Critical Review of News,“Better.com CEO fires 900 employees”

Journalist Ramishah Maruf has published controversial news "Better.com CEO fires 900 employees over Zoom" on the CNN Business website. Vishal Garg, a mortgage company Better.com CEO recently courted controversy by laying off about 9% of employees over a single Zoom call ahead of the holiday season. According to the now-viral video, "If you are on this call, you are part of the unlucky group that is being laid off; your employment here is terminated effective immediately", Garg announced abruptly to the workforces on the call. Fortune also reported that Garg accused the staff of 'stealing' from their colleagues and customers through unproductive working performance, only working two hours a day. In a statement of CFO Kevin Ryan said, "Having to conduct layoffs is gut-wrenching, especially this time of year; however, a fortress balance sheet and a reduced and focused workforce together set us up to play offence going into a radically evolving homeownership market." After the CEO layoffs incident, three Better.com executives resigned, the public listing plan was postponed.

Whether called 'layoffs', 'rightsizing', 'downsizing', since the late 1980s, cannot deny that American companies have been reducing the scales of their workforces at alarming rates." (Levy, 2017, p. 384). The pandemic outbreak brings damage to the job market on another level and may seem profound and long-lasting because Covid-19 continues to evolve. Employees facing challenge stress might be getting dismissal; the management has to deal with the pressure and sorrow of downsizing a large number of employees and also feel latent anxiety about their positions at the same time. How the management let employees go matters for the company's reputation, and the way the CEO's actions made the situation even worse brings more hidden costs for the company. Cutback may be an economic reality, but still can handle them professionally.

The proper way of firing someone is to break the bad news face-to-face (Vasel, 2018). While texting and emailing all play an important role in communication, face-to-face communication is still the best way to go. To terminate employment is one of them. Everyone's reaction to being fired will be a little different, and when it comes time to let workers know about upcoming staffing changes, management needs to find a private place to have a one-on-one conversation (which can also include a human resource representative). Employees should not be made to feel on display when they receive the news. During a Coronavirus crisis, remotely laying off staff seems to be the only viable option, whether via phone call or video conference, still can show human dignity and compassion.

Try to avoid a masse group Zoom. Not everyone will suspect that layoffs are coming; the reaction might cry or reach acceptance immediately in a myriad of ways. Some people will have an emotionally overwhelming and stressful experience, shame, anger, loss of self-esteem, etc. (Stanford University). It is disrespectful letting that happen on the camcorder in front of people. The coronavirus has made it more difficult for everyone's life; usually, 'home' is a person's safe zone, so it is more personally invasive to tell staff with bad news within earshot of their family than in the office. During these transitional times, employees want most to believe that the layoffs are being done fairly (Brockner, 2006). Therefore, maximise employees' privacy and suggest they stay in some quiet place, and family members are not around while making this phone call, preserve dignity and respect during the termination.

Do not cut contact too soon. According to Ramishah Maruf's report, some fired employees indicate that when the meeting ended, they tried to ask what was going on through the company's Slack channels, their screens went black, and they lost access to the company computer, email, phone, and messaging immediately. Laying off people may be a difficult chore for the leaders, but for an employee might be traumatic. Research has shown that being unemployed is consistently among the top ten most stressful things in a person's life (Levy, 2017, p. 383). From a former Better.com employee perspective, being layoff within a surprise three-minute online meeting and suddenly turned off access to the platform, feeling numb and isolated, is a grieving process (Latifi, 2021). For some people, colleagues are like part of their extended family. Landy & Conte (2016) indicated that losing a job can be devastating to the employee because they may still have continuance, affective, and normative commitments to the organisation. With an economic recession due to the pandemic, the unemployment rate increases, resulting in psychological well-being becoming a major global concern (Godinic et al., 2020). It is vital that helping hand make connections for those in transition, feel less stress and more severe mental health concerns such as depression and anxiety disorders, be compassionate for the departing employee, and express gratitude for their dedication to the work. Show kindness and offer some help, do not cut contact too soon, try to make the transition as smooth as possible.

2. Reputational damage

A firm's reputation, one of the most familiar but least understood intangible assets (Cole, 2012). The harmful effects of layoffs are not only on the fired employees but also the organisation that implemented the layoffs; Better.com's has suffered a significant blow due to laying off incidents and brings a very high cost of a bad reputation, making it hard to recruit new talent and undermine employee retention, increase staff costs and hit operate margins.

Talent recruit is drastically impacted by corporate reputation. With the popularity of review sites such as Glassdoor, LinkedIn, Fairygodboss and CareerBliss, which has become a great way to vet and attract staff, companies have been forced to think deeper about reputation and the hiring process's effects on the company culture. According to the statistics, sixty-nine per cent of potential candidates would not accept an offer with a company by a bad reputation, even if they were unemployed; And eighty-four per cent of current employees might square up leaving current jobs if offered another position with a company that had a positive reputation (Glassdoor Team, 2019). With the leaked layoff footage going viral, Better.com has got negative news coverage and a social media tongue lashing; the CEO blames difficult market conditions due to the layoffs, and those who were fired include diversity, equity and inclusion recruitment team; but it turns out that the firm had just gotten a $750 million cash infusion recently. Not being honest about the layoff reasons and situation, Better.com is getting crushed on the job review website. Businesses operating in a new era of employee brands must be aligned with their public brand, and clearly, Better.com's internal actions and external brand are not aligned. As a result, the layoff incident has created a significant recruitment problem.

Companies cannot recover from major problems overnight, and hidden costs increase. Many organisations via downsizing to enhance economic benefits; however, the reach from Cascio (2009) point out numerous of the expected benefits of the layoff did not materialise. The fallout from how the CEO handled the layoffs has been widespread; the fourth quarter of the 2021 public listing plan has been delayed. Increasing severance to handle the disastrous cutbacks potential lawsuits, the company's marketing heads, Melanie Hahn, the company's VP of communications, Patrick Lenihan; and head of public relations, Tanya Gillogley;  have all resigned at a time when companies sorely need help in all those fields (Mary, 2021). It is demoralising and kills productivity when multiple employees resign simultaneously, can sap remaining employees' trust and enthusiasm; a powerful psychological effect, 'turnover contagion', occurs when key employees resign (Felps et al., 2009), seeing colleague leave which can motivate people to start thinking about if the grass is greener on another side. Studies show that when employees show pride in their workplace, they attract customers, increasing revenue twofold compared to competitors without a committed and engaged workforce (Bardwick, 2008). A good leader should be strengthening employee recruitment and retention to prevent being left captain a ship without a crew.

In summary, all online issues start offline, and in most cases, there are internal fixes that can prevent online problems from occurring. It is not a case against firing people; unfortunately, that is part of life; this is a case for basic human dignity. Treating employees well is more than just an ornament - it is critical to the company's bottom line. It is crucial in a compassionate and human dignity way to handle a mass cutback in a professional that helps maintain productivity, avoid legal liability, and keep the positive company reputation for attracting talent in the future. Companies need to have clear, well-communicated; by covering all bases of employee risk, the potential for damage to a company's reputation can be minimised. Sometimes layoff is necessary, but the company's leaders must think over and understand the short- and long-term costs or other available alternatives to layoff.

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Brockner, J. (2006). Why it's so hard to be fair. Harvard Business Review, 84(3), 122–129. https://europepmc.org/article/med/16515160

Cascio, W. F. (2009). Employment Downsizing and Its Alternatives: Strategies for Long-Term Success. Alexandria, VA: SHRM Foundation.

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Felps, W., Mitchell, T. R., Hekman, D. R., Lee, T. W., Holtom, B. C., & Harman, W. S. (2009). Turnover Contagion: How Coworkers’ Job Embeddedness and Job Search Behaviors Influence Quitting. Academy of Management Journal, 52(3), 545–561. https://go.exlibris.link/YWSrQlvm

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Latifi, F. (2021, December 10). I’m one of 900 employees Better.com fired in a surprise 3-minute Zoom. Telling my kids was the hardest part. Business Insider. Retrieved December 15, 2021, from https://www.businessinsider.com/better-com-layoffs-900-employees-it-was-a-gut-punch-2021-12?international=true&r=US&IR=T

Levy, P. E. (2017). Industrial/organizational psychology: Understanding the workplace (5th ed.). New York, NY: Worth Publishers.

Stanford University. (n.d.). Coping with the Emotional Impact of a Layoff. Faculty Staff Help Center. Retrieved December 15, 2021, from https://helpcenter.stanford.edu/resources/work-related-resources/coping-emotional-impact-layoff

Vasel, K. (2018, March 15). The right way to fire an employee. CNNMoney. Retrieved December 15, 2021, from https://money.cnn.com/2018/03/15/pf/jobs/how-to-fire-employee/index.html

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Mary, A. (2021, December 8). Better.com’s PR, comms, marketing heads submit resignations in wake of layoffs fiasco. TechCrunch. Retrieved December 22, 2021, from https://techcrunch.com/2021/12/07/better-coms-pr-comms-marketing-heads-submit-resignations-in-wake-of-layoffs-fiasco/