Treating the Delivery of Bad News Like a Crisis Can Help Mitigate PR Damage
It’s been one year since Better.com CEO Vishal Garg infamously laid off 900 employees over Zoom.
Garg, who already had a soured reputation of treating employees poorly, unemotionally braced staff for announcing layoffs stating, “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.”
The news, coupled with the way it was delivered (on a 3-minute Zoom and not in a more personal or sympathetic way), did not go well with those on the call and created a crisis for Garg and the mortgage company.
In fact, clips of the announcement and the news of the firing went viral, spreading online with people calling Garg “evil,” “unhinged” and “horrible.” In traditional media it spread across the globe – CNN, Forbes, The Guardian, New York Times, India Today, Economic Times and many more.
Some called him a “grinch” due to it being so close to the holidays and noted that “the company had received $750 million as part of their public offering. Better.com was rich with cash and had more than $1 billion on its balance sheet.”
It also didn’t help that it was reported Garg later complained on a separate call, as well as the website Blind, about the fired employees, stating that they should have been fired months ago and that they were stealing from the company by working only 2 hours a day.
These actions and comments raised a firestorm of negative attention for Garg, who a couple days later apologized for the way he handled the announcement and took a leave of absence to reflect on his leadership before returning in January of 2022.
Better.com actually showed CEOs and companies can learn from past mistakes – the company laid off another 3,000 employees in March of this year to much less fanfare as employees were notified via a personal phone call. However, that effort was short lived as some employees discovered they were laid off via a glitch in payroll that doled out severance payments before the calls were made.
But much like Better.com, numerous companies worldwide, especially social media and tech-based companies, have started cutting their workforces due to inflation, the ever-looming recession and loss in revenue.
Most of these layoffs have been relatively lowkey, receiving a few headlines in the news and becoming just one of many on a growing list.
However, some well-known CEOs and bosses have not handled the communication of layoffs with much tact, causing an uproar that is not likely to quiet down any time soon.
Just today for example, The Washington Post publisher Fred Ryan announced that the newspaper would be conducting Q1 layoffs during a town hall but gave little comfort to ease concerns. Despite being in a room full of reporters, Ryan refused to answer any questions and provide additional details, which of course, caused panic from people who are nervous of losing their jobs.
Instead of allowing for a Q&A, Ryan told the reporters, “We are not going to turn this into a grievance session” and walked away. Unbeknownst to him however, this brief interaction was also caught on video and shared on Twitter by Washington Post’s national correspondent Annie Gowen.
As one would expect, the announcement and the handling of the town hall by Ryan has already spread through social and traditional media, such as CNN and The New York Times – both of which noted the town hall grew “contentious” after Ryan refused to answer questions.
One of the most notable poor firing performances in recent months came from Elon Musk, who purchased Twitter this fall and saw drops in revenue, abruptly and quickly laid off about 50% of the social media company’s workforce via email that lacked any type of thoughtfulness and sensitivity, as well important details on how employees can move forward. Musk also locked terminated staff out of the company network almost immediately.
With the swiftness of the terminations at Twitter, Musk, who has a reputation of being staunch and demanding, was being criticized as “inhumane,” and showed a “lack of care and thoughtfulness.”
Some former employees have also filed a class action lawsuit, stating that Musk did not give them appropriate notice of their termination under U.S. federal law, and only found out they were fired when they discovered they were locked out of their computers.
Although critics don’t appear to have swayed his actions, companies have most definitely left a mark on Musk and the company by pulling their ads, including Apple, Chipotle, United Airlines, General Mills, Pfizer, Audi, Volkswagen and Mondelez International Inc.
This of course has resulted in even further drops in revenue since Musk took over and has placed the company in crisis. The firings are also part of larger string of PR missteps Musk has taken since buying the company:
- Dissolving Twitter’s Trust and Safety Council via an email that said the council was not “the best structure” to bring “external insights into our product and policy development work” less than an hour before it was to meet.
- Abruptly removing and reinstating verified accounts.
- Reinstating suspended accounts.
- Offering an ultimatum to employees – work long and intense hours or leave.
- Shadow-banning accounts that parodied him or showed “hateful conduct” towards him.
- Picking fights with celebrities and brands such as Apple.
- Insulting some of Twitter’s most loyal users.
To contrast Musk, Meta (formerly known as Facebook) CEO Mark Zuckerberg also made an announcement to terminate a sizeable portion of the company’s staff – about 11,000 people – but also noted there is no easy way to fire people and attempted the mass layoffs in a more respectable manner.
In a post to Meta employees Zuckerberg laid out the details of the firings, why they were occurring and that they were his fault for overspending and underestimating the loss in revenue. He also provided employees with a clear understanding of their importance to the company and how their efforts brought about success.
That won’t make the termination any easier, but it at least shows some level of concern from Zuckerberg towards his employees.
Importantly, Zuckerberg also provided next steps for those laid off – severance (an amazing “16 weeks of base pay plus two additional weeks for every year of service, with no cap”), remaining PTO, insurance coverage, career services and even immigration support. These dismissal packages are all things that employees want to know and should be made aware of when being let go.
Unfortunately, Zuckerberg and Meta are also looking to limit costs by reducing benefits provided to employees, such as mental health and work-life balance programs.
And although there was a large amount of attention placed on Zuckerberg and the firing of 11,000 employees, there has not been much coverage in media that criticized Zuckerberg for the way he went about it (although, there are plenty of calls for his resignation and employees that claim that Zuckerberg is slowly killing the company in recent years).
The stark contrast between the firings by Musk and Zuckerberg, however, highlights how important it is for CEOs to carefully plan for and execute the delivery of bad news. Zuckerberg even noted in a town hall meeting that he and Meta put more thought into their layoffs than Musk and Twitter.
Maybe Zuckerberg has a point. Terminating staff, which impacts more than just the employee but also their livelihood and families, needs to be thought out as if the company were planning for a crisis response (which in essence, it could be).
Musk may not overtly care about his reputation or the well-being of his staff at Twitter, but that doesn’t negate the fact that there is now a crisis surrounding his reputation, as well as within the company.
The CEOs of Twitter and Meta are not the only ones that have had to announce major layoffs in recent months. A small sample list of companies that have made layoffs is include below, but a true visualization is available online from VisualCapitalist.com:
- Peloton
- Masterclass
- Lyft
- DocuSign
- Zillow
- Amazon
- DoorDash
- Microsoft
- Noom
- HP
- Morgan Stanley
- CNBC
- Buzzfeed
- Carvana
No one can ever predict when bad news is to come and when it will need to be delivered, but it is important for CEOs to know how to go about announcing layoffs to their staff, as well as plan to move forward in assisting employees, and responding to questions and critics.
It takes preparation and practice, and for more information on how Xenophon Strategies can assist in preparing CEOs, please visit: https://xenophonstrategies.com/services/media-training.