- Layoffs at some high-profile startups — including Bird, Wonderschool, and ZipRecruiter — were announced via mass video calls.
- Experts say that’s hardly best management practice.
- Even during an extended period of remote work, you can conduct layoffs with respect and compassion. One strategy is to arrange one-on-one meetings with managers and employees.
- Mishandling layoffs could hurt a brand’s reputation in the long term.
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On March 27, employees at the buzzy scooter startup Bird were invited to a 30-minute Zoom meeting titled simply, “COVID-19 Bird Update.”
Within a few minutes of the meeting start time, Dot.LA reported, an unidentified member of Bird’s staff came on the line (there was no video) to announce that management had been forced to make difficult decisions in the midst of the coronavirus pandemic and the economic recession. One of those decisions was eliminating some roles.
Immediately after the message was delivered, employees said, their company-issued laptops restarted and they no longer had access to their computers. Some of those people told Dot.LA that they weren’t certain what had happened until they saw a TechCrunch article about the layoffs.
Ultimately, 30% of Bird’s staff was laid off. The company had raised $275 million in funding several months ago.
Bird is just one example of startups — including the childcare startup Wonderschool and the employer marketplace ZipRecruiter — that have conducted layoffs via mass videoconference in the last few weeks.
These videoconference layoffs have elicited strong emotions from former employees.
“I find a lot of the actions that took place on Friday horrendous,” former Bird employee Jenny Li Alva wrote in a Medium blog post.
Bird’s CEO, Travis VanderZanden, subsequently tweeted that managers had been asked to connect with laid-off employees individually after the Zoom meeting. A Bird spokesperson confirmed that managers, executives, and HR representatives followed up with the employees who’d lost their jobs. The spokesperson also said that, during the Zoom meeting, a slide was projected indicating that laid-off employees would receive four weeks of pay, three months of medical coverage, and extra time to exercise their stock options.
The fallout from this sort of employer-employee drama can come in many forms.
“This is the moment where brands are built or brands are dented,” said Yair Riemer, president of career transition services at the HR technology company CareerArc. If the company mishandles layoffs, Riemer added, “it absolutely will impact recruitment and talent because the world is small.”
Many high-flying startups have been hit hard by the recession
Startups are often risky bets to begin with, ideas that could either become the next Amazon or the latest flop.
The New York Times’ Erin Griffith reported on April 1 that in the few weeks prior, more than 50 startups had cut or furloughed a total of roughly 6,000 employees. Those startups include fitness platform ClassPass, clothing retailer Everlane, clothing rental service Rent the Runway, flexible-space company Knotel, corporate travel company TripActions, and women’s coworking space The Wing.
Just a few months ago, these companies were flying high, backed by millions of dollars in funding from prominent venture capitalists including Andreessen Horowitz and Sequoia Capital.
But that’s changed.
At ZipRecruiter, all employees were invited to a webinar with CEO Ian Siegel, Business Insider’s Meghan Morris reported. According to two employees that spoke to Morris on condition of anonymity, Siegel spoke for less than 10 minutes and said that the company was laying off some employees. A total of 443 employees were laid off and 49 were furloughed, according to Dot.LA, which first reported the news that ZipRecruiter was conducting layoffs. ZipRecruiter raised $156 million in a Series B round in October 2018, when it was valued at $1.5 billion.
Wonderschool delivered the news about layoffs during an all-hands meeting on Zoom, Business Insider’s Melia Russell reported. According to a former employee, staff were told that the only way for Wonderschool to survive the financial crisis was to let some people go. About 50 employees, or 75% of the staff, were let go.
It’s important for leaders to conduct layoffs with compassion and respect for the employees
Announcing layoffs via a mass virtual meeting is hardly best management practice.
Elaine Varelas, managing partner at the career-management firm Keystone Partners, previously told me that leaders should have one-on-one meetings with every employee who’s being let go. (In this case, those meetings can be virtual.) No one should be “treated like suddenly they’re a criminal,” she said.
Layoffs are an example of a situation where the standard startup playbook — “move fast and break things” — doesn’t quite apply, said Riemer, of CareerArc. Efficiency and nimbleness typically work to startups’ benefit, Riemer added, but in this extended crisis situation, “that attitude needs to be modified.” A one-and-done videoconference just isn’t the right move. It’s especially important to support employees getting laid off from a high-growth startup because this may be the first job they’ve ever held, Riemer said.
A recent blog post from David Ulevitch, a general partner at Andreessen Horowitz, outlines strategies for conducting layoffs at a startup while everyone’s working remotely during the pandemic. For example: Don’t send a “subtle” calendar invitation for a meeting with the employee, their manager, and an HR representative. Have your camera turned on when you announce layoffs virtually. Essentially, Ulevitch is reminding startup executives that there’s a human being on the other side of the call, someone who’s smart but also has feelings.
“Remember that with every decision you make in this process you need to err on the side of doing whatever you can to help the impacted employee,” Ulevitch wrote. That probably means, he added, that you allow employees to continue to use their company-issued laptop, especially since it may be the only computer they have right now. (Ulevitch said management should be clear that the computer is still company property and will need to be returned later.)
Beyond logistics, management should make the motivating factors for staff cuts clear. That helps leaders avoid subjectivity and bias. Once the announcement is made, some employees may request an explanation for why they were let go, but their colleague wasn’t — and you’ll want to have an answer ready. Buffer CEO Joel Gascoigne, for example, wrote a blog post in 2016 about how the company ended up laying off 10 employees, including a flow chart illustrating management’s methodology for deciding which positions to eliminate.
Mishandling layoffs can hurt a brand’s long-term prospects
It’s possible for a company to recover from a management misstep. Specifically, Riemer said, they can rebuild trust among the employees that are left behind and worried about their own job security.
Execs might use some variation of Riemer’s script: “We made an error here. We believe in this business. We believe in this company. We’re acknowledging the pain that we’ve put on others, and you guys are still here with us. We’re going to make the best possible plans to ensure that it doesn’t happen again.”
In the Medium blog post, Alva, the former Bird employee wrote that “I still believe in the product” and in the dream of getting people on scooters and bikes, instead of “isolated in cars.” But after the way the company handled layoffs, Alva said, “I’m unsure if I believe in the brand anymore.”
SEE ALSO: The startup founder’s guide to letting people go efficiently and compassionately, if you have no other choice in a time of crisis
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