Running a business isn’t easy. Sometimes market forces work against you, and the company doesn’t do well. In trying times, you see who is a real leader. They should stand strong and show empathy towards the employees who are impacted by the unfortunate turn of events.
Vishal Garg, CEO of ‘unicorn’ mortgage lender startup Better.com—after receiving a $750 million cash infusion with a valuation of around $7 billion—bluntly informed his 900 employees that a large number of people will be fired in a cold, awkward one-way video announcement, Thursday.
Looking visibly uncomfortable, Garg said that 15% of the workforce would be laid off. In a monotone voice he said, “This is the second time in my career I’m doing this and I do not want to do this. The last time I did it, I cried; this time I hope to be stronger.”
During the holiday season, it’s standard company practices to hold off on bad news such as mass terminations. Instead of waiting some weeks for the staff to enjoy family and friends during the holiday season, Garg dropped the bombshell announcement, “If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated effective immediately.”
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In a video version of the termination call, a presumed disgruntled employee cursed out the CEO saying “F*ck you, dude,” over the announcement. Garg did say, “I wish you all the best of luck,” in their new endeavors.
Kevin Ryan, Better.com’s CFO, said in a statement that the company only laid off 9 percent of its employees, and “Having to conduct layoffs is gut-wrenching, especially this time of year, however a fortress balance sheet and a reduced and focused workforce together set us up to play offense going into a radically evolving homeownership market.”
This is not the first time people were let go via a one-sided or cold video announcement. Back in May, 2020, at the early stages of the Covid-19 outbreak, ridesharing app company Uber announced the layoff of 3,500 employees, representing 14% of its workforce. In a sign of the times, with employees working from home, Uber informed the job-loss casualties via an online Zoom call.
The head of Uber’s customer service office, Ruffin Chevaleau, told workers that today was their last day at the company. Chevaleau soberly shared that Uber’s business was hit hard. The company’s business dropped by over 50%. She said, “With trip volume down, the difficult and unfortunate reality is there is not enough work for many front-line customer support employees.”
Chaveleau added, “As a result, we are eliminating 3,500 front-line customer support roles. Your role is impacted and today will be your last working day with Uber.” Uber CEO Dara Khosrowshahi said of the downsizing, “We’re focused on navigating through this crisis that absolutely leaves us in a stronger position, as the world starts to recover.” Khosrowshahi announced that he will be forsaking his base salary.
Scooter-sharing startup Bird fired 406 employees in April, 2020 via a “Black Mirror” style video. The unsuspecting workers were asked to log into a one-way Zoom call, after being informed that all other appointments were cancelled. A disembodied voice read a script informing the person that they’ve been laid off. Their Slack and other accounts were shut off and given end dates.
24 Hour Fitness, a privately held national chain of about 430 gyms with 22,000 workers, fired employees via a phone call. The gym’s Chief human resources officer, Tami Majer, sent an email to workers asking them to participate in a phone call to discuss “important company updates,” indicating that they’ll be paid for their time. On the call, the employees were told that they’ve been let go. There wasn’t any in-depth discussion around severance packages, benefits or any other color provided as to what’s going on.
Airbnb took a different, more enlightened approach to layoffs during the height of the virus outbreak. The company announced that it would downsize 25% of its workforce. Roughly 1,900 people out of the company’s 7,500 total workforce would lose their jobs. At the time, this was one of the largest layoffs that we’ve seen out of Silicon Valley due to the effect of the coronavirus outbreak. What’s different about Airbnb is the manner in which the company informed employees of its plans.
In a message to staff, Airbnb cofounder and CEO Brian Chesky said, “Some very sad news. Today, I must confirm that we are reducing the size of the Airbnb workforce.” Chesky then advised his employees that he will be transparent and offer details, so that everyone is fully aware of what’s happening.
He was forthright and didn’t try to spin the narrative, as he stated, “We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill. Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019. In response, we raised $2 billion in capital and dramatically cut costs that touched nearly every corner of Airbnb.”
He also assured the staff that the “decisions are not a reflection of the work from people on these teams.” Chesky thanked his employees by saying, “We have great people leaving Airbnb, and other companies will be lucky to have them.” The chief executive promised that the company will take care of those that are leaving. “We have looked across severance, equity, healthcare and job support and done our best to treat everyone in a compassionate and thoughtful way,” Chesky added.
His message also said, “Employees in the U.S. will receive 14 weeks of base pay, plus one additional week for every year at Airbnb. Tenure will be rounded to the nearest year. For example, if someone has been at Airbnb for three years and seven months, they will get an additional four weeks of salary, or 18 weeks of total pay.” Twelve months of health insurance will be covered through COBRA.
It’s important to demonstrate compassion and understanding, as being let go is a traumatic experience. The impacted employees are worried about their financial situation, scared about trying to quickly find a new job, concerned that companies may perceive the firing as if they did something wrong, the loss of identity that’s tied up with your job, and missing the camaraderie of close workmates.
Real leadership is needed in a time of crisis. It’s important to show empathy in sharing the bad news. Have everything ready for the impacted workers such as insurance coverage, date of departure, severance packages, recommendation letters, introductions to recruiters who could help with finding new jobs. Actively listen to the staff who are part of the downsizing, and take actions to help them through this difficult transitionary period.