Editor’s note: Earlier today, president and chief executive officer of Red Hat, Matt Hicks, shared the following email with Red Hatters.
There have been several occasions where we’ve had to make tough decisions at Red Hat, but no decision has been harder than the one I must communicate to you today: We will reduce the associate base of Red Hat over the next few months. Our reductions will focus on general and administrative (G&A) and similar roles across all functions and represent a reduction of just under 4% in total. We will not reduce roles directly selling to customers or building our products. Notifications will begin today in some countries, and the process will continue through the end of Q2.
We’ve been asked about the potential for layoffs at Red Hat before, and this was a decision our leadership team was truly hoping we could avoid. This decision is now appropriate to ensure Red Hat’s ability to compete in a new environment. I will share details on how we arrived at it in this email and at today’s Company Meeting, which should already be on your calendar. Please prioritize attending.
Like every company, Red Hat’s resources are finite, and our investments, including our investments in talent, must be aligned with our strategy. Over the past few quarters, each member of our corporate leadership team has considered what a best-in-class organization looks like for their function and articulated a vision for their organization over the next few years, including the talent and skills needed to execute that vision.
I know it is hard to reconcile that we are a successful, growing company and still need to take these hard actions. At the core of this decision is the need to rebalance where we are investing to enable Red Hat’s future. Our leadership team deeply cares about Red Hat’s ability to have as much impact in the next 10 years as we have had to date. Red Hat has a tremendous opportunity around open hybrid cloud with the evolution of public cloud and edge and in specific industries like telecommunications and automotive, but the market opportunities will not wait for us. What's become evident is that we must adapt and make this change to ensure we're able to invest in ways that will enable Red Hat to do this, including how we align budget and headcount.
This will be difficult for all of us; there is no way around that. How we treat one another always matters, and in this moment, we will treat our impacted teammates with respect and gratitude. What makes a decision like this hard is that we’ll be saying goodbye to passionate Red Hatters who contributed in significant ways and who made this a better company.
How did we get here?
When I stepped into the role as CEO last year, I said I wanted us to refine our playbook to the simplest possible set of things needed to deliver on our strategy and become best-in-class in everything we do. Achieving our North Star — to give customers the transformative capability to deliver any app, anywhere, in a way that only open hybrid cloud technologies can deliver — requires laser focus.
The last decade has been one of high growth for Red Hat in terms of our business, product portfolio, and associate base. Reviewing Red Hat’s strategy and the balance of our investments gave us new perspective on that growth:
- The core of Red Hat’s value is that we make customers successful with open source software. Most of our own investments, whether resources, budget, headcount, or time, should prioritize innovation in our products and with our customers, not on the internals of how we work together, which should be focused and efficient. Rebalancing the investment we’re making in supporting organizations and roles is aimed at emphasizing roles building and supporting our technology and customers while also moving us forward as a more agile Red Hat.
- Red Hatters are contributors by nature. We’ve pursued many interesting ideas and initiatives across all our teams. When we add people to something, they want to contribute to it, they want to make things better than they were before, and naturally, they want to see the things they contribute to persist and grow. Often, we create more without removing other things from the system. Once things exist, we rarely revisit them and earnestly question if they are delivering what we need them to with measurable impact. Sometimes, even when things are performing well, we must still make an intentional decision to simplify and focus. Each added priority results in more complexity over time, and as big teams get bigger, we start investing more in the process than the outcome of the process. We need to focus on the outcome which is making open source innovation consumable for our customers.
To Red Hatters leaving…
The core of Red Hat is our people. It is cliche to say that decisions like this are not personal. For everyone impacted, this is personal. Your contributions helped make Red Hat what it is, and I’m grateful for everything you brought to this company. I’m genuinely sorry we weren’t able to find ways to incorporate your talents here longer.
We are committed to supporting impacted associates during these transitions in many ways. The specifics for associates will differ based on the country they are located and be consistent with local practices. For example, associates in the U.S. will be eligible to receive a variety of benefits, including: above-market severance pay; continued medical coverage for between three and six months based on years of service; Q1 bonuses paid at 100% of the funded target, and Q2 bonuses paid at 100% of their prorated quarterly target; six months of career transition services; and extended access to the Employee Assistance Program (EAP). Outside the U.S., benefits will align with local laws and practices in each country.
To Red Hatters staying…
We must continue to sharpen our focus and do fewer things better. Our ways of operating must evolve — there will be a required change in the work we all do. We must be willing to engage and learn the intersections between our teams and to manage them more directly, with fewer layers of interface. This is not work we can delegate to others; instead, we must put our energy into simplifying our structure. This structural change needs to be accompanied by a cultural change as well: we must choose to work and prioritize differently, or we will simply recreate the challenges that got us here.
In my 17 years at Red Hat, I’ve seen us navigate many challenges, and each one has made us stronger because we have adapted. And I believe we will do the same here. Our ability to adapt will bring our remarkable opportunity within reach, and I have every confidence Red Hat will seize it.