Online mortgage lender, Better.com, recently fired over 900 of its employees over a Townhall meet. On December 1, the employees were informed that almost 15 per cent of the workforce would be terminated and be rendered jobless, because of various reasons, including performance, productivity and efficiency.
Vishal Garg, CEO, Better.com, chaired the webinar, where employees were informed of the mass firing. “If you’re on this call, you are part of the unlucky group that is being laid off,” Garg is heard saying on the call.
It appears that the Company also wishes to keep the workforce lean and focussed on the dynamic and “radically evolving” homeownership market, as informed by Kevin Ryan, CFO, Better.com, to CNN.
The very brief Zoom meet saw the CEO informing the staff that the unfortunate decision had to be made considering the way the market had changed; that it was the only way the Company could hope to survive and stay competitive. He also admits during the call, that it was the second time he had had to take such a difficult decision.
“Since it’s a US-based organisation, it would be difficult to comment on the ethicality because in the US, a notice period is not a compulsion in the contract”
Kamlesh Dangi, group head HR, Incred Financial Services
The employees were informed that those laid off would be receiving a formal e-mail from the HR informing them of the termination and the details pertaining to the severance package. All the affected employees in the US will get four weeks’ severance pay, and a month’s full benefits. The Company will also pay two months of cover-up, paid as premium.
The digital mortgage lender has downsized its workforce as it gets a cash infusion of $750 million in new agreements with its SPAC backers.
Better.com is one of those companies which saw a significant increase in business during the pandemic. The US Federal Reserve’s interest rates for home loans were at an all-time low at the onset of the pandemic, which led to a large number of people refinancing their loans.
The platform has seen a 200 per cent increase in mortgage applications at the beginning of Covid-19. It funded about $1.4 billion of loans in April 2020 itself.
In a bid to meet this increase in business demand, Better.com had to expand its workforce significantly. At the onset of the pandemic, the Company had an employee strength of about 2,000 across six offices worldwide, as opposed to over 7,000 now.
An internal source from the company tells HRKatha that the exact number of people let go from the Indian workforce is not known, but the impact of the cut is quite significant. The Company was on an aggressive hiring spree in India at the onset of the pandemic, hiring 1100 employees at the time. They even paid their employees an additional stipend of Rs 10,000 a month as COVID-19 benefits. The Company had announced the onboarding of people who were laid off from the hospitality industry at that time as well.
A majority of the Company’s backend employees hail from India.
“Whatever the reason, I don’t think such an action by Better.com can be justified”
Debjani Roy, CHRO, Mind your Fleet
“Nobody knew a thing. We were working our regular shifts when we received an e-mail invite for a Townhall meet with the CEO. While it stated that we would be interacting with him, there was no mention of ‘termination’,” shares an internal source with HRKatha.
The source adds that the manner in which the firings were carried out was truly shocking. The management told them that the employees who were let go were the ones who performed “poorly” in their September-October performance reviews.
“We couldn’t really work after that. The way the layoff was carried out was truly demoralising and devastating. The management’s justification for the abrupt manner in which the laid off employees were asked to leave and sever ties immediately with the Company, was that they didn’t want them to be part of any wrongdoings that may affect the Company’s business,” the source reveals.
Kamlesh Dangi, group head HR, Incred Financial Services, gives a very matter-of-fact perspective to the development. “This is more of a Western style of termination. Since it’s a US-based organisation, it would be difficult to comment on the ethicality of the move from an Indian stand point. In the US, a notice period is not a compulsion in the contract, whereas in India, this would be considered unethical and is unheard of,” he points out.
The unceremonious manner of the termination was a shocker to the employees of the Company as well as many HR heads. Debjani Roy, CHRO, Mind your Fleet, calls the move unethical and completely against the jurisprudence of anything taught under HR management.
“An employer is the provider of livelihood to the employee, who, in turn, commits to giving his best performance to the employer/organisation. This employer-employee trust is completely thrown out of the window here,” she says.
“Whatever the reason, I don’t think such an action can be justified. Taking away the livelihood of such a significant percentage of the workforce without any prior intimation is the worst kind of management decision. It also shows the character of the leadership and their behaviour towards their employees,” she states.
Vishal Garg has been known to display unfavourable behaviour towards his employees in the past. He has been involved in controversies in the past, one of the most significant of them being an internal e-mail he sent to his employees and which Forbes obtained. In the mail, he calls his employees “dumb dolphins” and pulls them up for being “too slow” and “embarrassing” him!
This time around, media reports that the employees who were fired were accused of “stealing” from their colleagues and customers by being unproductive!