The boss of a US firm has been criticised after he fired around 900 of his staff on a single Zoom call.
“If you’re on this call you’re part of the unlucky group being laid off,” said Vishal Garg, chief executive of mortgage firm Better.com, on the call, later uploaded to social media.
Comments on social media said it was “cold”, “harsh” and “a horrible move”, especially in the run up to Christmas.
“Last time I did [this] I cried,” Mr Garg told the staff on the call.
“I wish the news were different. I wish we were thriving,” he said. This time his tone was measured and he referred to notes on the desk in front of him.
Mr Garg said staff performance and productivity, and market changes lay behind the mass-firing of what he said was 15% of Better.com’s workforce.
He did not mention the $750m (£565m) cash infusion Better.com received from Softbank, the Japanese firm and key investor, last week.
Better.com’s chief finance officer, Kevin Ryan, told the BBC: “Having to conduct layoffs is gut-wrenching, especially this time of year.”
He added, however, that having “a fortress balance sheet and a reduced and focused workforce” was necessary to take on the “radically evolving homeownership market”.
Vishal Garg’s announcement to staff
“Hi everyone, thank you for joining. I come to you with not great news. The market has changed, as you know, and we have to move with it in order to survive so that hopefully we can continue to thrive and deliver on our mission.
“This isn’t news that you’re going to want to hear but ultimately it was my decision and I wanted you to hear it from me. It’s been a really, really challenging decision to make. This is the second time in my career that 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. But we are laying off about 15% of the company for [a number of] reasons: the market, efficiency and performances and productivity.
“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.”
Ann Francke, chief executive of the UK’s Chartered Management Institute, criticised the way in which the staff were fired.
“Bad managers will fire people badly whether virtually or in person,” she told the BBC’s Today programme. “But the callous manner in which this was conducted was just magnified by the fact that it was done in this sort of virtual and quite callous style.
“What we know in the pandemic is that empathy matters.”
Better.com, which aims to use technology to make the housebuying process “faster and more efficient”, confirmed earlier this year that it plans to float the company on the stock market. A deal is likely to value the business – which Mr Garg founded in 2015 – at between $6.9bn (£5.2bn) and $7.7bn.
Ms Francke suggested the way in which Mr Garg fired his staff could have an effect on Better.com’s future business.
“This is a customer-facing business, they are trying to provide people with mortgages. I’m sure many customers or potential customers are thinking: ‘Gee whizz, if they treat their employees this way I wonder how they treat their customers?’.”
After the firing, Fortune magazine said that Mr Garg was the author of a previously written anonymous blog post in which he accused sacked staff at his firm of “stealing” from their colleagues and customers by being unproductive and only working two hours a day, while claiming for eight or more.
Mr Garg’s management style has also been criticised before, after an email that he sent to staff that was obtained by Forbes last year.
In the email, Mr Garg wrote: “You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS… SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME.”
Business Insider reported that after firing 900 staff, Mr Garg held a subsequent “town hall” meeting with remaining workers.
Better.com had recruited high numbers of staff during the pandemic. But Mr Garg reportedly told his staff: “Today, we acknowledge that we overhired and hired the wrong people, and in doing that, we failed.
“I failed. I was not disciplined over the last 18 months.”
A right way to fire staff?
“Organisations do have to make job cuts sometimes, it is a hard reality,” says Rachel Suff, senior policy adviser on employee relations at the Chartered Institute of Personnel and Development.
“But how they go about it and the humanity they approach it with can have a fundamental impact on how people deal with that shocking news.”
Ms Suff points out that the situation facing Better.com’s staff in the US would not happen in the UK. Legally, UK employers have to enter a consultation period with workers of at least 30 days, or 45 days if more than 100 people are being made redundant.
During that period “people should be given the right phrasing, eased into it, given warning, prepared for the news and explained the reasons why”, she says.
UK employers also have to look for alternative roles for workers. “An employer really needs to tell people that they’ve exhausted every possible alternative, it is the last thing they wanted to do – it is about being able to leave with your dignity and respect intact.”
Ms Suff adds that while a lot of focus regarding Better.com has been about Mr Garg using Zoom to fire staff, the approach is incredibly important.
“If you notice as well [Mr Garg] talks about the impact on himself. He says: ‘I cried the last time’. But who’s losing their job here? It was very rich, talking about the impact on himself – what about them?”
Gemma Dale, lecturer in employment law and business studies at Liverpool John Moores University in the UK, said this was “no way to lead an organisation”.
A mass-firing like this would not be legal in the UK, she said.
“Just because you can do this in America, doesn’t mean you should,” she added.
“There are ways to do these things which, even in difficult conditions, are empathetic and decent.”
It could harm the firm as well as its staff she said as “existing employees will look to how the company treats people as a signal to how it will treat them in the future”.
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