June 1st, 2022
Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)
It is not unusual for companies to reduce their workforce in response to crises: Industry upheavals. Revenue shortfalls. Global pandemics. But if employers decide to fire people en masse on Zoom—or use other impersonal approaches—they can create a second crisis that makes a bad situation much, much worse.
Take what happened at Carvana, the online used car dealer which last month laid off 2,500 people, many of them over Zoom.
“An email to employees from CEO Ernie Garcia reportedly blamed slower-than-expected growth. Carvana, which has struggled to maintain its early-pandemic success, reported a net loss of $260 million in the first quarter and its stock price is down more than 84% since the start of the year,” Protocol reported.
In an email to CBS MoneyWatch, Carvana said it had “as many conversations as we could in person, and where in-person was not possible, we spoke to our team members over Zoom.” The spokesperson added, “Not all of the conversations were through Zoom.”
Reaction on social media was swift and critical, with people expressing their anger on how they were let go and how the online session was conducted. This response on Twitter was typical: “Part of [Caarvana’s] principles is ‘we are all in this together’ and I don’t believe that at all. Carvana, next time you need to lay people off do it in a more organized way than what happened today because honestly, that was ridiculous.”
“They were doing mass layoffs in these Zoom calls, “Leigh Frantz, 26, of North Liberty, Iowa, told CBS MoneyWatch. She said that a woman read from a prewritten script to inform them that they had lost their jobs. Workers weren’t allowed to ask questions on the Zoom call. “It was so disrespectful.”
The mortgage company Better has used Zoom three times since December to lay off workers. In a statement to Fast Company, it cited “ongoing instability in the mortgage environment” as the reason.
The remote firings have been seen as a cold, impersonal and detached way to lay off people.
Challenges And Issues
Using Zoom and similar services can create a second crisis for organizations.
Because of how the workers were notified and what is said on the video calls, they can place businesses on the defensive and damage the credibility, image and reputation of CEOs and the organizations.
The videos “… can be recorded and kept by the former employee,” said Baruch Labunski, a reputation management expert and CEO of Rank Secure. “The former employee could then use it on social media, editing it to make the company or manager look bad. It could also be used in legal proceedings if the employee decided to sue the company,” he added.
Leaked copies of any video calls about the layoffs can add fuel to the fire and help lengthen the crisis or make it worse.
“Leaked video from a second meeting that Better.com held minutes after the now-infamous Zoom call in December when it terminated 900 employees, provides stunning new insight into the level of mismanagement that went into perhaps the most bungled corporate downsizing in recent memory,” Fast Company reported.
A third crisis could be created by the videos because of the impact they can have on company morale and the ability to retain or recruit employees.
An Added Layer Of Complexity
Firing people online could also create legal-related crises.
Employment attorney Omar Ochoa said “… firing over video conferencing, like Zoom, adds a layer of complexity because the company has to be aware of the laws in the employee’s specific location rather than just worrying about employment laws in the jurisdiction of the company’s headquarters.
“There may be specific laws regarding when termination can occur and whether any type of notice or process is required. Firing employees en masse over Zoom may seem more expedient to companies (even if it seems cold and impersonal to the public), but it can lead to lawsuits if the law is not followed,” he warned.
Advice For Business Leaders
- Employees could immediately post copies of the video on social media platforms.
- Do not say anything on the call that you would not want to be reported by news organizations.
- Take steps to ensure that the reasons for the layoffs are clearly understood by all those who are affected by the reduction of your workforce or who may learn about it later.
- This includes posting an official statement from the company on its website, and social media platforms and emails, distributing a press release and posting a video from a corporate spokesperson on YouTube.
- Be ready to immediately respond to any blowback about the video or why employees were fired.
- Prepare in advance key messages about the firings to use when responding to calls from the media, messages from remaining employees and criticism on social media.
- Conduct media training sessions before the video calls to ensure you are ready to respond to questions from reporters.
- Make yourself available to answer questions people and news organizations may have about the layoffs, and respond quickly to their inquiries.
- Immediately respond to any allegations or charges about the reasons for the layoffs.
- Seek advice or counsel from your internal or external PR and legal teams about potential issues related to firing people via video that may be unique to your company, organization or industry.
- The more you know about potential problems that can cause or exacerbate a layoff-related crisis for your company, the more prepared you can be to help mitigate or deal with it if it happens.
Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0
Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.