Vishal Garg: US boss fires 900 employees over Zoom

dWeb.News Article from Daniel Webster dWeb.News

By Beth Timmins
Business reporter, BBC News

Media caption,

Former Better.com employee, Christian Chapman described the Zoom call as “excruciating”

The boss of a US firm has been criticised after he fired around 900 of his staff on a single Zoom call.

“If you’re on this call you’re part of the unlucky group being laid off,” said Vishal Garg, chief executive of mortgage firm Better.com, on the call, later uploaded to social media.

Comments on social media said it was “cold”, “harsh” and “a horrible move”, especially in the run up to Christmas.

“Last time I did [this] I cried,” Mr Garg told the staff on the call.

“I wish the news were different. He said, “I wish we were thriving.” His tone was more measured this time and he pointed to the notes on his desk.

Mr Garg said staff performance and productivity, and market changes lay behind the mass-firing of what he said was 15% of Better.com’s workforce.

He did not mention the $750m (PS565m) cash infusion Better.com received from Softbank, the Japanese firm and key investor, last week.

Better.com’s chief finance officer, Kevin Ryan, told the BBC: “Having to conduct layoffs is gut-wrenching, especially this time of year.”

He added, however, that having “a fortress balance sheet and a reduced and focused workforce” was necessary to take on the “radically evolving homeownership market”.

Vishal Garg’s announcement to staff

“Hi everyone, thank you for joining. This is not good news. We have to adapt to the market’s changes in order to continue our mission and thrive.

“This isn’t news that you’re going to want to hear but ultimately it was my decision and I wanted you to hear it from me. This was a difficult decision. This is my second attempt at this in my professional career. I don’t want to do it again. It was hard for me to do it the last time. This time, I want to be more resilient. But we are laying off about 15% of the company for [a number of] reasons: the market, efficiency and performances and productivity.

“If you’re on this call you are part of the unlucky group that is being laid off. Your employment is ended. Effective immediately. “

‘Empathy matters’

Ann Francke, chief executive of the UK’s Chartered Management Institute, criticised the way in which the staff were fired.

“Bad managers will fire people badly whether virtually or in person,” she told the BBC’s Today programme. “But, the inhumane manner in which it was carried out was only magnified by its virtual and very callous nature.

“What we know in the pandemic is that empathy matters.”

Better.com, which aims to use technology to make the housebuying process “faster and more efficient”, confirmed earlier this year that it plans to float the company on the stock market. A deal is likely to value the business – which Mr Garg founded in 2015 – at between $6.9bn (PS5.2bn) and $7.7bn.

Ms Francke suggested the way in which Mr Garg fired his staff could have an effect on Better.com’s future business.

“This is a customer-facing business, they are trying to provide people with mortgages. Many potential customers and customers will be thinking, “Gee whizz! If they treat their employees like that, I wonder how they treat customers?” “

‘I failed’

After the firing, Fortune magazine said that Mr Garg was the author of a previously written anonymous blog post in which he accused sacked staff at his firm of “stealing” from their colleagues and customers by being unproductive and only working two hours a day, while claiming for eight or more.

Mr Garg’s management style has also been criticised before, after an email that he sent to staff that was obtained by Forbes last year.

In the email, Mr Garg wrote: “You are TOO DAMN SLOW. You’re a bunch of dumb DOLPHINS… STOP IT. STOP IT. STOP IT NOW. I AM EMBARRASSED BY YOU. “

Business Insider reported that after firing 900 staff, Mr Garg held a subsequent “town hall” meeting with remaining workers.

Better.com had recruited high numbers of staff during the pandemic. According to reports, Mr Garg told his staff that he had admitted that he had overhired and hired the wrong employees, and that he was sorry for that.

“I failed. I was not disciplined over the last 18 months. “

A right way to fire staff?

“Organisations do have to make job cuts sometimes, it is a hard reality,” says Rachel Suff, senior policy adviser on employee relations at the Chartered Institute of Personnel and Development.

“But how they go about it and the humanity they approach it with can have a fundamental impact on how people deal with that shocking news. “

Image source, Getty Images

Ms Suff points out that the situation facing Better.com’s staff in the US would not happen in the UK. Legally, UK employers have to enter a consultation period with workers of at least 30 days, or 45 days if more than 100 people are being made redundant.

During that period “people should be given the right phrasing, eased into it, given warning, prepared for the news and explained the reasons why”, she says.

UK employers also have to look for alternative roles for workers. Employers must tell workers that they have exhausted all options. It is not about being forced to fire people. It is about being able leave the workplace with dignity and respect. “

Ms Suff adds that while a lot of focus regarding Better.com has been about Mr Garg using Zoom to fire staff, the approach is incredibly important.

“If you notice as well [Mr Garg] talks about the impact on himself. He said, “I cried the first time.” Who’s going to lose their job? It was rich. He spoke about the impact on himself. What about others? “

Gemma Dale, lecturer in employment law and business studies at Liverpool John Moores University in the UK, said this was “no way to lead an organisation”.

A mass-firing like this would not be legal in the UK, she said.

“Just because you can do this in America, doesn’t mean you should,” she added.

“There are ways to do these things which, even in difficult conditions, are empathetic and decent.”

It could harm the firm as well as its staff she said as “existing employees will look to how the company treats people as a signal to how it will treat them in the future”.

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