five-point bell curve performance grading system last year. In practice, it's designed to encourage people to consistently go beyond their job description. This year, simply maintaining last year's performance isn't enough to achieve the same rating. Unless you've done more than you did the year before, your rating is likely to drop. Staying consistent effectively means being marked down.
The day before this year's ratings were released, the CEO sent a company-wide announcement - much to the surprise of many senior managers - saying that anyone receiving one of the bottom two ratings would be offered a voluntary severance package instead of being placed on a performance improvement plan.
It's worth pointing out what those ratings actually mean. The second-lowest rating doesn't necessarily mean someone is underperforming. It can simply mean they've done the job they were employed to do, rather than consistently exceeding expectations, or that they haven't improved beyond last year's performance under the new system.
Unsurprisingly, many affected employees are taking the package. The feeling is that if they don't, they'll likely end up in a worse position next year, with no severance option and instead be managed out of the business.
By next week, more than 70 UK employees are expected to have left, including some who've been with Xero for over a decade. The same process is happening across other regions, so the impact will be felt globally.
The immediate cost of the UK severance packages alone is expected to exceed half a million pounds. The longer-term impact is likely to be felt by customers as many of the company's most experienced people leave. Some may argue that's simply part of improving efficiency, but many of those employees stayed for years because they genuinely cared about the product and the people they worked with.
If you're a Xero customer, don't be surprised if the service feels different over the next 12 to 18 months. HR is already scrambling to recruit replacements, while a significant amount of experience is walking out of the door. And if current trends continue, the same process could easily repeat itself this time next year.