Rocket Lab is a private American company that manufactures rockets and launches satellites into Earth’s lower orbit. Most of the launches start from platforms in New Zealand, and the company also has facilities in the US and Canada. Rocket Lab is proud is that it delivers satellites for commercial use with high frequency and quality. The company has already delivered 105 satellites, which is a significant indicator in the field. One of the most recent achievements of the Rocket Lab was the development of the reusable launch vehicle and the successful landing of the first stage of the Electron spacecraft. Even more, Rocket Lab’s Photon spacecraft was approved by NASA for a science mission to Mars. This year, Rocket Lab went public by selling its shares and is in the process of a merger with another public company — Vector Acquisition. A history of successful work has secured Rocket Lab 15 contracts for additional Electron launches, as well as Vector Acquisition’s investor support, which could bring the company approximately $777 million.
However, despite recent commercial and scientific advances, Rocket Lab has significant organizational culture and workforce management issues. The results of journalistic investigations showed that Rocket Lab has a “toxic” working environment because of the normalization of unpaid overtime, favoritism, and pressure on staff.
Many employees believe that the main reason for creating such an environment is the company founder and CEO, Peter Beck, who, although integral to Rocket Lab with his genius ideas, is not the most capable leader. As noted by Henry Burrell, Peter Beck seems to value intelligence and motivation over staff experience and managerial ability. For this reason, many employees, especially fresh graduates, exhaust their enthusiasm for prestigious and interesting jobs under the pressure of harmful working conditions.
For example, Rocket Lab’s employees frequently complain about work late into the night and on weekends, which is mandatory, albeit unpaid. In other words, if employees do not want to give all of their time to the company, they will not receive promotions and will soon be kicked out of the company. One of the former employees left the following review:
“The majority of their staff are very young & know how important this role is to their careers, so they’re terrified to put a foot wrong. Expect really long hours, zero flexibility, veiled threats from managers & more than a hint of racism. It felt really exploitative.”
Moreover, there is favoritism in the company as well as non-transparent HR management practices. Some of the specialists who did not argue with their superiors receive Rocket Lab shares as a bonus and take managerial positions. Simultaneously, many employees said that situations, when some of their colleagues are called to “meetings” and pack their things immediately after these meetings, are frequent. Some other workers were demoted, deprived of part of the salary or bonus, or forced to reapply for promotions multiple times without apparent reasons.
Eventually, such a policy resulted in a $980000 check from Rocket Lab to its former employee, Craig Owen, for unfair dismissal. Craig Owen was hired by Rocket Lab in 2018 as an engineer and fired a year later for “poor performance”. This wording was used in the resignation document provided to Owen, which became his cause to sue Rocket Lab. In the court, Peter Beck clarified that he had lost confidence in the engineer because he had neglected documentation and engineering processes, as well as showed poor performance in technical aspects. However, Owen was not aware of all these problems as managers had never warned him and provided him with the possibility of improvement.
Another fact was more indicative for the judges in addition to Rocket Lab’s violation of the dismissal procedures prescribed in New Zealand law. Rocket Lab tried to “buy off” Owen by offering him $ 10,000 in payments in exchange for signing an agreement “that required him to compromise any claims he had against Rocket Lab.” In other words, Rocket Lab understood that it violated the procedures and wanted to securitize itself.
However, Owen refused to sign the agreement and sued his former employer. It is possible that other employees, who were also unceremoniously sacked and escorted out of the company, signed similar agreements because the managers were obviously prepared.
After several years of litigation, the court ruled that Rocket Lab should pay Craig Owen $ 65,000 for six months’ salary, $ 30,000 distress compensation, and a $ 2,000 fine for a breach of good faith. The company must send another thousand dollars in the penalty to the Crown bank account.
The Employment Relations Authority also criticized Rocket Lab’s actions, although they did not make recommendations for improving its HR policies. Nevertheless, this case created a precedent that will make Rocket Lab think about its approaches to management. It is challenging to build a successful company only on the fear and enthusiasm of graduates. Besides, this case shows that despite the commercial success and genius of ideas, businesses must encounter the laws of a country in which they operate or be prepared to face legal consequences.