In May of 2020, Airbnb CEO and co-founder Brian Chesky sent a letter to all staff announcing the firm’s decision to layoff 1900 employees (25% of their workforce).
Like many in the travel and leisure sector, they’d been hard hit, with revenues down 80%.
The way the three founders of the business dealt with this incredibly difficult situation is a lesson in business leadership. I’ve included a link to the full communication at the end of this article.
Let me give you some highlights:
Brian had been in touch with staff frequently throughout the crisis. You can’t speak to your team enough when you’re facing a challenge.
He got straight to the point and said there was bad news.
However, he also explained the way they had reached their decision on the layoffs by giving staff the full picture the business was facing.
They went further, outlining the principles on which their decisions were made (which linked strongly with the organisation’s core values).
“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.”
3. Stakeholder model (not the old shareholder model)
Airbnb took action to shore up its balance sheet by raising $2BN.
They created a $250M fund to help Airbnb landlords that were being affected by the crisis.
And they provided a generous severance package for its global workforce:
- 14 weeks of base pay plus 1 week for each year of service
- Granted shares to the leaving employees, even if they had served less than the mandatory 12 months to qualify
- Covered a further 12 months of private health insurance
- Provided mental health support via an external company
- Offered job placement support
- Let departing employees keep their company laptops
Some thoughts for financial planning business owners
Financial planning is a human-centric business model; that’s what I love about it.
Airbnb (and other forward-thinking companies) provide a great example for all of us trying to run successful 21st-century businesses.
If you give your team the same information as the leadership group, they can see and understand for themselves what’s necessary. It might not change the decisions that need to be taken in a horrible situation, but if people can understand, they can accept it, make plans and get on with their lives.
I was discussing this idea of total transparency in one of my Uncover Your Business Potential In-Person courses recently.
Should a business owner share all financial information with their team (including profits in per cent and in pounds)?
Clearly, how much you decide to disclose is up to you, but the question I asked was “Why wouldn’t you disclose absolutely everything?”
The ensuing discussion made the point “Because staff might see how much you’re making and ask for a pay rise.”
What wasn’t said out loud, but I suspect is an issue was, “Are owners comfortable with earning a fair return for the risks they are taking?”
I’m a fan of total transparency for business owners. By giving people all the information that you have, you give them the same opportunity to contribute to and understand any business decisions.
A current example
Many businesses are grappling with when to get their teams back to working from the office.
Many business owners want it to happen, but some of their staff don’t.
Following the Airbnb example, I’d suggest an open, honest conversation about ALL the issues to do with home-working and see if you can craft a solution that works for the business and each staff member.
A lot of businesses taking this approach are finding that some mix of home-based and office-based working suits everyone. The right mix of each depends very much on the circumstances and needs of each employee and the business they work for.
Staff are stakeholders
Your staff are one important part of the stakeholder approach to business. (Along with the owners, suppliers, society and your local community)
Your number one focus when managing the team should be to keep them happy and working to their strengths. After all, happy staff deliver great service which creates happy clients. Happy clients refer more clients.
Keeping staff happy and working to their strengths also helps you retain employees. And retaining people has a huge economic advantage in that you’re not wasting time perpetually recruiting and training new staff. Longevity also sends a message of stability to your clients.
As Airbnb demonstrated in their approach to redundancies, how you treat departing staff also sends a powerful message to the staff you retain in any restructure.
Taking a leaf out of Airbnb’s playbook. If you focus on the needs of ALL the stakeholders in your business, you can be profitable, caring, and a contributor to your community.
I like it a lot.
What do you think?
*You can read the Airbnb communication in full here.
Money coaching for young adults
How do you help the children of your clients be good with money?
That was the question James Dent of Wealth Harbour was asking. As he said to me, “It’s an area that a number of my clients worry about.”
He did some digging and found this amazing financial skills training for young adults.
It’s called Positive Money Habits, run by Wise Monkey and it’s helping clients get some comfort that their offspring are receiving some specialist help.
The course is especially useful for those in their 20’s, helping them to become financially savvy, to make better financial decisions, and to grow in confidence financially. It also provides direct 121 financial coaching to help them get into good financial habits earlier.
Courses are delivered over Zoom and consist of around 10 participants.
The two principles at Wise Monkey are Simonne Gnesson and Dr George Callaghan. George is working with another great adviser I know, Duncan Glassey from Wealthflow and it’s going down really well.
They don’t sell financial products. They deal with the behavioural side of how to deal with finances.
Clients (or their offspring) have to pay to join. James believes that the course improves the financial skills of your clients’ children, reduces parental stress, and might even save parents money in the future (one can hope).
Here are upcoming dates for 2020 (and it’s first in, best dressed):
- November 9th. 7-8pm via zoom
- November 16th. 7-8pm via zoom
- November 23rd. 7-8pm via zoom
James doesn’t receive any referral fee for this, he just wants to give other financial planning businesses the opportunity to further enhance the value they deliver to clients. (Bless James, I say)
What’s one good idea worth to you and your business? Yeah, I know. So sign up below to get my best thinking in your inbox every week. (You can leave anytime, although I don’t think you’ll want to)