Co-working office space company WeWork is slashing its worldwide workforce by 20 percent – a total of 2,400 employees – as it strives to revamp its struggling business and cut costs, The New York Times reported on Thursday (Nov. 21).
The downsizing follows major losses, a failed initial public offering (IPO) and the resignation of Co-founder and CEO Adam Neumann. Its largest investor, Japanese conglomerate SoftBank, provided a $10 billion lifeline and a bailout that includes the sale of over $3 billion of new WeWork bonds to investors.
The company is also expected to lay off an additional 1,000 employees working for extraneous divisions that will be sold or shuttered. In addition, about 1,000 maintenance employees will be outsourced to real estate services company JLL or one of its partners. Maintenance employees were told they would receive similar pay and benefits.
A WeWork representative said in a statement that “the company is making necessary layoffs to create a more efficient organization.”
A new ownership team is being led by SoftBank executive Marcelo Claure. Under Neumann, WeWork lost $1.25 billion in the three months that ended in September.
“The process began weeks ago in regions around the world and continued this week in the U.S.,” the spokesperson told the NYT. He added that the downsized employees would receive severance and continued benefits, and would be offered help in transitioning their careers.
“These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade,” he said.
Many employees had hoped the equity they held would reap financial benefits with the planned IPO. After finding out that Neumann’s exit package was about $1 billion, they wrote angry letters to management.
Sources said earlier this week that layoffs could total 4,000 to 6,000 as part of a five-year plan to overhaul the company. Earlier this month, WeWork revealed a “90-day game plan” that included big changes to the company, including the divestiture of all of its non-core businesses.