Over the last few weeks, we've witnessed a significantly higher number of layoffs across organizations, both big and small. From big names like Better, Netflix, and Robinhood to B2B platforms like Workrise and Thrasio, businesses are scaling down their workforce to deal with the aftermath of the pandemic, inflationary risks, and the likelihood of a recession.
While layoffs are sometimes inevitable and needed for the survival of a business, many companies handle the process poorly, subjecting themselves to backlash and criticism. And so, we've highlighted 3 such organizations that failed to do layoffs right and what you can learn from them. If you ever find yourself in a similar situation, implementing these tips will help you make the tough transition as easy as it can be for your business and your employees.
A few weeks ago, employees of the Fintech startup Bolt were told over Slack to expect a calendar invite about an upcoming "organizational restructuring". By the end of the day, 250 employees who received the invite were laid off and removed from Bolt's Slack channel, while the rest attended a "Town Hall" meeting where they were told that they still had a job.
While there was definitely bitterness and anger, most employees who were let go were simply confused. And that's because the CEO never gave any indication that Bolt was in trouble. In fact, they had just raised $355 million in VC, valuing the company at $11 billion. And in the words of the CEO, they were "growing at lightning speed". To make matters worse, some of Bolt's employees who were reassured about the startup's growth ended up taking out personal loans from the company to exercise their stock options. Some of those who took part in this program were also laid off.
A couple of years ago, Microsoft, one of the largest tech giants in the world, decided to lay off 12,500 of its employees. Rather than being upfront and transparent about it, they sent a really lengthy memo with a ton of business-school jargon that made absolutely no sense.
After 11 paragraphs of complicated and obscure language, they finally said, "We plan that this would result in an estimated reduction of 12,500 factory direct and professional employees over the next year. These decisions are difficult for the team, and we plan to support departing team members with severance benefits."
In December 2021, Better.com announced a layoff of around 900 people through a mass zoom meeting. The CEO of the company, Vishal Garg, addressed his employees during the meeting and said, "If you're on this call, you're part of the unlucky group that is being laid off. Your employment here is terminated immediately." To top it off, some of the employees who were laid off are experiencing a host of problems, including getting shorted on severance payments, not being enrolled in COBRA insurance, and having unemployment claims denied.
Here's how you can do better
- Communicate as openly and honestly as possible. Ensure that your employees are aware of the current state of affairs and keep them informed of possible future actions. Glossing over the truth or providing a false sense of security does more damage than you think.
- Treat your employees with respect. Don't tell them they're fired over a group Zoom call or lock them out of their system. Be kind enough to protect every employee's dignity. Set up a private meeting, give them a chance to ask questions, and support them wherever possible.
- Provide a good severance package. The bare 2-weeks pay that many early-stage startups offer isn't enough for employees to care for their families and pay their rent/mortgage. Even on a tight budget, ensure that you provide employees a good severance package that can tide them over until they find a new job. Also, at the very least, provide outplacement support or connect impacted employees with recruiters and hiring managers within your network.
- Ensure that you're implementing fair and legal layoffs. The best way to do this is by speaking with an attorney to confirm if your company's actions are ethical, legal, and compassionate. It's also important to make sure that you're not discriminating against any protected classification of employees and that the layoff selection criteria are standard/equivalent across departments.
- Recognize that layoffs are upsetting and show compassion. At the end of the day, getting fired is a painful experience, and as an HR manager, it is your responsibility to provide support and help them cope with the situation. Acknowledge their feelings, ask them how you can be of help, and most importantly, empathize. At the same time, it is important to stay objective and show no favoritism or bias, as that can come back to haunt the company.