Layoffs happen. They are difficult, gut-wrenching, and troubling for all involved, but sometimes organizations have no other option.
When conducting a layoff, there are certain norms that organizations follow to account for the emotional toll that layoffs take on employees.
But that wasn’t the case for online startup mortgage lender Better.com CEO Vishal Garg, who announced the layoffs of 900 employees on Dec. 1 over a Zoom call in what many described as a callous and insincere manner.
“If you’re on this call, you are part of the unlucky group that is being laid off,” Garg said on the Zoom call. “Your employment here is terminated effective immediately.”
The Better.com CEO either didn’t listen to advisers on how to properly communicate the layoffs, got bad advice, or didn’t care enough to seek it.
If you have to layoff employees, here are some considerations:
1. Be sincere: The Better.com CEO focused on himself and how hard this was for him.
His demeanor on the Zoom call was cold and matter of fact. Just watching the video is cringe-worthy and awkward.
It is unimaginable that employees received notice of their termination — out of the blue — in this insincere, impersonal and reckless manner.
2. Layoffs should not be a remedy for poor performance: Poor performance should be handled through performance management.
Garg told Fortune magazine that just four weeks before the layoff, the firm reviewed employee productivity that looked at such things as missed telephone calls, the number of inbound and outbound calls, and employees showing up late to meetings with a customer.
If the company had concerns about the market and productivity, the company could have set four weeks earlier the standard for production and let employees know that if certain productivity standards were not met, that employees could be terminated.
The layoff announcement also came a week after the company received a $750 million cash investment.
3. Give as much notice as possible: People hate surprises. When employees know what is expected of them and the consequences for failing to meet expectations, they are more understanding when they are held accountable.
If there were issues with market changes, the CEO should have announced that he is currently reviewing changes in the market and will let employees know his strategic plan to address the concerns on a certain date.
Employees may become concerned. That is the give-and-take of being transparent and not causing panic. It’s called leadership.
4. Put the human into it: Layoffs matter not just to those affected, but also to those left behind. Layoffs impact the entire organization, especially those that are sudden.
The Better.com CEO took just four weeks to evaluate 900 people for layoff. Hardly enough preparation went into the decision, announcement, and additional care and concern of impacted and non-impacted employees.
5. Don’t make matters worse, including by anonymously insulting or disrespecting employees: The Better.com CEO has admitted that he anonymously wrote on a blog after there was criticism of the layoffs.
In the blog, he wrote: “You guys know that at least 250 of the people terminated were working an average of 2 hours a day while clocking 8 hours+ a day in the payroll system. They were stealing from you and stealing from our customers who pay the bills that pay our bills. Get educated.”
Employees weren’t shocked he authored these comments in light of an email he sent last year referring to employees as “dumb dolphins.”
6. Comply with the law: In some cases, your organization may need to comply with the WARN Act — the federal Worker Adjustment and Retraining Notification Act.
That law generally requires certain employers to provide a 60-day notification of plant closings and mass layoffs depending on the size of the layoff compared to the workers in that location.
Companies also need to comply with the Older Worker Benefit Protection Act, another federal law that prohibits discrimination among older workers if a release is sought.
You will need to notify those employees of how many individuals were considered for the layoff by age and of them, how many were selected. That law also places strict rules around timing to review the release, language required for the release, and a rescission period of seven days.
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The Better.com CEO wrote a lengthy apology on the company’s website, acknowledging he failed to show the appropriate level of respect and appreciation for those impacted. On Friday, Garg sent an email to employees saying he’s taking leave “effectively immediately,” according to media reports.
Some people have criticized Garg for conducting layoffs just before the holidays and offering only four weeks of severance. This means employees will have to search for new employment over the holidays, which will be difficult, and they will be paid only until the end of the year.
There is never a good time to conduct a layoff. Had he done it in January, for instance, people would have complained that employees spent money over the holidays not knowing they were going to be laid off. Again, people hate surprises.
If you are considering terminating an employee or laying them off between now and the end of the year, extend some grace and perhaps provide enhanced severance. Also, consider advising the employee now that there are performance or other issues that further action may be needed next year if things don’t improve. This gives the employee time to find other work or improve.
However, if the employee engages in egregious behavior (such as harassment, violence, or ethical violations) that truly warrant immediate termination, do not delay. There is never a good time to tolerate misconduct, and sometimes delaying can result in the employee committing additional offenses.