Rolls-Royce CEO laid off 2,500 employees as part of a plan that led to 500% share price jump: Report

Airbus general director Guillaume Faury (front L), Turkish Airlines Chairman of the Board Ahmet Bolat (C) and Rolls Royce general director Tufan Erginbilgic (R) applaud during an agreement signing ceremony on April 29, 2024 at Turkish Airlines headquarters in Istanbul. (Image credit: AFP)

A year after being appointed the CEO of Rolls-Royce, in 2023, Tufan Erginbilgiç took a step that saw the aero-engine manufacturing company's share price go up by 500 percent -- he fired 2,500 employees. Most of them were managers, Fortune reported. The layoff was part of a turnaround plan that also saw Rolls-Royce hitting profit targets two years ahead of schedule and adding more than $70 billion to its market value in two years.

But Erginbilgiç doesn’t regard himself as ruthless. Speaking to the Financial Times, he described how he leaned on “four pillars” to transform the company.

The first pillar involved showing Rolls-Royce employees the extent of the difficulties faced by the company, which both shocked and focused his 42,000 employees. At the time, the company was low on its market valuation, being bogged down by reduced air travel during the pandemic and costly contracts with loss-making clients. Erginbilgiç told the staff that Rolls-Royce was a 'burning platform' and this was their 'last chance'.

His second pillar was to create clear strategies that engaged employees. Erginbilgiç also held workshops for 500 employees to encourage brainstorming and the implementation of the best ideas. “If you don’t have a strategy that can cascade down to 42,000 people it won’t get delivered,” he told the publication.

His third pillar required Rolls-Royce to set clear performance targets, while the fourth pillar of the turnaround plan aimed to ensure that the company's targets were attacked with “pace and intensity.”

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

“If you don’t have a strategy that can cascade down to 42,000 people it won’t get delivered,” Erginbilgiç told Financial Times.