Organizational changes at Personio

Hi team,

Today, we’re announcing a number of changes at Personio across our organizational structure, spend and operations. 

These changes apply to several departments across the company and unfortunately also include reducing the size of our team by approximately 115 people which represents 6% of our employees. If you are among those directly impacted, you will have received a calendar invite today titled “Changes at Personio”. I know this is difficult news. I take full accountability for the decisions that got us to this stage and I want to share how we got here. This will be a lengthy message but it is important to me to give you as much context as possible.

Over the past few years, we have made great progress towards delivering on our mission to “Unlock the Power of People for Organizations around the World”. We launched Personio Payroll after years of development, we now offer 8 native apps to our customers, we have successfully entered into new segments like personio.org and mid-market, we have expanded across multiple geographies and we have evolved our positioning to clearly communicate our message to the market. We have also experienced exceptional revenue growth during this period, growing at rates that are at the very top of the range for companies our stage and size.    

Where we are now

In recent years, we based our investment decisions on the expectation that those levels of exceptional growth would continue. We also reinforced this expectation by adding new growth levers through our Delivery Pillars. When we look at actual growth rates for the past 12-18 months we are still growing at strong rates, however, they are lower than the levels we had anticipated. This is due to:

• External Challenges: An economy that is slower than projected and is impacting our customer’s headcount growth and buying decisions

• Internal Challenges: We have not executed as strongly as we had expected across some of our Delivery Pillars and our high investment level has also created operational inefficiencies with duplicative efforts in some areas and underinvestment in others. 

As a result, our costs are higher than they should be relative to our revenue. To ensure a healthy financial position for the future and remain on a path to profitability, we need to reduce our costs & create operational efficiencies. We will accomplish this through:

• Reducing the size of our organization by approximately 115 people (6% of employees) by aligning resources to priority areas & simplifying org structures

• Reducing our non people spend in specific areas across our business 

• Evolving our operations and way we work to allow for stronger execution, including reallocating investments to under resourced areas 

Our impacted Personios

To the Personios who are directly impacted by this reorganization, I cannot overstate how much I appreciate the contributions you’ve made to Personio. You have helped shape the company we are today, and I am deeply grateful for sharing your talent and passion with us.

There is no good way to do a lay off, but we’re going to do our best to support those directly impacted. Areas of support include: 

• Severance Package: We’ll go beyond statutory requirements and provide a comprehensive severance package to every individual based upon tenure

• VESOP: We’ll accelerate vesting dates through the end of the notice period and extend VESOP for Personios who haven't reached their cliff date to ensure everyone remains a shareholder

• PTO Payment: We will ensure payment of remaining vacation days in alignment with the regulations of each country

• Career Counseling: For any Personios that desire so, we’ll offer career counseling support to help prepare for their next role

• Alumni Support: We’ll assemble an opt in alumni list which we will share with our networks and those of our investors

• Immigration Support: We’ll provide additional support for all Personios whose immigration status is impacted

Each impacted Personio will have a 1:1 conversation with a manager and people partner over the course of today to discuss these programs and their individual situation.

Learnings & Corrective actions

Looking back with hindsight, I can see the errors in judgment that got us to this point:

• Growth Rates: We assumed a more favorable economic climate with less impact on our customers, we also overestimated how quickly we could grow revenues from new growth levers 

• Operational Complexity: We underestimated functional interdependencies and did not invest enough into the processes, systems and data that are required to enable strong execution

• Organization Structure: In some areas, we have not been deliberate with organizational design including the right team size, shape and accountabilities

Moving forward, we will learn from these mistakes and are making the following changes:

We are introducing increased planning discipline & rigor so we have high confidence in the growth rates we model into our plans. This approach has already begun with Personio Planning Week FY25 where we built detailed driver-based plans across all of our product areas & go to market motions, with clear accountability for each outcome.

We will increase focus on operations and reallocate investment to areas that have been underserved.  These include areas like Systems and Data which are a common pain point for many teams and have led to inefficiencies in our execution, raised by many of you in the recent Pulse Survey.

Lastly, we'll be more thoughtful about how we design org structures within our teams moving forward. This means being intentional about the size, structure, roles and skills needed to deliver against goals and also using external benchmarks as a guide.

The future

We started Personio with a clear mission and the ambition to build a leading global technology company from Europe. Our mission and ambition have not changed and I continue to be confident about the future, including the growth potential ahead of us.

We serve over 14,000 customers today, but that represents less than 1% of the 1.7 million organizations in our target segment in Europe alone. The relevance of our platform continues to be strong, the digitization of people processes and the shift to cloud solutions is still accelerating. We have several growth levers, including a fast growing payroll business that will help pave the path to €1B in revenues and beyond over the coming years. Additionally, the innovations we are bringing to The Intelligent HR Platform will help our customers run their people operations in new & exciting ways and continue to set us apart from competition.

Achieving our ambitious goals was never easy and it will continue to require a lot of hard work from us, but I have no doubt that we can and will tackle those challenges.

In closing

This was one of the most difficult actions I’ve had to take in my time as a founder. I feel for the Personios impacted and my thoughts are with the talented colleagues that will be leaving us. I am also convinced that this action is the right one for Personio and sets up the company for our next phase, operating with more agility and an improved operational foundation. 

It will be a challenging day for everyone at Personio, but today we will focus our efforts and attention on Personios who are directly impacted. Tomorrow, we will regroup and come together during an All Team AMA where I will speak more about the steps we took to get to this decision, learnings we are taking from it and answer any questions you may have. Next week we will look ahead, talk more about our strategy for 2025 and what will be important for the next chapter of Personio.

Hanno