There is never a great way to tell someone they are out of a job. However, doing so over large video conferences during the holidays is proven to be a poor option for Better.com, which is now suffering more than just social media backlash.
Amid a wave of scrutiny for laying off 900 employees via Zoom on Dec. 1, the online mortgage company’s CEO, Vishal Garg, is “taking time off effective immediately” following the ordeal.
In a Friday morning memo sent by Better.com’s board of directors and reported by Vice, the company stated that CFO Kevin Ryan will manage the day-to-day in Garg’s absence. The email also indicated that the Board “has engaged an independent 3rd party firm to do leadership and cultural assessment.” The move is the latest development following national criticism over Garg’s handling of a wave of firings online that has since gone viral on social media.
“If you are on this call, you are part of the unlucky group being laid off,” Garg said last week in a Zoom meeting.
During the call, he cited the market, performance and productivity as reasons behind his decision to cut 9% of the Softbank-backed company’s workforce in the United States and India.
Garg issued an apology on Dec. 7 for how he handled the layoffs, admitting that he “blundered the execution” of the layoff announcement.
“I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better,” Garg said in the statement.
Aside from backlash across headlines and social media in the days following the Zoom call, three of the company’s top communications executives have all resigned, according to multiple media reports.
According to Bloomberg reports, plans for Better.com to go public have also stalled.
The New York-based start-up announced plans to go public in May through a merger with blank-check firm Aurora Acquisition Corp in a deal valued at $7.7 billion.
Better.com reportedly amended the terms of the deal a day before its layoff announcement to provide the company with $750 million committed by SoftBank immediately instead of waiting until the deal closed.
Bloomberg reported that a subsidiary of SoftBank had committed to a $1.5 billion private investment in public equity when the deal was completed under its previous terms.
Better.com did not immediately reply to RISMedia’s request for comments on this story.
As Better.com works to handle the blowback, real estate leaders and experts in leadership development weighed in on the matter.
“While this was a clear failure in leadership, it also stands as an important reminder to each of us the vital importance of servant leadership,” says Josh Harley, founder, and CEO of Fathom Realty. “In the Marine Corps, I learned that leaders eat last. We must always remember that we are nothing without our employees, and we owe it to them to serve them and place them above ourselves.”
While Harley notes that there are times when layoffs are unavoidable, he opines that he thinks this case may not have to do with a market shift, as Garg suggested on the Zoom call.
“I believe it had to do with their need to show better margins in their bid to go public via a SPAC,” says Harley. “If that is true, then they did that at the detriment of their people, and that would be the greatest failure in leadership.”
Ryan Raveis, co-president, William Raveis Real Estate, thinks wave workforce cuts at Better.com may be a sign of things to come in the lending industry.
“You’ll see more layoffs coming from mortgage companies that don’t have a healthy mix of refinancing and purchase business and who don’t have a healthy mix of human touch versus smart tech,” Raveis says, pointing toward forecasts from the Mortgage Bankers Association that predict a drop in refi volume of 60%, while purchase volume will be up 8%.
“That means many companies will be left with too much labor supply,” Raveis adds.
Natasha Bowman is president of Performance ReNEW, a talent management and leadership development firm committed to helping organizations cultivate their people.
While she lambasted Garg for his layoff tactics, Bowman also pointed out ways he could handle things better.
“While I am sure that the CEO was looking for his budget numbers to come out better as we are nearing the end of the year, mass layoffs are never advisable three weeks before Christmas,” Bowman says.
While severance packages were offered, she indicates that impacted workers are now left figuring out their employment situation during the holiday season.
Since the layoffs occurred, Bowman says that she has been providing the names of the people who were impacted—and voluntarily submitted their information—on her LinkedIn account so that recruiters can reach out to them and hopefully get them all a job offer by Christmas.
This is a developing story. Stay tuned to RISMedia for updates.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.
