- A broad culling of management layers at Salesforce began on Monday.
- Salesforce has been under pressure from activist investors to become more efficient.
- Elliott Management recently said it would not pursue a proxy battle against the company.
Salesforce is undergoing a major flattening this week as the company eliminates some layers of management in response to pressure from activist investors to become more efficient.
The moves, which began on Monday, involve making some managers individual contributors, two people familiar with the matter said.
One of the goals is to reduce the “spans” and “layers of control” across Salesforce by giving managers a certain number of direct reports. This is designed to cut the number of management layers from the CEO down, one of the people explained. They asked not to be identified discussing private matters.
Salesforce didn’t respond to requests for comment earlier on Monday, before publication. After the story came out, a company spokesperson said that “while some groups may have made some immaterial and minor adjustments this is not a companywide initiative.” The spokesperson also said Salesforce is “not systematically moving managers to Individual Contributors.”
Activist investors including Elliott Management have been swarming Salesforce in recent months. In response, the company wants to accelerate a path to reach more than 30% non-GAAP operating profit margins by capping headcount growth, reducing general and administrative expenses, sales and marketing spending, and cutting back on real estate, according to a draft of the company’s business plan viewed by Insider.
On January 4, Salesforce announced plans to lay off 10% of its workforce as part of a broader restructuring plan meant to reduce costs. The company had been conducting other job cuts more recently.
The moves may be working. Elliott Management announced on March 27 that it would not proceed with nominating its own slate of directors to challenge the existing board, citing in a joint statement with Salesforce the progress the company has made with its “‘New Day’ multi-year profitable growth framework, strong fiscal year 2023 results, fiscal year 2024 transformation initiatives, board and management actions and clear focus on value creation.”
The Information reported earlier that Benioff and his team were discussing a reorganization aimed at consolidating layers of management and increasing the number of reports for each manager, which could lead to elimination of some roles.
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