An Elon Musk ally employed to overtake the U.S. Division of Treasury has a prolonged document of endeavor hardline reforms within the non-public sector that demoralized workers and made them concern for his or her jobs, based on 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 scores, and a request that weekly updates be despatched from staff on to Krause, the previous workers instructed ABC Information — echoing the form of reforms that Musk’s new Division of Authorities Effectivity has begun endeavor inside authorities businesses.
One former Cloud Software program Group worker mentioned she hid her being pregnant for concern it may make her a goal of layoffs. An ex-manager mentioned they dreaded submitting efficiency opinions of subordinates, understanding some staff might fall sufferer to the following cycle of cuts. One other former worker mentioned they averted 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 fashionable in boardrooms and on golf golf equipment, they usually’re taking them into authorities,” Kathleen Roan, a former senior content material designer at Cloud Software program Group who retired in 2024, instructed ABC Information.
Krause in latest days has vaulted right into a key place on the Treasury Division, overseeing its $5 trillion cost system, which sends funds to tens of hundreds of thousands of People for packages like Medicare and Social Safety, the company’s web site says.
In a press launch, the company mentioned Krause brings a long time of expertise “managing stability sheets” to the company’s effort to “maximize cost 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 mentioned they loved their tenure on the firm. However most of them requested that they not be recognized because of issues about reprisals.
“There was a whittling away of the issues that made you’re feeling such as you had been a valued worker after which lastly ‘Oh, now we’ll begin eliminating jobs,'” Roan mentioned of her time on the firm below Krause. “They noticed individuals as expendable.”
Cloud Software program Group firm was established in 2022 by way of the acquisition of enterprise software program agency Citrix in a non-public 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, just like what’s taking place now within the authorities,” a former human assets worker mentioned. “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 by way of Getty Photos, FILES
Among the cost-cutting measures at Cloud Software program Group below Krause had 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 mentioned.
On the identical time, the corporate closed some places of work in an effort to scale back overhead prices, a number of former workers instructed 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 mentioned.
On Inauguration Day, Trump signed an government 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 Avenue Journal, predicting that necessary return to work “would end in a wave of voluntary terminations that we welcome.”
‘A a lot larger degree of enterprise self-discipline’
Workers at Cloud Software program Group misplaced some perks, too.
David Morgan, a former shopper help supplier at Cloud Software program Group, mentioned the agency ended his quarterly bonuses, which amounted to $16,000 annually. Staff additionally stopped receiving “thanks” days, an additional allotment of paid day without work, Morgan mentioned.
“All the pieces we had been instructed could be advantages on the time of hiring was slowly eliminated,” Morgan mentioned.
An Air Drive veteran with a incapacity, Morgan mentioned he acquired at some point 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 protected over the months prior.
In a publish on LinkedIn that month, Krause mentioned the corporate had improved however nonetheless required personnel modifications.
“Our give attention to including worth for our long-standing clients whereas driving a a lot larger degree 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 mentioned.
“However change usually means troublesome choices,” he wrote. “Whereas we now have quite a lot of areas of the enterprise the place our plans contain extra hiring to help our targets, additionally they imply a practical have a look at these locations the place we merely want fewer or totally different assets.”
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, based on a screenshot of the dialog reviewed by ABC Information.
One other coverage shift below Krause introduced the implementation of employee-performance scores on a scale of 1 to 3, a number of former workers mentioned.
The scores took a toll on one former supervisor, who mentioned the corporate required them to label not less than one subordinate as a low performer. “I needed to give one particular person a low rating, even when I believed they did not actually deserve a low rating,” they mentioned. “It was depressing.”
Ranking programs have reportedly been deployed as a part of the Trump administration’s latest push to chop workers. Senior workers throughout the Division of Well being and Human Providers had been instructed to rank hundreds of workers in probationary durations, with as a lot as 40% to be deemed non-mission crucial, the Washington Put up reported.
‘It’s totally alarming’
Daniel Keum, a professor of administration at Columbia College Enterprise College, mentioned the obvious overlap between cost-cutting initiatives at Cloud Software program Group and a few federal businesses exemplifies the Trump administration’s use of ways borrowed from the non-public sector.
“In tech, there is a mentality that you must break issues to make them loads higher,” Keum instructed 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 in regards to the function on the Treasury taken up by Krause, although one expressed indifference and one other voiced help.
“It’s totally alarming,” mentioned Roan, the previous Cloud Software program Group design architect.
“He ought to completely not have something to do with the U.S. Treasury Division,” mentioned Morgan.
In distinction, a former account government on the firm applauded the selection of Krause for the Treasury function, citing his monetary acumen.
“I do not assume you will discover a greater particular person to swim within the weeds [and] sit within the edifice of the Treasury Division,” the particular person mentioned.
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,” based on a replica of the e-mail reviewed by ABC Information.
The strategy attracts on greatest practices from “two nice entrepreneurs and CEOs that lead essentially the most precious firms on this planet,” Krause wrote, naming Musk and Nvidia CEO Jensen Huang.
In a separate e-mail in latest days, Krause instructed workers that he plans to proceed in his function on the firm throughout his time on the Treasury, based on a replica 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.”