By now, I’m sure you’ve heard the story – but in case you missed it…
Vishal Garg, the CEO of Better.com, a digital mortgage company, just laid off 900 employees – on a zoom call.
As justification, he pointed to “the market, efficiency and performances.”
That’s right, they had 900 employees (roughly 15% of their total workforce) join a single call where the CEO announced they were being laid off en masse.
Unsurprisingly, three other executives from Better have already resigned.
As if that wasn’t bad enough, this is the same class act who once wrote an email to staff saying, “You are TOO D*MN SLOW. You are a bunch of DUMB DOLPHINS and…DUMB DOLPHINS get caught in nets and eaten by sharks. SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME.”
That’s a direct quote. I can’t make this stuff up!
Yet somehow Garg received a bonus of $25 million last year, and the company itself just received a $750 million cash infusion from investors.
I’ll be blunt. This is a perfect example of how NOT to be a CEO!
Allow me to break down this train wreck meets dumpster fire of a situation – and give some leadership 101 ideas for Garg and anyone reading on how to do better.
It’s Not What You Say, It’s How You Say It…
Look, I get it.
I’ve been there.
Laying off your people is gut-wrenching.
As a CEO, you have to make really tough decisions at times.
But having led my recruiting and leadership development business through two separate recessions, I can tell you that HOW and WHEN you communicate on the issue matters a LOT.
The “how” is the obvious part. It’s completely impersonal and inappropriate to tell 900 people at once that you’re laying them off. It would have been far more respectful to tell people one-on-one – or at least have leaders meet with small teams.
On such a large call, there’s no opportunity for any questions someone might have. There’s no opportunity for follow-up discussion. Garg might as well have laid them off via voicemail.
Furthermore, his justification for the firings was very weak. No one wants to work for a leader who vaguely blames “the market” and “performance” for mass layoffs. He admitted he made the decision himself, yet shirks responsibility and blames outside forces.
As a leader, it’s vital that you accept responsibility for the situation of your team. If you’re going to take credit for your wins, you have to take responsibility for the hard times too.
It sucks to get laid off, or see your coworkers laid off. But it sucks a whole lot more when you feel like you don’t hear a good reason as to why it happened.
…And It’s WHEN You Say it
Another key problem here is that the employees seemed COMPLETELY blindsided.
This was a huge decision. The leadership team must have been discussing their options in terms of layoffs for weeks, if not longer.
No one wants to get laid off, but it is a much easier pill to swallow if you know it might be coming.
To be fair, leaders should be communicating a warning about potential layoffs that could come down the road. Let people know what hard circumstances you’re facing, the options you’re considering, and why you’re considering each option.
Offer specific timelines so people can know when a decision will be made and they’ll be able to rest easy…or when they might need to start job hunting.
That way, if you do have to lay anyone off, it won’t be as much of a shock. This is helpful for those who are let go, AND for those who watch their coworkers laid off.
Instead, Better.com took a brutally abrupt, coldhearted approach.
Even the employees who DIDN’T get laid off saw their former coworkers ruthlessly laid off. As a result, morale is inevitably going to slump. People will also have to seriously question their long-term prospects at the organization.
After all, who wants to build a lifelong career working for someone like that? The recent investors need to take note of their “superstar” CEO!
Combined with the angry email I shared above, Garg might as well have flipped his employees the bird.
The damage to their reputation and company culture will be immense. Imagine how difficult it will be for recruiters to sell candidates on the company too!
It’s Probably Garg’s Fault They Ended Up Here Anyway
Let’s be real.
“The market” is a flimsy excuse and probably not the real reason this happened.
There are reports that Garg blasted hundreds of these workers for reportedly working only 2 hours a day.
As Garg himself stated, part of the reason behind the layoffs was “efficiency and performance.”
So to be clear, the company was at a point where there were efficiency concerns about 15% of their workforce. That’s pretty substantial.
Who’s really at fault for that? Isn’t the CEO and the leadership team largely to blame?
Shouldn’t leaders have had conversations with these workers BEFORE it got to this point? After all, this big of a performance concern doesn’t develop overnight!
As a leader, one of your key responsibilities is addressing poor performance when it occurs. However, I have to imagine that the poor leadership example set by Garg is unfortunately replicated across the company.
Leadership and culture flows down. Without strong leadership at the C-suite, leaders at lower levels are doomed to make the same mistakes.
Be Better Than Better.Com
The ironic part is that it wouldn’t have cost Garg a dime to do the things I suggested above. Being an effective leader is not easy by any stretch, but it does mean putting people above short-term profits – something that Garg clearly does not understand.
This example is exactly why I started sharing my leadership journey through development courses and training. The key lessons on leadership are simply not taught to new leaders (or experienced leaders either!). Many would even laud Garg for boosting the company’s profit margins – although any gains are bound to be incredibly short-lived.
Being a stronger, more effective leader starts today. But it takes effort and a commitment to improving on the lifelong journey of leadership. What path will you choose?