Nvidia, a titan in the tech industry, is experiencing a unique challenge. The company’s spectacular stock rise has led to a situation where some long-tenured employees, now significantly wealthier thanks to company stock, aren’t contributing as actively as they used to. This issue was significant enough to be addressed by CEO Jensen Huang at a recent all-hands meeting, sources disclosed to Business Insider.
An employee question about colleagues in “semi-retirement” mode prompted Huang’s response. He likened working at Nvidia to a “voluntary sport” and encouraged every team member to be the “CEO” of their own time. While Huang humorously acknowledged long-standing employees, he emphasized the importance of responsible decision-making regarding workload.
Nvidia’s stock surge – about 1,200% in five years – has not only enriched many employees but also created tensions. Some team members feel that veterans aren’t pulling their weight, as per discussions with 13 current employees and two HR professionals familiar with the company.
While Huang, the beloved and respected CEO and founder of Nvidia, is admired for fostering an employee-centric culture, this very approach, combined with the company’s hands-off management style and its strong position in the chip market, might be contributing to a less motivated workforce.
As Nvidia navigates increasing regulatory scrutiny and competition from rivals like AMD and Intel, the internal discord could pose future risks. “Jensen’s making a serious point, which is ‘do your damn job,'” one insider commented.
Nvidia’s spokesperson opted not to comment on the matter.
The company’s pro-employee culture, which has historically shied away from layoffs and focused on employee loyalty, could be exacerbating this issue of “coasting” – known in Silicon Valley as “rest and vest.” Unlike competitors like Amazon, Nvidia rarely places employees on performance improvement plans, opting instead to reassign them to new teams.
The financial security provided by Nvidia’s soaring stock means employees have little incentive to leave, as noted by Jim Herd, CEO of executive search firm Herd Freed Hartz. He observed that Nvidia’s strong culture leads to high employee satisfaction and low attrition compared to peers.
Meanwhile, Nvidia’s dominance in the GPU chip market, critical for generative AI services like ChatGPT, has given its employees an easier time with customers. This success is reflected in Nvidia’s financials, with a significant increase in revenue and moderate growth in operating expenses.
Despite the competition from companies developing their own chips, Nvidia employees feel unthreatened due to their product’s superior performance. “We have no competition,” one employee stated, though they expressed concern about the company becoming “bloated.”
Huang, aware of these challenges, regularly reminds his team of the high expectations that come with being a $1 trillion company. His hands-off approach and progressive work policies, like remote work and unlimited vacation, might be contributing factors to the current situation.
Nvidia’s generous stock compensation, which has seen even mid-level managers earn over $1 million a year, adds to the complexity. However, despite their newfound wealth, Nvidia employees reportedly maintain a modest lifestyle, focusing more on financial security than lavish spending.
Huang’s leadership continues to inspire strong loyalty among Nvidia employees, who appreciate his focus on human values and his active engagement with their work. Despite the success, Huang remains vigilant about future uncertainties, embodying a blend of desperation and aspiration, always mindful of potential business risks. “I wake up worried and concerned,” Huang remarked, reflecting his commitment to steering Nvidia through its current challenges and future endeavors.