As we climb our way out of this economy-crushing pandemic, one of the unfortunate outcomes are going to be layoffs.
Growth companies, who were scaling up and rapidly adding headcount, will need to resize to fit their revised market demand better.
Legacy companies that were already troubled are going to have to implement significant cutbacks to survive.
There are going to be many leadership examples on how to implement layoffs in the weeks and months ahead. One great example of how to do a layoff right is Brian Chesky at Airbnb.
Why is the Airbnb an excellent example of how to do a layoff?
I applaud Brian Chesky for speaking with sincerity and providing the reasons why the layoff is necessary. Being in the outplacement business, I know how difficult this can be for a CEO. Chesky goes to great lengths to detail the Airbnb strategy and the future financial outlook. He paints a realistic picture showing that while their business will recover, he cannot confidently predict when.
Even though external factors caused the layoff, Chesky still closes his letter with an apology. He also talks about the love he has for the entire Airbnb team. This sincerity is authentic. Chesky takes a holistic approach to not only speak to those who will be leaving, but also to all of the remaining team members who will be losing their colleagues.
Chesky explains the strategy (their exit from non-customer facing businesses), as being one of the primary determinants of who they will terminate. I do not have all of the details regarding who were the employees that were let go. I believe it is safe to assume that the decision-making process was an objective analysis based on the position rather than the person. Also, Chesky makes sure to emphasize that the employees were not at fault.
The exit packages were generous by industry standards. The packages included better than average severance, health care, and immediate vesting of stock. The stock vesting is important because Airbnb will have an IPO once the market stabilizes.
Airbnb also has gone the extra mile when it comes to helping their leaving employees with career transition services. The employees will not only receive outplacement (I forgive Airbnb for choosing a competitor), but they also will be getting assistance from the Airbnb recruiting team.
Layoffs are one of the most challenging decisions a business leader will have to make. Brian Chesky provides a great example of how to do it right.
Here is a copy of the full letter that Brian wrote to everyone at Airbnb. It is well worth reading.
This is my seventh time talking to you from my house. Each time we’ve talked, I’ve shared good news and bad news, but today I have to share some very sad news.
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 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.
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.
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.
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.
A more focused business
Travel in this new world will look different, and we need 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. When we started Airbnb, it was about belonging and 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.
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.
These decisions are not a reflection of the work from people on these teams, and it does not mean everyone on these teams will be leaving us. Additionally, teams across all of Airbnb will be impacted. Many teams will be reduced in size based on how well they map to where Airbnb is headed.
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.
I have done my best to stay true to these principles.
Process for making reductions
Our process started with creating a more focused business strategy built on a sustainable cost model. We assessed how each team mapped to our new strategy, and we determined the size and shape of each team going forward. We then did a comprehensive review of every team member and made decisions based on critical skills, and how well those skills matched our future business needs.
The result is that we will have to part with teammates that we love and value. We have great people leaving Airbnb, and other companies will be lucky to have them.
To take care of those that are leaving, we have looked across severance, equity, healthcare, and job support and done our best to treat everyone in a compassionate and thoughtful way.
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. Outside the US, all employees will receive at least 14 weeks of pay, plus tenure increases consistent with their country-specific practices.
We are dropping the one-year cliff on equity for everyone we’ve hired in the past year so that everyone departing, regardless of how long they have been here, is a shareholder. Additionally, everyone leaving is eligible for the May 25 vesting date.
In the midst of a global health crisis of unknown duration, we want to limit the burden of healthcare costs. In the US, we will cover 12 months of health insurance through COBRA. In all other countries, we will cover health insurance costs through the end of 2020. This is because we’re either legally unable to continue coverage, or our current plans will not allow for an extension. We will also provide four months of mental health support through KonTerra.
Our goal is to connect our teammates leaving Airbnb with new job opportunities. Here are five ways we can help:
- Alumni Talent Directory — We will be launching a public-facing website to help teammates leaving find new jobs. Departing employees can opt-in to have profiles, resumes, and work samples accessible to potential employers.
- Alumni Placement Team — For the remainder of 2020, a significant portion of Airbnb Recruiting will become an Alumni Placement Team. Recruiters that are staying with Airbnb will provide support to departing employees to help them find their next job.
- RiseSmart — We are offering four months of career services through RiseSmart, a company that specializes in career transition and job placement services.
- Employee Offered Alumni Support — We are encouraging all remaining employees to opt-in to a program to assist departing teammates find their next role.
- Laptops — A computer is an important tool to find new work, so we are allowing everyone leaving to keep their Apple laptops.
Here is what will happen next
I want to provide clarity to all of you as soon as possible. We have employees in 24 countries, and the time it will take to provide clarity will vary based on local laws and practices. Some countries require notifications about employment to be received in a very specific way. While our process may differ by country, we have tried to be thoughtful in planning for every employee.
In the US and Canada, I can provide immediate clarity. 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.
Some employees who are staying will have a new role, and will receive a meeting invite with the subject “New Role” to learn more about it. For those of you in the US and Canada who are staying on the Airbnb team, you will not receive a calendar invite.
At 6pm pacific time, I will host a world@ meeting for our Asia-Pacific teams. At 12am pacific time, I will host a world@ meeting for our Europe and Middle East teams. Following each of these meetings, we’ll proceed with next steps in each country based on local practices.
I’ve asked all Airbnb leaders to wait to bring their teams together until the end of this week out of respect to our teammates being impacted. I want to give everyone the next few days to process this, and I’ll host a CEO Q&A again this Thursday at 4pm pacific time.
Some final words
As I have learned these past eight weeks, a crisis brings you clarity about what is truly important. Though we have been through a whirlwind, some things are more clear to me than ever before.
First, I am thankful for everyone here at Airbnb. Throughout this harrowing experience, I have been inspired by all of you. Even in the worst of circumstances, I’ve seen the very best of us. The world needs human connection now more than ever, and I know that Airbnb will rise to the occasion. I believe this because I believe in you.
Second, I have a deep feeling of love for all of you. Our mission is not merely about travel. When we started Airbnb, our original tagline was, “Travel like a human.” The human part was always more important than the travel part. What we are about is belonging, and at the center of belonging is love.
To those of you staying,
One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb’s story. I am confident their work will live on, just like this mission will live on.
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.