Over the past few weeks, as I have stepped into the CEO seat, we have had several conversations about Xero’s strengths and significant market opportunities. We have also talked candidly about our challenges following the rapid scaling of the company.
As we look to the next phase of Xero’s growth, many of you have asked me what change is needed for us to simplify focus, strengthen our execution and balance growth with profitability. Today I want to share an important update and the extremely challenging news that comes with it.
In today’s all-hands, we are sharing the difficult decision to remove 700-800 roles across Xero, representing approximately 15% of our employee base. This will happen through a consultative process with those potentially impacted by this change, beginning next week.
While we remain committed to our broader platform strategy, to further focus our efforts, we have also made the decision to exit Waddle, the cloud-based lending platform we acquired in 2020.
I am deeply sorry to be taking this step. I want to make it clear to all Xeros that, as a leadership team and Board, we are responsible for the decisions that led us here.
Today’s news affects everyone at Xero, but most of all it affects the many talented colleagues and friends who have contributed so much to Xero and whose roles are potentially impacted. It is now our commitment to support them, and you through the coming weeks, and I will outline the steps we are taking shortly.
Where we are today
As we discussed recently, as Xero continued to scale in recent years, we have grown our headcount, areas of focus and cost base at a faster rate than our revenue.
Externally the broader tech landscape favoured high growth in this period; internally, we were less clear and measured in the rate of our hiring and investments.
In FY23 we made the decision to slow the rate of incremental headcount growth significantly which has helped, but not enough. On my CEO listening tour, I also heard from many Xeros about how we can improve our focus and prioritisation of resources to become more effective.
We aspire to build a higher performing global SaaS company; to do so, we must deliver better for our customers and execute against a disciplined growth framework. This is why we are streamlining and reshaping our organisation.
Our next steps
I do not underestimate the impact these decisions have on all Xeros. We are committed to moving through this time of change together with care, compassion and fairness.
From next week, we will begin consultation with those people in the 700-800 roles that we have identified as being potentially impacted. It may take up to four weeks for some people to have this conversation, as we work with care to support those going through this change.
In the coming quarter, we will look to redesign the way we work across key functions, in order to operate with greater clarity, speed and effectiveness. This involves a deeper redesign of our Technology function, which may result in role impacts of a smaller magnitude. We expect the full organisation design work to be completed by July this year.
Our Chief People Officer, Nicole Reid, will share further details via email about what these changes may mean for your role and next steps through the consultation process.
Supporting all Xeros
We are committed to caring for all Xeros who are leaving, with a globally consistent approach. Those colleagues leaving will be provided with:
- A minimum of 12 weeks’ pay – comprised of a minimum 8 weeks’ severance pay (plus additional severance based on tenure) and a minimum of 4 weeks’ notice
- Employee Share Plan – 31 March 2023 RSU shares will vest to employees
- Short Term Incentive (STI) – eligible employees will receive their FY23 STI entitlement
- Career transition support – provided to all impacted employees
- Laptops – existing laptops provided to permanent Xero employees
- Employee Assistance Program – support offered for three months after leaving date
- US Healthcare – we will continue to honour six months of existing healthcare premiums
- Visas – support for any Xeros on working visas, including where necessary, external support up to NZD $1,000
Support is in place for all Xeros. Please connect with your People Leader, Senior Leader or People Experience (PX) team. Additional support is also available through our Employee Assistance Program.
I know everyone will experience a variety of emotions upon hearing this news. This includes many of the leaders who are here to support you and are absorbing the news themselves in parallel. I trust that Xeros will extend empathy and compassion for each other as we move through this time and as a leadership team, we remain here to support everyone as much as possible also.
Sukhinder Singh Cassidy