Lay-offs suck. But if you’re forced with the decision, there’s a better way to do it.
Lay-offs should always be a last resort. As a leader faced with the decision, make sure you’ve exhausted all your options. Then go back, get more ideas, and exhaust all of those options. No matter your business, people are your most important asset.
But if you’re forced to make the decision, as Airbnb was this week, CEO Brian Chesky and his leadership provided a decent road-map to follow.
On May 5, Brian posted a public message for his 7,500 employees around the world to see. In the letter, he announced that nearly 1,900 “teammates” would have to leave Airbnb. Lay-offs, epecially big ones like this are devastating to everyone – the individual, the work team, company owners, the individual’s family, the community.
Brian and his team mitigated the negative impact and positively reinforced Airbnb’s culture by using these 5 key considerations.
1. Paint the picture and frame the stakes
It’s important to put the layoffs into context for your team. Be open and transparent about the forces that have led you to this difficult decision. Explain the exhaustive steps you’ve taken to avoid this decision.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill. Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019…
We faced two hard truths:
- We don’t know exactly when travel will return.
- When travel does return, it will look different.”
Over the last 45 days, Airbnb has raised over $2 billion. $1 billion in debt and equity from Silver Lake and Sixth Street Partners, and another $1 billion on a five year loan. Listening to Brian Chesky’s guest appearance on Masters of Scale, he explains that this cash infusion was to take care of their employees and weather the uncertain future.
2. Explain the decision making process
Whether these guiding principles are right or wrong is up to the leaders. But making these principles public mitigates the rumor mill as to how they decided who would stay.
“Travel in this new world will look different, and we need to evolve Airbnb accordingly…This means that we will need to reduce our investment in activities that do not directly support the core of our host community. ”
“These were our guiding principles:
- Map all reductions to our future business strategy and the capabilities we will need.
- Do as much as we can for those who are impacted.
- Be unwavering in our commitment to diversity.
- Optimize for 1:1 communication for those impacted.
- Wait to communicate any decisions until all details are landed — transparency of only partial information can make matters worse.
Our process started with creating a more focused business strategy built on a sustainable cost model. We assessed how each team mapped to our new strategy, and we determined the size and shape of each team going forward. We then did a comprehensive review of every team member and made decisions based on critical skills, and how well those skills matched our future business needs.”
3. Express gratitude, show compassion and respect
“The result is that we will have to part with teammates that we love and value. We have great people leaving Airbnb, and other companies will be lucky to have them.
To take care of those that are leaving, we have looked across severance, equity, healthcare, and job support and done our best to treat everyone in a compassionate and thoughtful way.”
To close the message, Brian expressed gratitude with these words:
“First, I am thankful for everyone here at Airbnb. Throughout this harrowing experience, I have been inspired by all of you. Even in the worst of circumstances, I’ve seen the very best of us. The world needs human connection now more than ever, and I know that Airbnb will rise to the occasion. I believe this because I believe in you.
Second, I have a deep feeling of love for all of you. Our mission is not merely about travel. When we started Airbnb, our original tagline was, “Travel like a human.” The human part was always more important than the travel part. What we are about is belonging, and at the center of belonging is love.”
Employees in the US will receive 14 weeks of base pay, plus one additional week for every year at Airbnb. Tenure will be rounded to the nearest year. For example, if someone has been at Airbnb for 3 years and 7 months, they will get an additional 4 weeks of salary, or 18 weeks of total pay. Outside the US, all employees will receive at least 14 weeks of pay, plus tenure increases consistent with their country-specific practices.
We are dropping the one-year cliff on equity for everyone we’ve hired in the past year so that everyone departing, regardless of how long they have been here, is a shareholder. Additionally, everyone leaving is eligible for the May 25 vesting date.
In the midst of a global health crisis of unknown duration, we want to limit the burden of healthcare costs. In the US, we will cover 12 months of health insurance through COBRA. In all other countries, we will cover health insurance costs through the end of 2020. This is because we’re either legally unable to continue coverage, or our current plans will not allow for an extension. We will also provide four months of mental health support through KonTerra.”
4. Job support
This is where Airbnb far exceeded expectations.
“Our goal is to connect our teammates leaving Airbnb with new job opportunities.”
“Here are five ways we can help:
- Alumni Talent Directory** — We will be launching a public-facing website to help teammates leaving find new jobs. Departing employees can opt-in to have profiles, resumes, and work samples accessible to potential employers.
- Alumni Placement Team — For the remainder of 2020, a significant portion of Airbnb Recruiting will become an Alumni Placement Team. Recruiters that are staying with Airbnb will provide support to departing employees to help them find their next job.
- RiseSmart — We are offering four months of career services through RiseSmart, a company that specializes in career transition and job placement services.
- Employee Offered Alumni Support — We are encouraging all remaining employees to opt-in to a program to assist departing teammates find their next role.
- Laptops — A computer is an important tool to find new work, so we are allowing everyone leaving to keep their Apple laptops.”
** The Alumni Talent Directory was created after employees had been informed they would be leaving the company. I posted it here in hopes you might emulate it if you are faced with this difficult decision.
5. Outline clear next steps
“I want to provide clarity to all of you as soon as possible. We have employees in 24 countries, and the time it will take to provide clarity will vary based on local laws and practices. Some countries require notifications about employment to be received in a very specific way. While our process may differ by country, we have tried to be thoughtful in planning for every employee.”
“Within the next few hours, those of you leaving Airbnb will receive a calendar invite to a departure meeting with a senior leader in your department. It was important to us that wherever we legally could, people were informed in a personal, 1:1 conversation. The final working day for departing employees based in the US and Canada will be Monday, May 11. We felt Monday would give people time to begin taking next steps and say goodbye — we understand and respect how important this is.
Some employees who are staying will have a new role, and will receive a meeting invite with the subject “New Role” to learn more about it. For those of you in the US and Canada who are staying on the Airbnb team, you will not receive a calendar invite…
I’ve asked all Airbnb leaders to wait to bring their teams together until the end of this week out of respect to our teammates being impacted. I want to give everyone the next few days to process this, and I’ll host a CEO Q&A again this Thursday at 4pm pacific time.”
How you lay-off teammates should not be looked at only from a short-term impact lens.
The way you handle lay-offs impacts the morale of employees you decided to keep. Are they proud of the way you handled things, or scared that they’re next? Lay-offs also impact your ability to attract future employees. Looking at an uncertain future, are you a company this employee can trust to do the right thing?
Hopefully you’re not faced with a decision of this magnitude during this time of crisis. But if you are, take notes from Airbnb.