Trial by Fire: CEOs navigating the path of terminating employee ‘permanent’ appointment

Trial by Fire: CEOs navigating the path of terminating employee ‘permanent’ appointment

Creased brows, hollow eyes, heavy sighs of near despondency, anxious sniggers of hope, recouped struts of near confidence, dented whimpers from parched throat and layered folds on the foreheads, maps out not just exhaustion from overworking at the office or sleepless nights spent in meeting deadline of a contracts. Beyond that, there is a seething smoke from a blazingly ill-omened phenomenon asphyxiating and clogging the life expectancy of a worker in an organization.

You’re fired! The most dreaded words in any career discourse depending on the perspective of deliberation can alter the trajectory of one’s life. For the gutsy and defiant; it’s just another bump in the road of success, but for the delicate ‘china tea cup’, a chip can as well mean damnation.  The term may sound like the catchphrase from the Apprentice show, where Donald Trump will authoritatively belt the phrase out to panicky ‘employees’ from his swivel seat, but the year 2020 paints a more realistic picture of the dismissal of staff by employers.

Through no fault of theirs, employers have had to painfully sift through loyal and hardworking employees to retain those the company deem indispensable. The issue of who bells the cat in breaking such news to already broken employees who are bereft of any hope as the virus malignantly chips away their desires and aspirations, is at best doleful.

Caught between a rock and a hard place? CEOs are definitely not in for a swell time having to lead employees to the sack ‘guillotine’ as if the impact of the pandemic isn’t deathly enough to strike a jugular punch. The proportion of domestic workers who were significantly impacted varied across regions and time, depending on the timing and extent of lockdown measures.

Thus, in Africa, only 34.6 per cent of domestic workers were significantly impacted on 15th March, but this number rose to 78.7 per cent by 15th April. In the Americas, where the number of new cases per day remains high, around 74 per cent of domestic workers were still significantly impacted by 4th June. In Asia and the Pacific, 79.4 per cent of domestic workers were significantly impacted by 15th May, but a much higher proportion (87.5 per cent) were impacted in the South Asia sub region.

Finally, in Northern, Southern and Western Europe, the impact fluctuated from 36.6 per cent on 15th March, before peaking at 50.1 per cent on 15th April. These numbers are significantly lower than in other regions, in part because more domestic workers are in formal employment as measured by registration to social security. While registration to social security helps reduce the impact on domestic workers, as we will see, formal employment alone has not fully protected domestic workers from the impacts of lockdown measures (ILO June 2020).

Psychology of job loss

Regardless of how philosophical one may tread on the lines of the unpredictability of life, there are certain parts of our life and wellbeing we instinctively and consciously decide to sweep under the carpet of rejection and the destructing impact of losing a job and stable source of income, is definitely one. Paradoxical is the defining position of an employee, as the veil of job security within a ‘permanent’ role which he/she may have applied for, is starkly becoming increasingly momentary.  What is dissolving the permanence of job retention till the grey years of retirement for most is likely to gradually disappear from job advertisements and mechanical planning strategies. In a world gravitating rather rapidly towards the virtual world and a subsequent submerging of real life experiences in real time trapped  within the ‘submarine’ of the pandemic, it is difficult to justify hiring permanent staff when you can outsource and contract for specific roles with a simple Google search.

This shift is likely to push employment into a more slight state of existence; “employees” becoming their own bosses and undertaking multiple contracts for different organizations at any given time will be the norm (McKinsey Global Institute, 2016). Ultimately, employment will be about outputs, and not inputs.

As the virus continues to devastate lives and businesses, many leadership teams have been forced to make the difficult decision to lay-off and furlough their teams. Regrettably for humans, the loss of a job has long-lasting effects. The psychology of job loss is consistent with what we see in most situations which concern loss and grief.  

Research by George Bonanno (2010) from Columbia University highlights that “people are more stressed out when they fear losing their jobs, than they are when they actually get laid off.  When massive job layoffs come closer to home and are observed in their communities, people are more likely to feel they are next, and their well-being drops significantly as a result.”

Also, recent statistics, according to The Entrepreneur, from governments around the world highlight that many employers will be separating from their employees in the coming months. In April, Australia’s Department of Treasury indicated that its unemployment rate would double from 5.1% to 10%. According to Larry Elliott, a journalist for The Guardian: “It matters a lot that the official US unemployment rate rose by more than 10 percentage points to 14.7% in a single month, that the real level of joblessness is actually around 25%, and is likely to reach 30% before it peaks.”

Bearer of Bad News

Leaders in various organizational position have had a tough call to make and it will not get any easier, as the surge in COVID cases increases, largely affecting economies, trickling down to protracted profit margins and the often avoided conversation of layoff. Conversely, if by dint of good luck a company happens to experience more sunny days than stormy nights, then a salary cut or furlough will suffice in the stead of getting chucked out. A case in point is a message from Co-Founder and CEO Brian Chesky of Airbnb, dated May 5, 2020, expounded on their lack of choice in having to lay most of the workers due to a plunge in demand.

Out of our 7,500 Airbnb employees, nearly 1,900 teammates, according to Mr. Chesky 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.

“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. For a company like us whose mission is centered on 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.  Let me start with how we arrived at this decision. 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. In response, we raised $2 billion in capital and dramatically cut costs that touched nearly every corner of Airbnb.

Although the Airbnb CEO expressed some optimism over the company’s recovery, he maintained that 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”.

Expatiating the need for a more focused business, Brian reechoed sentiments reverberating along every scene in most organizations morphing to accommodate the ensuing changes brought on by the pandemic and as travel in this new world will look different,  he reckons the company needs to “evolve Airbnb accordingly”. “People will want options that are closer to home, safer, and more affordable. But people will also yearn for something that feels like it’s been taken away from them — human connection. This crisis has sharpened our focus to get back to our roots, back to the basics, back to what is truly special about Airbnb — everyday people who host their homes and offer experiences”.

Airbnb’s approach to employee reduction had a clear set of principles, guided by their core values, for how they would approach reductions in their workforce. These principles include;  Mapping all reductions to our future business strategy and the capabilities we will need, doing as much as they can for those who are impacted, unwavering in commitment to diversity and optimize for 1:1 communication for those impacted.

Issues of severance, healthcare, equity and job support were adequately tackled by Airbnb, however, not many employees were privy and privileged to receive such transparency and support during ‘their last moments. “Employees in the US will receive 14 weeks of base pay, plus one additional week for every year at Airbnb. Tenure will be rounded to the nearest year. For example, if someone has been at Airbnb for 3 years and 7 months, they will get an additional 4 weeks of salary, or 18 weeks of total pay”.

Brian asserted that, a crisis brings you clarity about what is truly important. Though we have been through a whirlwind, some things are clearer to me than ever before.

A recent poll of 114 human resources and business professionals conducted by the Guelph Chamber of Commerce, in collaboration with the Gordon S. Lang School of Business and Economics at the University of Guelph, reveals that temporary layoffs were the leading worker reduction strategy used by businesses to respond to COVID-19. This aligns with research indicating that layoffs have become the most popular management tool to cut costs and restructure an organization. Arguably, grits of humans can be well likened to the formation of diamonds. Life’s sudden upheavals bring our true worth, value, and strength to the surface. The incredible pressure we face during hardships and fiery trials cause the hidden treasure within us to emerge; as this pandemic has unraveled globally. However, a diamond’s resilient nature makes it stable, pure, and strong, but it doesn’t happen overnight. In light of this, the ‘friction’ between CEOs, COVID-19 and staff layoffs are just right recipe for initiating a better trajectory in organizational success.