Twitter founder Jack Dorsey plans to cut workforce by 10% at Block

Jack Dorsey warns staff at his tipping firm Block he will fire underperformers ‘quickly’ and ditch ‘lazy’ performance improvement plans – as he looks to cull workforce by 10% as its growth outpaces revenue

  • The Twitter co-founder issued a letter to staff Tuesday
  • The company will now rely on ‘milestones’ to determine how well an employee is doing
  • This will allow the company to fire underperforming employees immediately

Jack Dorsey has announced sweeping changes to his new tech venture Block – including doing away with performance improvement plans.

Three weeks ago, the firm announced it would slash hundreds of workers over the next year to get the headcount down to 12,000 – as much as a 10 percent cut.

The company owns Square, whose Square Register system powers iPad checkout screens at restaurants and cafes that prompt customers to tip.

In a note sent to staff on Tuesday, Dorsey highlighted part of the restructuring plan.

‘I want us to build a culture of excellence,’ begins the message obtained by Business Insider. ‘Excellence in service to our customers, excellence in our craft, excellence in our respective disciplines, and excellence to each other.

Jack Dorsey, co-founder of Block (and formerly of Twitter), announced sweeping changes to the tech firm in a letter Tuesday

Three weeks ago, the company announced that it would be cutting the number of employees by 10 percent to get the headcount down to 12,000 people

Dorsey criticized the company’s former method of evaluating employee performance and announced that they would do away with performance improvement plans

‘We want to help everyone achieve excellence here at Block. And if that’s not possible for any one person, we want to acknowledge that, and part ways without delay (which is a perfectly fine and honorable outcome.)

‘Our current ‘performance management’ practices do not help us achieve this.’

Dorsey critiqued how the company approached giving employees feedback in the past, writing: ‘Performance should be continuously evaluated, and feedback should not be queued up for later.’

He announced that Block would no longer run ‘performance improvement plans,’ or ‘PIPs.’ These plans are intended to give workers a detailed explanation of their shortcomings and a roadmap of ways to improve.

Dorsey referred to PIPs as ‘a lazy and often surprising approach that we can avoid with direct and consistent feedback.’

According to the letter, Block leadership will now rely on ‘milestones’ like product launches or completions in an effort to make feedback more personalized.

Employees who do not meet expectations can be fired or let go immediately, without having to wait for formal feedback during a review cycle.

Other changes to be implemented next year include the introduction of performance ratings of ‘exceeds,’ ‘meets,’ or ‘falls below.’

‘We will not tolerate mediocrity or low performance from our leads,’ Dorsey warned in the note. ‘You have my commitment that we will hold a very high bar to all of them, and act extremely fast if things are clearly not working out.’

He also announced the creation of a new role to oversee technical strategy and the company’s shared technology platforms across business units.

Dhanji Prasanna, a longtime Block employee and its chief scientist, was named as CTO. 

Block is home to the POS system Square Register, whose blue-and-white screens on iPad and iPhone checkouts ask customers how much they would like to tip

In the note, Dorsey also announced the appointment of Dhanji Prasanna to the company’s new CTO role

Despite Square’s profits tripling between 2018 and 2022, Dorsey told staff that the number of employees had ‘far outpaced’ growth and performance

Block, originally called Square, was founded by Dorsey and Jim McKelvey in 2009. According to Forbes, the men have a net worth of $4 billion and $1.3 billion respectively.

In 2021, the company rebranded, but the arm controlling its digital Point of Service systems has maintained its original name.

Square earns money every time a diner adds gratuity, though a representative previously told that the income equates to ‘mere cents.’

Despite profits increasing three-fold in the last four years, Dorsey sent a note to staff earlier this month claiming that the number of employees had ‘far outpaced’ growth and performance.

‘In fact, I believe it’s slowing us down and frustrating everyone,’ read the letter obtained by Business Insider.

‘So, Square is going to be smaller than we are today by the end of next year.’

Dorsey added that executives would not ‘take a single action, but rather look critically at everything we’re doing and act thoughtfully.’

The letter ended: ‘You may not agree with our decisions, but we’ll do our best to explain why we believe they are right.’

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