CEO fires 900 staff over Zoom: why failure to get redundancy right will have far-reaching implications

Letting somebody go is as much a part of the employee cycle as finding that person in the first place. It is for all intents and purposes inevitable, with jobs for life being a thing of the past.

As an HR practitioner, I have had to initiate and implement redundancy procedures resulting in job losses.

It is never a nice thing to do, even when it is the right thing to for the business – and it always feels personal.

Having been made redundant twice I can testify to that. At the heart of any dismissal is the human impact that you know it will have on the person being dismissed, their self-worth and their loved ones.

A better approach to redundancy:

What should HR know about mass redundancies?

How can HR ease the redundancy process?

Legal-ease: Redundancy

Because of the volatile business environment that we are in, we see new opportunities being created and, conversely, opportunities being closed, resulting in ‘hard’ decisions being taken.

That said, the news from the US that Vishal Garg, chief executive of mortgage firm, dismissed 900 employees via a Zoom call just before the holiday break has sent ripples across every industry.

While employment regulations in the US are very different to the UK, there is a principle to uphold: just because you can, does not mean you should.

Garg referred to the group as unlucky, as if this decision was down to chance, which suggests that the decision itself has not been robustly formed after taking into consideration all the options available to the business.

Hard decisions should be exactly that. In the UK, there is a legal requirement to be able to demonstrate that all avenues have been exhausted before arriving at dismissal through redundancy. Options include redeployment into alternative roles, reducing hours, sharing roles and freezing pay, with dismissal being the last resort.

Consulting with your people in a meaningful way can often surface viable options for consideration before having to dismiss. 

The 900 staff represented 15% of the workforce being laid off with no warning of what was to come. The message to the remaining 85% is very clear: 'Your jobs with us are not secure and we do not really care about you and your loved ones'.

The impact of that message alone is itself significant and substantial and will send staff looking for their next opportunity outside of the organisation, making retention a challenge. Equally attraction becomes an issue, with talent being cautious to put themselves forward for opportunities, now and in the future.

Morale among the ‘survivors’ will have been affected, and in a business that is about providing a service to its customers, you can anticipate what this mass firing will do to productivity. Every person will know of this action taken and possibly someone that has been affected.

This will be the only thing that is on everyone’s mind and the only topic of conversation. Meeting agendas become defunct in the wake of this decision.

And then there is the implication that if the business can treat its employees like this, then surely it can't have much concern for its customers, potentially driving them to the competition, where they may feel more confident. 

Garg’s delivery has been criticised as much as the message itself. His lack of empathy for those affected by the dismissal in the lead-up to the holiday period, and the impact on their families, is telling.

Garg shared that previously when he has had to let people go, he has cried, indicating that he is thinking of himself rather that those that he is dismissing.

If dismissal is truly unavoidable, businesses can and should see how they can support those affected by giving them time to apply for roles, but also help with securing their next role by running workshops on writing CVs, support with submitting applications and advice on how to ‘shine’ at competency-based interviews and assessments.  

The negative comments that flooded the business's platforms are a clear indication of how this decision was received. And how it was delivered has had greater ramifications for the business beyond the 900 directly affected. The ‘horse has clearly bolted’ and any subsequent press statement trying to control the damage is not likely to be able to undo what has been done.

Mass firing 900 staff over Zoom makes for a great case study of what not to do. The irony of the name of the business prompts me to say: Do Better. A lot Better.

Shakil Butt is founder of HR hero for hire