- Tesla CEO Elon Musk is the second-richest man – but he’s prone to make poor leadership choices.
- Musk’s micromanagement ranges from setting unreasonable expectations to rage-firing employees.
- Micromanagement is bad for business, leading to wasted time, money, and high turnover rates.
Tesla CEO Elon Musk is a self-described “nano-manager,” as he told The Wall Street Journal in 2015, but his leadership style comes at a high cost to his business.
“Elon basically does what he wants, whenever he wants,” one Tesla factory worker who has been in contact with Musk told Business Insider.
Sometimes Musk’s controversial leadership pays off, and sometimes he gets in his own way. He’s the second richest person in the world with a net worth of $192.6 billion. Tesla earned its highest-ever profits this year despite pandemic delays and a global chip shortage.
But recently, the company has struggled with quality-control issues with the newest Model Y and the Autopilot feature, leading to a federal investigation. Musk also leads the aerospace manufacturer SpaceX, which is also lagging behind preorders for its Starlink user dishes.
Musk has long been criticized for his micromanaging leadership style. In 2018, then-current and former Tesla employees told CNBC that Musk’s extreme unwillingness to delegate tasks had been detrimental to the company. In a New York Times podcast from September 2020, the Tesla CEO said he delegates tasks on a limited basis and does most of the major work he needs himself.
Tesla did not immediately respond to a request for comment on Musk's leadership style.
Business Insider examined Musk's leadership and how it's had an effect on his business ventures.
He's known to make impulsive decisions
In a new book, "Power Play: Tesla, Elon Musk, and the Bet of the Century," The Wall Street Journal's Tim Higgins details numerous instances when the CEO appeared to fire employees and contractors out of sheer anger, though Musk denied these assertions, saying he gives "clear and frank" feedback.
He sets expectations too high.
Micromanaging in general makes employees feel undervalued at work. Reporting from multiple sources indicates that Musk's particular brand of micromanaging means that he often sets expectations unrealistically high, refuses to consult others when making decisions, and, in turn, frustrates his team.
For example, in an email obtained by Reuters earlier this month, Musk asked employees to "go super hardcore" and finish the quarter strong with "an unusually high" delivery wave.
When people feel like they have less control over their decisions, their brains react like they're being threatened and, in turn, experience higher levels of stress, according to researchers at the Center for Neuroeconomics Studies.
"Feeling in control, even if it's an illusion, is key to … cognitive ability staying intact," Amy Arnsten, Yale neurobiology and psychology professor, said. So when employees feel that they can't take ownership of their work, it leads to worsened mental health and lower productivity.
Musk's leadership style could be a reason for high employee turnover
Musk is never really satisfied with his team's work. That's a telltale sign of a micromanager.
When asked why he doesn't share more work with his team, Musk told The New York Times, "The practical reality is that I cannot delegate because I can't find people to delegate to."
According to AllianceBernstein analyst Toni Sacconaghi, Tesla had an annualized turnover rate of 44% for executives reporting to Musk over a nine-month period in 2019. The average annualized rate at the seven other companies the investment management and research firm analyzed - Facebook, Amazon, Uber, Lyft, Netflix, Airbnb, and Snap - was 9% from the past six to 20 months.
According to a 2018 report from the employee-engagement firm Tinypulse, people who were micromanaged to the point that they didn't have freedom over their decisions at work were 28% more likely to leave their jobs.
This story has been updated from its original version on Sept. 30, 2020.
May Teng contributed to this report.