Between Airbnb and Zomato’s announcement of layoffs, there’s a lot to compare and learn.
I’d, in fact, say that Zomato’s communication (May 15th) took some inspiration from the widely appreciated note by Airbnb’s Brian Chesky (May 5th). For starters, Chesky framed his letter as ‘A more focused business’. Zomato’s entire letter is called ‘A more focused Zomato’!
Airbnb’s note had the structure of ‘why’, ‘what’ and ‘how’.
1- Why? – why layoffs now? This also addressed recent fund-raising efforts that may be used in context with the layoffs or downsizing. So it is important to make a strong business case for the downsizing bringing the pandemic-induced impact in business with as specific details as possible. It is also imperative to talk about the near future in this regard instead of the immediate 2-3 months that caused this decision. That the pandemic is likely to impact certain sectors harder than others is something that needs to be explained with data and context, here.
2- What? – what kind of downsizing? No broad or sweeping announcements. The more specific the better in credibility.
3- How? The most critical element of the note. In a way, the ‘why’ and ‘what’ are merely setting the stage for the more personal ‘how’ that goes into explaining how individual employees are likely to be affected and what the company has in store for them. The more the company thinks for them (without looking at getting them off as soon as possible), the better it is for the brand’s reputation even during a downsizing.
Both communications (Airbnb and Zomato) take a lot of effort to explain the ‘why’ before going into the ‘what’ and ‘how’ of the layoffs. And that starts with a humble and honest plain-speak.
While these actions (referring to raising $2 billion in capital and dramatically cutting costs) were necessary, it became clear that we would have to go further when we faced two hard truths:
We don’t know exactly when travel will return.
When travel does return, it will look different.
All of this uncertainty (referring to, “I expect the number of restaurants to shrink by 25-40% over the next 6-12 months”) inevitably needed us to re-define our business strategy. There’s no going back to the ‘normal’ – all we should focus on is building for the ‘new normal’. Considering what we know at this point, the idea is to make a complete shift towards being a transactions first company, focusing heavily on a small number of large market opportunities in the food value chain.
Then, both refer to the series of belt-tightening measures that are being rolled out.
This means that we will need to reduce our investment in activities that do not directly support the core of our host community. We are pausing our efforts in Transportation and Airbnb Studios, and we have to scale back our investments in Hotels and Lux.
We are, however, going to prepare ourselves for things getting worse. Therefore, we need to make sure that we preserve as much cash as possible to weather the storm if the business environment gets worse, or continues to be the same for the rest of the year or more.
The actual numbers being explained, in context to the overall workforce:
For a company like us whose mission is centered around belonging, this is incredibly difficult to confront, and it will be even harder for those who have to leave Airbnb. I am going to share as many details as I can on how I arrived at this decision, what we are doing for those leaving, and what will happen next.
Out of our 7,500 Airbnb employees, nearly 1,900 teammates will have to leave Airbnb, comprising around 25% of our company. Since we cannot afford to do everything that we used to, these cuts had to be mapped to a more focused business.
Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to ~13% of our workforce going forward.
Airbnb comes across as being more empathetical in this part, compared to Zomato that lands the numbers more matter-of-factly.
But both focus on the communication cadence specifically, to assure and ensure transparency.
How we approached reductions
It was important that we had a clear set of principles, guided by our core values, for how we would approach reductions in our workforce. These were our guiding principles:
Map all reductions to our future business strategy and the capabilities we will need.
Do as much as we can for those who are impacted.
Be unwavering in our commitment to diversity.
Optimize for 1:1 communication for those impacted.
Wait to communicate any decisions until all details are landed — transparency of only partial information can make matters worse.
Over the next couple of days, GG, MG and I will be getting on video calls with impacted employees to walk them through the next steps and help find them jobs as soon as possible. We are going to assure them that we stand by them, and will financially and emotionally support them to the fullest possible extent.
The most important part of both communications was the ‘how’ – or, how will the impacted employees be treated/helped. This is the part that has won both organizations maximum visibility for the amount of thought and consideration that has gone into it and the level of details listed.
Like the ‘more focused X’ part, the 4 elements under the ‘how’ are identical between both organizations: severance/financial support, equity, job support/outplacement support and healthcare/health insurance and support! The specifics under each category are very country-specific.
At a tactical level, both organizations have offered the office-provided laptops to the affected employees and have called it out specifically, with Zomato including the smartphone too.
In terms of the closure, Brian comes across as more caring and empathetic again, with a very personal note and tone.
To those leaving Airbnb,
I am truly sorry. Please know this is not your fault. The world will never stop seeking the qualities and talents that you brought to Airbnb…that helped make Airbnb. I want to thank you, from the bottom of my heart, for sharing them with us.
To everyone who is impacted, I assure you that we have already explored every possible option of retaining your roles, or creating new roles for you. Also, short term cost is not a decision driver here; this will however, end up making Zomato leaner, and improve our chances of success in the long term.
I thank you for your time and commitment towards building Zomato. You have helped make Zomato what it is today. All of Zomato is grateful to you, and is going to do its absolute best to ensure that this is a smooth transition for you.
Zomato will always be home for you – and I wish we continue to enrich your life – as customers, as well as external custodians of our mission of better food for more people.
Layoffs are inevitable in times like this. The kind of business environment mandated due to the pandemic is unprecedented. But how the layoffs are communicated, to employees and to external stakeholders as well as the general public, go a long, long way in shaping the corporate’s reputation and perception. The more thought leaders and communicators put into it, the better the investment in the corporate reputation.
Airbnb was the first, in this spectrum, making their announcement on May 5th. Zomato followed, on May 15th, ten days later.
It looks like they (Zomato, Swiggy and Ola) have taken the best lessons from Airbnb and improvised on it. To be sure, these are really tough announcements to make, from corporate communications and PR perspective. So, having a precedent that is well-appreciated really helps.
Like Airbnb, Zomato, Swiggy and Ola go really deep into the ‘why’, to open their letter. Their ‘care package’ have largely similar elements as Airbnb, but they also add other interesting new aspects – ‘learning support’ (in Swiggy’s note – as seen below), among others.
To ensure that the journey of upskilling oneself continues for the impacted employees, we will be providing free LinkedIn Learning access for the next 3 months, for both technical and professional skill development. We have also curated and assigned content to them around resume building, interviewing skills, emotional intelligence, etc. that will help them with their career transition during this time.
In such communications, specifics and details matter a lot more than sweeping sentences. All 4—Airbnb, Zomato, Swiggy and Ola —have a lot of details. That specificity, in terms of the reasons behind the move, on how the affected employees would be handled and supported, showcases empathy on the part of the employer brand. It also demonstrates a willingness to be transparent about the entire process that affects lives significantly.
This is an area where CultFit’s announcement felt underwhelming. It was devoid of details and focused more on the overall sentiment by making broad statements (“significant severance package”, “our full assistance in out-placing them”), thereby making it less trustworthy as a message. Plus, that misplaced addition of the donation to PM-CARES that had no business whatsoever being inside an announcement meant for downsizing!
To some extent, mixing the intended target audience was also an issue in CultFit’s communication – it spoke to both customers and employees at the same time, muddling the intent and focus as a result. In comparison, Airbnb, and eventually Zomato, Swiggy and Ola are sharply focused on employees as the target audience, with the rest of the world in CC. It also helps that for Airbnb, Zomato, Swiggy and Ola, the primary target audience was employees, regardless of the note going public eventually. In comparison, CultFit’s communication was public-first.
In fact, Ola’s note was not shared as a blog post at all, the way Airbnb, Zomato and Swiggy did – it was merely leaked to the press. But it is useful to assume that your layoffs email to your employees would definitely be leaked to the media, particularly if you have been a well-celebrated unicorn in the past.
When the brands do not share details or specifics about layoffs, other, unofficial channels fill in the gap and add to the rumors.
Airbnb’s note is being used as the main source of inspiration when it comes to this pandemic-induced season of layoffs. This is a good inspiration to have because it helps companies do the right thing. Or, at least say the right thing, and hopefully, also follow it up with living by the words uttered.