by Matt Barkett

December 6, 2021

Updated on December 8, 2022 to include details about the delayed IPO. 

Occasionally, I am asked for examples of companies doing things the wrong way in difficult situations so that my clients can avoid the same pitfalls. Unfortunately, there’s always a good example at hand. This recent misstep from Better.com, a real estate mortgage company that had to lay off more than 900 employees before year-end, was one that even I found a little shocking.

Here’s a few snippets of the unfortunate, the bad and the unforgivable in this story:

The Unfortunate
As is fairly common today, the announcement had to be made via Zoom due to a remote employee base and social distancing. Making it worse was the ever-unpopular Holiday Season Layoff, which every company that has had to do knows the outcry that can create, no matter how necessary it is for financial reasons prior to year’s end.

The Bad
No reasonable executive wants to give notice of a layoff via video conference. I’ve had several clients struggle with what to do, but most have found ways to make it more personal and empathetic. In one example, the company made the broad announcement via email but then quickly followed up with onsite, small-group meetings, in-person, one-on-one conversations and personal phone calls to those directly impacted.

That’s not perfect but certainly better than Better, whose CEO Vishal Garg opened his Zoom call with “If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated, effective immediately. You’ll get an email from HR detailing benefits and severance.” Yikes! How about displaying a little empathy, particularly around the holidays, Vishal?

The Unforgivable
As is typical in these difficult announcements, Garg cited market efficiency, performance and productivity as the driving forces behind the firings. But he didn’t stop there like most reasonable managers would. He blasted the departing employees, accusing them of “stealing” from their colleagues and customers by being unproductive and only working two hours a day. A particularly cringe-worthy touch was Garg’s termination of the Diversity, Equity & Inclusion (DE&I) recruiting team as part of the layoff. Yeah, that’s not really important these days.

So, there’s the latest example, everyone. Another playbook not to follow, particularly when downsizings are hard enough without these kinds of unforced, self-inflicted errors.

And, by the way, Better.com announced in May it was going public through a SPAC and last week received $750 million in cash as part of the deal. The company will likely have more than $1 billion on its balance sheet and is preparing to play offense going into a radically evolving homeownership market, according to a company HR executive in a statement provided to CNN.

Best of luck on the recruiting trail.

Have a difficult announcement to make in the near term? Email me and let’s figure out the best path forward.

Update as of December 8, 2022: And with the continued international blowback over Garg’s layoff fiasco, now comes the news that Better.com is going to have to postpone its SPAC apparently due to changes it made in the deal terms just before the layoffs were announced. These changes may indeed have been material and therefore a delay appropriate but one can’t help but wonder how the avalanche of negative publicity impacted this decision. In any case, I bet Garg has had some uncomfortable conversations with his financial backers over all of this.