Ethics and compliance professionals often talk about the importance of tone at the top, and we have no shortage of examples of CEOs setting a poor tone. Today we can pivot toward the better, with an example of strong, empathetic tone at the top from AirBnB.
On Tuesday AirBnB announced that it would lay off roughly 1,900 people around the world, one quarter of its 7,500-person workforce.
Layoffs of that magnitude are difficult under the best of circumstances. Given the awful state of the economy these days thanks to Covid-19, we can only imagine how much more painful those layoffs will be for the people losing their jobs, as well as the executives who had to make that decision and the shell-shocked employees who remain.
The lone bright spot I could see was this: the clear, respectful, heartfelt open letter that CEO Brian Chesky wrote to AirBnB employees, which is a model of how senior leaders should deliver terrible news during terrible times.
The letter is 1,694 words long, and none of its news is good. Still, the letter itself was good. It achieved its intended purpose of conveying factual information, conveying sentiment about the company’s predicament, and pointing people to the future that senior leaders want to achieve — in a way that remaining employees can believe and support.
That’s good tone at the top. So Chesky’s letter is worth dissecting in detail.
Above All, Honesty and Clarity
First, his message was clear. Consider this passage near the top:
When you’ve asked me about layoffs, I’ve said that nothing is off the table. Today, I must confirm that we are reducing the size of the Airbnb workforce… We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill. Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019.
Within the space of a few sentences, Chesky informed employees that layoffs are happening and explained the root cause of those layoffs. Its 2019 revenues were reportedly $4.8 billion, so the company is facing a disastrous revenue picture for this year. Any employee could read those words and understand why layoffs might be necessary.
More impressive, however, was that Chesky went on to explain why layoffs in fact are necessary, period. Consider this passage further down—
In response, we raised $2 billion in capital and dramatically cut costs that touched nearly every corner of Airbnb. While these actions 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.
While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy.
In other words, AirBnB is sitting on $2 billion in cash which it theoretically could use to keep people on payroll in hope of some fabled return to normal. But Chesky knows a move like that would only the inevitable, and probably make the inevitable even worse. So he’s jumping to the inevitable now.
That’s unpleasant, but it brings clarity and certainty. It shows respect for the people losing their job even as Chesky delivers an awful thing upon them. People recognize respect when they get it, and remember it long after.
Dignity and Support
Then came the actual details of how AirBnB would support the 1,900 losing their jobs. They will get severance packages that address all the concerns someone facing unemployment typically has.
- Severance. All departing employees will get at least 14 weeks of base bay. Most will also get additional pay depending on years of service with AirBnB.
- Equity. Everyone leaving will also receive all pending equity awards immediately, “so that everyone departing, regardless of how long they have been here, is a shareholder,” as Chesky put it. That is no small thing since AirBnB is a pre-IPO company, whose shares could be worth a considerable sum someday.
- Healthcare. In the United States, all departing employees will have 100 percent of health insurance paid for 12 months. In the rest of the world, AirBnB will pay all insurance costs through 2020 (mostly because local law overseas doesn’t let AirBnB pay a full year for those workers, too).
- Other support. AirBnB will also work its alumni network to help laid-off employees find new jobs, give them all four months of professional outplacement support, and let everyone keep the company laptop they have.
Again, Chesky’s message provides clarity and certainty. That’s what employees want when they face such a wrenching change.
Moreover, the severance packages are generous. That tells all employees — including those who will remain with AirBnB — that the company does put a high value on taking care of its people. It’s a statement about priorities.
I understand that not every company can be as generous as AirBnB, which is sitting on mountains of cash and doesn’t have public shareholders constantly harping for dividends and efficiency. Every company will need to strike its own balance of support to employees versus financial performance for shareholders. Still, AirBnB sent a powerful message that employees will remember.
Then Chesky’s letter moves into the details of how employees will be notified:
Within the next few hours, those of you leaving Airbnb will receive a calendar invite to a departure meeting with a senior leader in your department. It was important to us that wherever we legally could, people were informed in a personal, 1:1 conversation. The final working day for departing employees based in the US and Canada will be Monday, May 11. We felt Monday would give people time to begin taking next steps and say goodbye — we understand and respect how important this is.
Personal meetings to inform employees of their layoff is another sign of respect. We’ve all heard of (or perhaps even experienced) more impersonal processes such as calling employees to a group meeting for the announcement, or even leaving layoff notifications via voicemail.
That’s clumsy. Approaches like that tell employees that the management team’s convenience is more important than their dignity and well-being. Those approaches are, really, another statement of the company’s priorities, and not a good one.
Chesky’s letter shows that AirBnB is trying to take the opposite approach, even though that will be demanding and emotionally difficult for managers. Because the company values its departing employees enough to accept that burden and cost.
So like I said — there’s nothing good in Chesky’s letter, but the letter itself is excellent. It captures how an executive should communicate information to employees and reflect the ethical priorities of the corporate culture.