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| Details |
Case Code: CLHR069
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| Case Length: 8 pages |
| Period: 2019-2020 |
| Pub Date: 2020 |
| Teaching Note: Available |
| Subject : Human Resources/ Organization Behavior |
| Price:Rs.200 |
| Organization :Airbnb, Inc |
| Industry :Travel & Tourism |
| Countries : United States |
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Airbnb`s Approach to Layoff during the COVID-19 Crisis |
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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 US$2 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 US$250 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 US$18 billion by mid-2020 from US$ 35 billion in mid-2019.
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Issues: |
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- Understand the external environmental factors that force a business to alter its strategy.
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- Learn about the challenges of dealing with layoffs .
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- Understand how a company can build its image by following a compassionate layoff approach.
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- Learn about the importance of a logical approach and decision-making on layoffs.
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- Become aware of the differential pay and benefits offered to contract employees.
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| Introduction |
The outbreak of the novel corona virus disease in early 2020 devastated the travel businesses globally. Airbnb, an online marketplace which let people rent out their properties or spare rooms to guests and took a commission for every booking, too was not spared. Airbnb’s business was hit hard and the company forecast a 50 percent drop in its revenue for the year 2020 over that of 2019.
In response, the company raised $2 billion in capital in two tranches on April 6, 2020, and April 15, 2020, through debt, equity, and a line of credit to provide additional cash during the economic slowdown caused by the pandemic. As a last resort to reduce its costs during the pandemic, Airbnb decided to lay off 1,900 employees – 25% of the 7, 500 employees it had globally.
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Keywords |
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HR Policy; Employee Lay-offs; Lay-off Strategy; Severance Benefits; Employee Compensation; Contract Employees; HR Communication; Lay-off Approach
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
$16) per copy.
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