Better.com teaches us how not to downsize a company

Over the past four months, digital mortgage lender Better.com has conducted a mass layoff not once, but twice. The company also badly botched a mass layoff not once, but twice. 

First, on December 1, Better.com laid off about 900 employees via a Zoom video call that ended up going viral. It was hardly the first company to lay people off over Zoom during a global pandemic. But it was the manner in which it was handled that offended so many.

CEO and co-founder Vishal Garg was universally criticized for being cold and unfeeling in his approach. He also added insult to injury by days later publicly accusing affected workers of “stealing” from their colleagues and customers by being unproductive.

On top of that, just one day before, CFO Kevin Ryan sent an email to employees saying that the company would have $1 billion on its balance sheet by the end of that week. In the weeks following the layoffs, Garg “apologized” and took a month-long “break,” employees detailed how he “led by fear,” and a number of senior executives and two board members resigned.

Then, on March 8, the company laid off an estimated 3,000 of its remaining 8,000 employees in the U.S. and India and “accidentally rolled out the severance pay slips too early.” Many workers reported that they initially found out by seeing a severance check in their Workday accounts — the payroll software the company uses. When execs realized their mistake, those employees said, they deleted the checks from some people’s Workday accounts. According to one affected employee who wished to remain anonymous, the severance checks arrived without any additional communication from the company.

As we look back on these two layoffs, it’s clear that we can all likely agree on one thing: Better.com could have handled both incidents better. Obviously, layoffs are hard no matter the circumstance but sometimes necessary — especially in times like these, when we’re seeing startups again considering layoffs as a way to control cash consumption and attract new capital. We spoke to a trio of HR experts who offered some advice on how to make a layoff less painful for all involved.

“This is an example to all companies of what not to do,” Lisa Calick, director of HR Advisory Services at Wiss & Company, said of Better.com’s handling of the situation. “Communication around involuntary terminations should always be handled with tact, respect and consideration for the affected individuals.”