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 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.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the external environmental factors that force a business to alter its strategy
• Learn about the challenges of dealing with layoffs
• Understand how a company can build its image by following a compassionate layoff approach
• Learn about the importance of a logical approach and decision-making on layoffs
• Become aware of the differential pay and benefits offered to contract employees

Keywords

HR Policy; Employee Lay-offs; Lay-off Strategy; Severance Benefits; Employee Compensation; Contract Employees; HR Communication; Lay-off Approach