Understanding the better.com layoffs fiasco

A lot is being said and written about the layoffs at better.com and people I know are mortified by the way the CEO terminated the employees over a video call. When we hear such news, our natural response is to assess them with our emotions.

Business is all about revenue generation, profits and financial statements. Money and emotional quotient (EQ) never goes hand-in-hand. When business goes down, it is not the matter of if the business will bounce back. It is all about time. How long can a company sustain itself before business picks up again or it is forced to consolidate its finances is the burning question. Reducing the workforce is one of the ways to reduce the company’s expenses. Hire and fire is not the way to manage people but is a very efficient way to run businesses especially when the supply of people far exceeds the demand for them in the market.

It is not really lack of empathy on the CEO’s part, just that emotions cannot come in the way of doing business which is why he says in the video that he cried the last time he fired his employees and he hopes to be stronger this time. Termination over video call is undoubtedly terrible but it helps to keep the emotions out unlike in a physical meeting. If his job is to make the company profitable, consolidation is also his call. The timing is also not so bad I suppose because companies open up for recruitment in January.

This isn’t a one-off case, IBM closed down business units and terminated 15,000 employees globally in 2014 and WeWork reduced 20% of its workforce in 2020. We are not used to seeing layoffs in the traditional businesses but in the startup ecosystem we can expect to see a lot because its all about investment and ROI and companies are accountable to its investors for everything it does and doesn’t do.

The company receiving a cash infusion and supposedly going public according to this article is irrelevant in the context. An external cash injection is not necessarily the sign of a company bouncing back as exemplified by how a consortium of banks kept on infusing cash flow into the now defunct Indian airline Kingfisher when its business floundered and showed no signs of picking up. IPO is just an eyewash to cover the investments of the company’s investors and help them reap profits as this post about Zomato’s IPO journey illustrates.

So irrespective of all the backlash, after the global market devastation caused by COVID, expect this to become a precedent if market conditions do not improve.

--

--

--

Business Consultant, Startup mentor, writer, nature conservationist, wildlife photographer

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Lithium Ion Battery Market is Estimated to Reach USD 76.80 Billion in 2024

Deoxyribonucleic Acid (DNA) Vaccines Market Analysis by Size — Business Developing Strategies…

COVID-19:FERROALLOYS MARKET TO REACH USD 75.4 BILLION BY 2027 | CAGR 5.1% — FORENCIS RESEARCH

New Tech City — NYC on the Charge

Bringing drones to every job site: Our investment in DroneDeploy

COVID19: NEXT GENERATION MILITARY POWER SUPPLY MARKET TO REACH USD 19.6

Specialty Polystyrene Resin Market is Projected to Reach a Value of Over USD 137.4 Billion by 2027

Sectors that will shine bright post Covid-19

What changes can we see in major business sectors across the globe post the lockdown

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ranjeet Menon

Ranjeet Menon

Business Consultant, Startup mentor, writer, nature conservationist, wildlife photographer

More from Medium

How Career Assessments can Instantly Improve Fit-to-Job Hiring

Questions to Ask Yourself Before You Go Remote

Fighting for talents in the skill shortage times

Why Are We All So Obsessed With Independence?