Peloton switches up retention strategies

Peloton (and its exercise bikes) became a household name during the pandemic when gyms were closed and individuals had to rethink how to get their exercise fix from home.

Fast forward two years, and the company’s business is struggling. Its share price reached a high of $129.70 in 2021, but it plummeted to below $10 at points during 2022.

These economic challenges forced Peloton to lay off 2,800 employees globally in early February – this included 20% of its corporate staff.

At the same time as announcing the job cuts, Peloton’s co-founder John Foley stepped down as CEO. He was replaced by former Spotify CFO Barry McCarthy.

In an interview with the New York Times about the future of Peloton, McCarthy shared that he planned to lead the company in a different way to his predecessor.

“You’ll never hear me say we’re a family”, noted McCarthy. “We’re a sports team, and we’re trying to win the Super Bowl. And so we’re going to put the best players on the field we can.

He continued: “And if you go down the field, and we throw you the ball, and you drop it a bunch, we’re going to cut you.

“Because everybody else who’s trying hard to win the game deserves to have the best players on the field…and if you’re a good player, you’re going to love being on this team.”

A retention crisis at Peloton?

When the lay-offs were announced, Peloton’s existing employees hit back, so it is no surprise that the company is now rethinking its retention strategies, especially given the ‘Great Resignation’.

The idea is that employees will benefit while Peloton changes its business strategies. Peloton CPO Shari Eaton commented: “The extraordinary circumstances that we find ourselves in now really give us that chance to pause and look at what it is that we can do to ensure future success”.

CNBC reported that Peloton has updated its stock compensation plan for employees, as well as introduced a cash bonus for hourly workers.

Previously stock options at Peloton could only be granted when the share price exceeded $27.62, but the company has lowered this to $9.13. At the time of writing, Peloton’s share price is $10.65.

The option is not available to hourly workers or the C-Suite. Instead, hourly workers told Peloton they would prefer a cash bonus, so the company decided to implement a bonus that will be payable in February those who worked at Peloton between July and late January.

The idea, for Peloton, is to commit to having “competitive and equitable compensation for our people” according to a statement given to Business Insider. The company has also been working on its pay parity with AON and identified a pay gap linked with race, gender, sexuality, or disability in 4% of its workforce.

Will this focus on retention be sufficient to keep Peloton employees happy, particularly in this cost of living crisis? Or will the company need to rethink again if it wants to keep its talented workers?

UNLEASH has reached out to Peloton for comment, but is yet to receive a response.

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