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Stripe Schools Us on Employer Brand
There isn’t an easy way to communicate layoffs to your employees, but there absolutely is a right and wrong way to do it. We can learn a lot from Stripe’s recent announcement.
This has been a confusing year for HR and recruiting teams (and job seekers and humans in general). We’re paddling super fast to keep up with requisitions and filling new roles in some industries. In others, we’re hoping the current doesn’t move too quickly because we have layoffs or restructuring. Also? We haven’t really started working on internal mobility programs or preparing for lateral movement within our companies. Regardless, we can’t do any of these things if we cannot attract talent.
Let’s talk about employer branding and how it works when we have to give bad news. One of the questions the Talentcare team hears often is “what happens to our employer brand when we have layoffs?” No one loves to be in this situation (we hope) on either side of the table, and it will affect your brand, but the good news is that it doesn’t have to negatively impact your employer brand. There is a right way and a wrong way to communicate bad news.
Let’s Talk About the RIGHT Way (Take Notes!)
Case in point: Stripe is a technology company that builds economic infrastructure for the internet founded by brothers John and Patrick Collison. Businesses of every size—from new startups to public companies—use its software to accept payments and manage their businesses online. In early November, Stripe CEO Patrick Collison sent an email to Stripe employees that began with the following:
“Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.”
Accountability and Ownership
The CEO and executive team took accountability. They over hired. The explanation was summed up by this statement:
“In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important:
We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.
We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”
Before going into this detailed explanation, the email addressed what surely was top of mind for the employees affected by the layoffs (14% of employees impacted totaled approximately 1,120 employees of the company’s 8,000-employee workforce) – and their coworkers.
The Lesson: Announcing a layoff can be done in a number of ways and that way may differ from company to company, however, there is a right way and a not-so-right way to do that. The announcement should come from the CEO of the company and executed in a way that shows empathy and accountability. It’s the leader's job to bring all the forces together that support the health of the company, so playing the blame game doesn't work in these situations. Own it, commit to fixing it, and learn from it. We saw it from Stripe, but what happens now?
Stripe Softens the Blow with Care and Support
The list includes generous severance pay, that the employees laid off would still receive their annual bonus and PTO payouts, six months of continued healthcare coverage or the equivalent in cash, career support, and immigration support for employees on work visas.
These actions are real and meaningful, many of them are highly unusual in the tech sector, and they are exactly why Stripe’s employees know that the company’s CEO isn’t just paying lip service to leadership and empathy.
“Most importantly, while this is definitely not the separation we would have wanted or imagined when we were making hiring decisions, we want everyone that is leaving to know that we care about you as former colleagues and appreciate everything you’ve done for Stripe. In our minds, you are valued alumni. (In service of that, we’re creating alumni.stripe.com email addresses for everyone departing, and we’re going to roll this out to all former employees in the months ahead.)”
The Lesson: It’s important to recognize the stress and inconvenience that your former employees are going through and consider a reasonable severance offer that will assist them throughout their financial uncertainty of unemployment. Like Stripe, a reasonable severance should offer financial support, insurance extensions, career assistance, and anything else that can help laid-off employees through this difficult time.
Acknowledge That This is a Tough Time for All
The last thing in the email is not just for the 14% impacted by layoffs; this is what speaks to Stripe’s culture and acknowledges that (1) this is sad for everyone and (2) the company’s mission has not changed:
“People join Stripe because they want to grow the internet economy and boost entrepreneurship around the world. Times of economic stress makes it even more important that we find innovative ways to help our users grow and adapt their businesses. Today is a sad day for everyone as we say goodbye to a number of talented colleagues. But we’re ready for a pitched effort ahead, and we’re putting Stripe on the right footing to face it.
For the rest of this week, we’ll focus on helping the people who are leaving Stripe. Next week we’ll reset, recalibrate, and move forward.”
The Lesson: The announcement should acknowledge not only those who are laid off but all other parties who may be affected by this news, like your standing employees who just lost colleagues and friends. Look for ways to celebrate the contributions of former employees and cement them into the foundation that current team members build upon and support the company's future success.
Key Takeaways for Maintaining a Positive Employer Brand
If you were looking for a model for how to maintain your employer brand and reputation during layoffs, Stripe’s CEO just set that up for you. This is a master class on sincerity, empathy, accountability, and the acknowledgment that no business can operate without encountering bumps in the road – but choosing to address them directly is what creates transparency. Transparent organizations have employees who trust them implicitly.
All companies will take a reputational hit after conducting any layoffs, but handling how you break the news, being transparent about what has happened, and focusing on your outgoing employees as a support system can reduce the number of negative reviews on employer review sites like Glassdoor and Indeed. Your remaining employees will expect you to follow through on promises made and your outgoing employees will always remember how they were treated during this process, so following a model like the one Stripe has and then following through can mitigate the negative impact on your company’s reputation.
There have been a lot of large brands making layoff announcements in the news lately and we won’t mention the names you probably already know. What we will say is that Stripe’s layoffs made the news too, but most news outlets reporting on it are doing so because it’s a great example of how to communicate business decisions when times get tough. So, that right way and wrong way we mentioned earlier? This was the right one. Read the entire email from Patrick Collison to Stripe’s employees here.