Article: Better.com fiasco: Price leaders pay for getting people & culture equation wrong

Employee Relations

Better.com fiasco: Price leaders pay for getting people & culture equation wrong

Top three executives of Better.com also resigned from the company in the wake of the mass layoffs.
Better.com fiasco: Price leaders pay for getting people & culture equation wrong

Better.com’s CEO Vishal Garg, who was hit by a wave of backlash over a leaked Zoom call in which he callously laid off some 900 employees just before the holidays, is “taking time off” as the New York-based mortgage lender undertakes a leadership and cultural assessment.

Better.com’s board of directors informed employees via an email that Garg, 43, would be taking time off effective immediately after the “very regrettable events over the last week” and Chief Financial Officer Kevin Ryan will be managing the day-to-day decisions of the company and will be reporting to the board, Vice reported citing an email from the board of directors sent out last Friday.

The email also mentioned that the board has engaged an independent third-party firm to do a leadership and cultural assessment. “The recommendations of this assessment will be taken into account to build a long-term sustainable and positive culture at Better,” it added. 

Last week, the Indian-American entrepreneur put out an apology on the company website saying he "blundered the execution" of communicating the layoffs at the SoftBank-backed company. However, it looked like the remorse came too late and the damage was already done.

Top three executives of Better.com (head of marketing Melanie Hahn, head of public relations Tanya Hayre Gillogley and vice president of communications Patrick Lenihan) resigned from the company after the mass layoffs, the Insider reported last week. The divisive style of leadership displayed by Garg was directly responsible for the decision, Insider quoted sources as saying.

A culture of empathy is vital

Having the right set of people and a transparent, inclusive, and empathetic organizational culture is essential for growing and flourishing and it takes decades to get all these attributes ingrained in the organization, which becomes a vital part of the Employee Value Proposition.

Garg firing people over a zoom call is a perfect example of how one can tarnish the organization's image globally. Laying off people is always a painful process, but when it is done with so much insensitivity, then it's a virtual massacre.

“Clients and people are the two vital components for any organization to sustain and grow. If anyone gets this wrong, then obviously, there is a price the organization has to pay, depending on the magnitude of the impact.  A similar price is paid by the individual or a group of individuals who planned and executed the same. Considering the negative publicity Garg and Better.com received over this issue globally in the last few days, the management had to take a tough stand. The company was supposed to go public through a merger with blank-check firm Aurora Acquisition Corp in a deal valued at $7.7 billion. This merger may also get impacted because of this event. Without considering whether the layoff was warranted or not and the intentions behind the same, people will always judge you based on the presentation and execution and not the intention,” Anirban Das, Chief People Officer of Law Firm Lakshmikumaran & Sridharan, said.

Garg being given a “time off” with immediate effect following his insensitive culling of employees is only reactive.  “The damage has already been done. A better approach would have been to discuss within the management all the pros and cons of laying off and then managing the entire process with utmost sensitivity,” he adds.

CEO as a relationship worker

Abhijit Bhaduri, Founder & CEO of Abhijit Bhaduri & Associates and one of Linkedin’s Top voices, says a CEO is not just a knowledge worker, but a relationship worker too.

“Businesses go through ups and downs. The lives of the employees are linked to the fate of the organisation. When the business is losing in the marketplace, the leader has to make tough calls to shut down units. Sometimes, entire businesses have to be shuttered. While closing down the business is a decision that can be done clinically, laying off people cannot,” he adds.

Better.com’s CEO made several major mistakes during and after the Zoom call. He blamed employees and portrayed the layoff as their fault instead of acknowledging his and the company’s failures. He showed low emotional intelligence by focusing on his own feelings instead of theirs.

James Gerber, Brand Storyteller and Vice President, Account Services at Boston-based Public Relations firm Crackle, says that Garg also failed to consider how his comments would be perceived if they were made public and how that might damage the company.

“And caused damage it did. The controversy surrounding their brand put their stock debut in jeopardy. It lost key executives. It’s going to be much harder to attract and retain top talent. And customers will now think twice before doing business with it. Regardless of how he personally felt, he should have taken the high road and shown empathy. That means explaining the reasoning for the layoff, thanking everyone for their hard work, and offering resources to help them. If he showed employees the bare minimum of respect, the crisis could have been averted. Layoffs happen, but callousness doesn't need to,” adds Gerber.

Garg has company

Garg is not the first CEO who paid the price for getting the people and culture equation wrong at an organisation. There are several others who were booted out earlier for toxicity/misconduct or an unhealthy work environment. While some of these 'firings' are related to the company's performance, others were prompted by relationships viewed as inappropriate.

In September 2011, Yahoo Inc Chairman Roy Bostock fired CEO Carol Bartz over a phone call on 'performance grounds'.

In 2013, IT company iGate sacked president and CEO Phaneesh Murthy over sexual harassment charges… for "violating" company policy by failing to report a "relationship" with a fellow employee.

Indian entrepreneur Rahul Yadav, known for co-founding and leading real estate search portal Housing.com as its CEO, was fired by the board for his behaviour towards investors, ecosystem and the media, which it believed was not "befitting of a CEO and detrimental to the company".

More recently, Chip giant Intel CEO Brian Krzanich had resigned after an investigation found that he had a consensual relationship with an employee in breach of the company's policy.

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Topics: Employee Relations, Leadership, #Layoffs

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