Rolls-Royce CEO’s Strategy To Lay Off 2,500 Employees Sparks 500% Surge In Share Price — Details

Erginbilgic's third focus was on setting clear performance targets for the company, while the fourth was aimed at ensuring that those targets were pursued with "pace and intensity"

This layoff was part of a broader turnaround strategy

Source : Somnath Chatterjee

A year after being appointed CEO of Rolls-Royce in 2023, Tufan Erginbilgic made a bold move that resulted in a 500 per cent surge in the British luxury car and aero-engine manufacturer's share price, which was to lay off 2,500 employees, most of whom were managers, according to a report by Fortune. 

This layoff was part of a broader turnaround strategy that enabled Rolls-Royce to meet its profit targets two years ahead of schedule and increase its market value by over $70 billion in just two years.

However, Erginbilgic doesn’t view himself as ruthless. In an interview with the Financial Times, he explained how he relied on four "pillars" to transform the company.

Making Employees Aware Of The Company's Struggles

The first pillar involved making Rolls-Royce employees aware of the company’s struggles, which both shocked and focused his 42,000-strong workforce. At the time, the company was undervalued, weighed down by reduced air travel during the pandemic and costly contracts with loss-making clients. Erginbilgic described the company as a "burning platform" and told staff it was their "last chance" to turn things around.

His second pillar stressed creating clear strategies that would engage employees. Erginbilgic also hosted workshops for 500 employees to encourage brainstorming and implement the best ideas. He noted, “If you don’t have a strategy that can cascade down to 42,000 people it won’t get delivered.”

The third pillar focused on setting clear performance targets for the company, while the fourth pillar aimed to ensure that those targets were pursued with "pace and intensity."

“If you don’t put scores on the board quickly, you will lose people. When you continue to deliver, suddenly more and more people believe.”  Erginbilgic told the publication.

“If you don’t have a strategy that can cascade down to 42,000 people it won’t get delivered,” Erginbilgic added in the interview.