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Are Start-up Founders’ Claims Of Helping Sacked Employees Merely Lip Service?

While many CEOs who went on a guilt trip after announcing retrenchments assured assistance to their sacked employees, it remains questionable how serious are they about keeping their promise

Are Start-up Founders’ Claims Of Helping Sacked Employees Merely Lip Service?
POSTED ON November 12, 2022 11:47 AM

Few days ago, Nikesh Jain, co-founder of Bengaluru-based edtech Edurigo Technologies received a call at 5.30am from his company’s US headquarters. They had drawn up a list of 13 employees who had to be fired that very day and wanted him to communicate this news in person. 

A rattled Jain realised that this list comprised some top performers.  “I asked on what basis this list was decided and why was I not consulted? They said even they were given just two hours to prepare the list so there was no time. That was the worst day of that job because I was executing someone else's decision but still had to own that decision. I came home full of guilt. Sometimes decisions are taken without putting any brains or heart,” he rued. 

This same guilt is probably what consumed Unacademy founder and CEO Gaurav Munjal, Byju's founder Byju Raveendran and Facebook founder Mark Zuckerberg, which explains why each of them apologised after laying off people recently. In fact, Munjal and Raveendran went to the extent of claiming that their organisations would try to help sacked staffers find alternative employment. 

A claim that seems a far cry from the reality. 

Pink Slips Bleed Red 

This year, the start-up industry has seen a spate of layoffs amidst a funding winter, as investors take a hard look at profitability and valuation, while the fears of a recession loom large. 

Meta Platforms, Facebook’s parent company, let go of 11,000 employees, while Byju’s and Unacademy fired 2,500 and 350 staffers recently. 

Facebook founder Mark Zuckerberg
Facebook founder Mark Zuckerberg let go of 11,000 employees

In August 2022, Vedantu sacked 100 employees after firing 624 people in two batches in May. Business-to-business ecommerce marketplace Udaan retrenched 300 to 350 employees in November 2022, after firing around 200 of its staff in June. 

Chennai-based revenue management start-up Chargebee laid off 10 per cent of its workforce, which amounted to almost 142 people, this November citing adverse macroeconomic conditions. These are just a few names in a lengthy list of start-ups that have been showing the door to their people. 

While Zuckerberg, Munjal and Raveendran expressed their guilt about the layoffs, what really would make a difference is their assistance – of any form – to their departed employees.  

While a Byju’s spokesperson told Outlook Business that each employee affected by the restructuring is being informed individually with the empathy they deserve and need at this time, the ground reality needs to be checked. 

“Byju’s is providing all of them a progressive exit package, including extended family health insurance benefits, outplacement services led by some of the industry’s best recruitment specialists, fast-track full-and-final settlement on demand and the provision of ‘garden leave’ where they can look for jobs while being on Byju’s payroll,” the spokesperson said. “All these employees (those laid off) will also be offered an assured path to return to Byju’s in case they are unable to find a job in the next 12 months in new roles that are more relevant and productive for both the company and the employees. Also, Byju’s continues to recruit across functions like sales and teaching,” the spokesperson added. 

Byju Raveendran, chief executive officer, Byjus
Byju Raveendran, chief executive officer, Byju's

Byju’s, on the other hand, has faced severe backlash after it announced the signing up of football star Lionel Messi—one of the most expensive sports stars to onboard—as its global brand ambassador. The revelation came just days after it fired 5% of its staff in a mass lay-off.  

Emails sent to Unacademy and Chargebee to understand how they planned to assist their retrenched workforce went unacknowledged. 

Putting Up a Front? 

Byju’s claims are squashed by one of its ex-staffers from Chennai who, on conditions of anonymity, told us that the company was merely attempting to tick the boxes than actively helping retrenched staffers land another job. “I am on a garden leave for two months, where I will be paid for this period. As for helping us get alternative jobs, the HR team is simply picking up job openings from Linkedin, copy-pasting this and emailing it to us. That is unlikely to yield results,” he lamented. 

His other big grouse is the nature is which the layoffs were done; according to him, people were fired randomly rather than based on their performance. “Many top performers were fired. However, those who are not productive but have good relations with the managerial staff were retained,” he added. 

This feeling is echoed by another staffer from a Bengaluru-based tech start-up. She claimed that three weeks before she was fired in September 2022, people were praising her performance. “Suddenly I was fired saying my performance was poor. I have lots of financial responsibilities with an ailing mother. Getting a job has been an uphill task. A couple of companies that were willing to consider me as a candidate were unwilling to pay me what I was earning in my last job,” she rued. 

Jaideep Kewalramani, head of employability business and chief operating officer of TeamLease EdTech
Jaideep Kewalramani, head of employability business and chief operating officer of TeamLease EdTech

Many staffers laid off in the recent spate of job cuts were unwilling to come on record, fearing it would irk their companies where they are still on notice period and also jeopardise their future career prospects. 

Nikhil Sivadas, who is trying to galvanise folks under the All India IT Employees Union is unsurprised. He is in touch with some Byju’s ex-staffers who were rendered jobless, but who refused to speak to the media. 

Losing one’s job expectedly and unceremoniously does make folks wary. Most people Outlook Business spoke to are eyeballing financial hardship before landing a job, especially one they aspire to, rather than one that helps them pay their bills. Add to this the rancour of being fired because a company miscalculated its growth projections, reducing them to mere statistics to be juggled on the balance sheets rather than be treated as human beings. 

That raises the pertinent question—are start-up founders indeed going the extra mile to help those rendered jobless as they try to balance their balance sheets, or are their words of contrition just eyewash? 

According to Jain, it is a mixed bag. He opined that some start-ups and large enterprises help their laid-off employees to land other jobs. 

“Sometimes, they also keep their employees on payroll and allow them to look for a job so that employees do not have to show that they are laid off. That's a huge help because while in a job getting another one is always easier. There may be some companies which may not provide any help or support, but that number is small,” he added. 

The Heart Of The Matter 

Every organisation has its internal modus operandi when it comes to managing layoffs. However, the strategic script for retrenching or “rationalising manpower” more or less remains the same. 

It broadly weaves between slowing growth, cost management, departmental reorganisations or focus on high-priority growth areas, according to Amit Ratanpal, founder and managing director of BLinC Invest, a Mumbai-based venture capital fund. 

Ultimately, everything boils down to the start-up’s ethos and whether it genuinely puts people over profit. Those run professionally by serial entrepreneurs with defined processes will extend a helping hand to outplace the affected team members. 

However, finding alternative employment is not an easy task given that they have to expend efforts, spend money and move their networks to make this happen. With accelerated economic cycles, this can become more challenging unless the founders are committed to this cause. 

Jaideep Kewalramani, head of employability business and chief operating officer (COO) of TeamLease EdTech, a learning solutions company, said, “In the last 20 odd years, we have seen the Y2K bust in 2000, the 2008 global financial crisis, the COVID disruption in 2020 and now the expected synchronised global recession in 2022 to 2024. There will always be a few who make a public announcement but never see it through.” However, he chose not to share name of companies given the sensitivity of the subject and the varied experiences the affected staff have.  

Jain recalled one organisation that indeed walked the talk. When the India-focussed portal of America Online (AOL) shut down its Bengaluru office in 2011, rendering 400 people jobless, he claimed that its HR team arranged interviews with the Indian operations of Yahoo! 

“Pretty much the entire AOL Bengaluru team had an opportunity to interview with Yahoo! So, these employees were getting their salaries but at the same time, they were officially interviewing with Yahoo!. That's one very common way to handle mass layoffs and some start-ups have applied a similar modus operandi,” he added. 

Whether today’s start-ups will go the AOL way or resort to wordplay, only time will tell. As for now, the thousands rendered jobless will look forward to any form of assistance and expect no one makes false claims as far as help in getting a job is concerned.  So, it will have to be seen if start-up founders will finally put their efforts where their words are and truly help the people who helped them reach the highs or just offer trite words of apology for upending their employee’s lives with a single profit-oriented decision. 

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