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Published by:
IBS Center for Management Research (2020)
Length:
8 pages
Data source:
Published sources

Abstract

The case 'Airbnb's Approach to Layoff During the COVID-19 Crisis' describes Airbnb's compassionate approach toward employees who had to be laid off due to the ongoing COVID-19 pandemic. The company had forecast a 50 percent reduction in revenues for 2020 and despite raising USD2 billion in capital in April 2020 reached the decision to lay off 1,900 employees globally or 25% of its 7,500 entire workforce in May 2020. The case looks at the guiding principles that the co-founder Brian Chesky had put in place to ensure that Airbnb started the process of lay-offs based on the new focused business strategy built on a sustainable cost model. Teams were reduced in size based on how well they mapped to where Airbnb was headed as part of a new focused strategy. Although the news of such a layoff was painful for everyone, the case highlights how Airbnb showed organizations a different way to handle layoffs. It remained committed to diversity, communicated transparently, and offered support and benefits to those let go. The case also highlights the severance package of USD250 million offered by Airbnb to its full-time employees that included healthcare and mental support, and assistance finding new work. At the same time the contract employees had a different experience during the lay-offs and faced inequities in severance pay and benefits. The case ends with details of the impact of the COVID-19 pandemic on the travel industry and on Airbnb's IPO plans after the company's valuation nearly halved to USD18 billion by mid-2020 from USD35 billion in mid-2019.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Topics

HR policy; Employee lay-offs; Lay-off strategy; Severance benefits; Employee compensation; Contract employees; HR communication; Lay-off approach

Setting

The events covered by this item took place in 2019-2020.

Geographical setting

Region:
World/global
Country:
United States

Featured company

Company name:
Airbnb, Inc
Employees:
5001-10000
Turnover:
USD 4.8 billion (FY2019)
Type:
Self-owned
Industry:
Travel & tourism

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