An Elon Musk ally employed to overtake the U.S. Division of Treasury has a prolonged file of enterprise hardline reforms within the personal sector that demoralized employees and made them concern for his or her jobs, in keeping with interviews with a number of former workers at his tech agency.
Tom Krause, the CEO of Silicon Valley-based Cloud Software program Group, oversaw layoffs at his firm in every of the final three years whereas instituting a return-to-office mandate, inflexible efficiency rankings, and a request that weekly updates be despatched from staff on to Krause, the previous workers informed ABC Information — echoing the type of reforms that Musk’s new Division of Authorities Effectivity has begun enterprise inside authorities businesses.
One former Cloud Software program Group worker stated she hid her being pregnant for concern it may make her a goal of layoffs. An ex-manager stated they dreaded submitting efficiency evaluations of subordinates, realizing some staff could fall sufferer to the following cycle of cuts. One other former worker stated they prevented expressing unease in firm emails or within the messaging app Slack out of concern that it may jeopardize their job.
“They’re taking enterprise practices common in boardrooms and on golf golf equipment, and so they’re taking them into authorities,” Kathleen Roan, a former senior content material designer at Cloud Software program Group who retired in 2024, informed ABC Information.
Krause in latest days has vaulted right into a key place on the Treasury Division, overseeing its $5 trillion fee system, which sends funds to tens of thousands and thousands of People for applications like Medicare and Social Safety, the company’s web site says.
In a press launch, the company stated Krause brings a long time of expertise “managing steadiness sheets” to the company’s effort to “maximize fee integrity.”
Neither Krause nor Cloud Software program Group responded to a request for remark from ABC Information.
A ‘hatchet man’
A number of former workers ABC spoke with praised Krause as a savvy enterprise chief, and one stated they loved their tenure on the firm. However most of them requested that they not be recognized on account of considerations about reprisals.
“There was a whittling away of the issues that made you’re feeling such as you have been a valued worker after which lastly ‘Oh, now we will begin eliminating jobs,'” Roan stated of her time on the firm below Krause. “They noticed individuals as expendable.”
Cloud Software program Group firm was established in 2022 via the acquisition of enterprise software program agency Citrix in a personal equity-backed $16.5 billion deal, adopted by a merger with TIBCO Software program.
Krause, who had beforehand served as president of software program at Palo Alto-based Broadcom, was named CEO of the brand new agency.
Inside months, in January 2023, the corporate reduce 15% of its workforce.
“The sensation was that he was there to chop bills down and be a hatchet man, much like what’s occurring now within the authorities,” a former human sources worker stated. “Everybody was on edge.”
Tesla, SpaceX and X CEO Elon Musk attends the inauguration ceremony the place Donald Trump will sworn in because the forty seventh US President within the Capitol Rotunda in Washington, Jan. 20, 2025.
Chip Somodevilla/POOL/AFP through Getty Pictures, FILES
Among the cost-cutting measures at Cloud Software program Group below Krause have been first reported by The American Prospect.
Inside months of Krause’s arrival, the corporate additionally requested that workers return to the workplace, a number of former workers stated.
On the identical time, the corporate closed some workplaces in an effort to cut back overhead prices, a number of former workers informed ABC Information. The closures left some staff with out an workplace close by, making them exempt from the return-to-office requirement, a former worker stated.
On Inauguration Day, Trump signed an govt order calling on federal company heads to mandate in-office work. Musk backed that coverage in an op-ed he co-authored within the Wall Road Journal, predicting that necessary return to work “would lead to a wave of voluntary terminations that we welcome.”
‘A a lot larger stage of enterprise self-discipline’
Staff at Cloud Software program Group misplaced some perks, too.
David Morgan, a former consumer help supplier at Cloud Software program Group, stated the agency ended his quarterly bonuses, which amounted to $16,000 annually. Staff additionally stopped receiving “thanks” days, an additional allotment of paid day off, Morgan stated.
“All the pieces we have been informed can be advantages on the time of hiring was slowly eliminated,” Morgan stated.
An Air Power veteran with a incapacity, Morgan stated he acquired sooner or later of discover earlier than he misplaced his job as a part of a spherical of layoffs in January 2024, after having been assured that his place had been secure over the months prior.
In a put up on LinkedIn that month, Krause stated the corporate had improved however nonetheless required personnel adjustments.
“Our concentrate on including worth for our long-standing prospects whereas driving a a lot larger stage of enterprise self-discipline and accountability is bearing fruit — with buyer retention and monetary outcomes for our first fiscal 12 months as Cloud Software program Group coming in forward of plan,” Krause stated.
“However change typically means troublesome choices,” he wrote. “Whereas we’ve got plenty of areas of the enterprise the place our plans contain further hiring to help our objectives, additionally they imply a practical have a look at these locations the place we merely want fewer or completely different sources.”
In a direct message to Krause over LinkedIn days later, Morgan wrote, “It is difficult to reconcile my dedication and dedication to the corporate with the sensation of being let go in a means that appeared to lack empathy.” It doesn’t seem that Krause responded, in keeping with a screenshot of the dialog reviewed by ABC Information.
One other coverage shift below Krause introduced the implementation of employee-performance rankings on a scale of 1 to 3, a number of former workers stated.
The rankings took a toll on one former supervisor, who stated the corporate required them to label a minimum of one subordinate as a low performer. “I needed to give one individual a low rating, even when I believed they did not actually deserve a low rating,” they stated. “It was depressing.”
Ranking techniques have reportedly been deployed as a part of the Trump administration’s latest push to chop employees. Senior employees throughout the Division of Well being and Human Companies have been informed to rank 1000’s of workers in probationary durations, with as a lot as 40% to be deemed non-mission crucial, the Washington Publish reported.
‘It’s totally alarming’
Daniel Keum, a professor of administration at Columbia College Enterprise Faculty, stated the obvious overlap between cost-cutting initiatives at Cloud Software program Group and a few federal businesses exemplifies the Trump administration’s use of techniques borrowed from the personal sector.
“In tech, there is a mentality that it’s important to break issues to make them lots higher,” Keum informed ABC Information. “When transposed into federal businesses, that mentality turns into very dicey.”
Practically all former workers who spoke to ABC Information expressed shock or concern concerning the position on the Treasury taken up by Krause, although one expressed indifference and one other voiced help.
“It’s totally alarming,” stated Roan, the previous Cloud Software program Group design architect.
“He ought to completely not have something to do with the U.S. Treasury Division,” stated Morgan.
In distinction, a former account govt on the firm applauded the selection of Krause for the Treasury position, citing his monetary acumen.
“I do not assume you could find a greater individual to swim within the weeds [and] sit within the edifice of the Treasury Division,” the individual stated.
In January, Cloud Software program Group performed one other spherical of layoffs. That very same month, Krause despatched an e mail to all workers asking them to voluntarily ship him a message on the finish of every week “telling me what you completed,” in keeping with a duplicate of the e-mail reviewed by ABC Information.
The method attracts on finest practices from “two nice entrepreneurs and CEOs that lead probably the most worthwhile corporations on the planet,” Krause wrote, naming Musk and Nvidia CEO Jensen Huang.
In a separate e mail in latest days, Krause informed workers that he plans to proceed in his position on the firm throughout his time on the Treasury, in keeping with a duplicate of the e-mail reviewed by ABC Information that was first reported by CRN.
“I’m honored to serve our nation,” Krause wrote. “Let me be clear — as CEO of Cloud Software program Group, I’m dedicated to our firm and to you, our workers.”
