Photo credit: Fred R. Conrad

Better.com CEO Vishal Garg’s ‘demoralizing’ treatment of employees was unacceptable

Article originally published by the Philadelphia Business Journal on December 20, 2021.

A CEO must possess people skills that a founder may lack. This was amply demonstrated at Better.com, a privately held online mortgage company founded in 2016 by Vishal Garg.

On Dec. 1, Garg personally laid off 900 shocked employees during a three-minute video conference. He claimed the reason was to improve productivity, not an uncommon objective in advance of going public. What was unacceptable, however, was the way he did it.

Effective CEOs would not ignore the organizational principle that terminations need to be implemented by managers to whom those employees report, with support from the company’s HR department. When employees are terminated, they are to be treated with dignity and respect. I am sure if Garg was an employee about to be terminated, he would like to hear it directly from his boss.

During the video conference, Garg claimed that based on the company’s employee tracking software, 250 of these employees had been stealing time from the company by working only two hours during an eight-hour workday.

Photo credit: Fred R. Conrad

Shortly after the layoffs, Garg told the remaining employees that their productivity would be closely monitored. An employee commented that “his tone was extremely harsh and threatening.” Another employee said, “Garg belittled the laid-off workers to the rest of us and told us there would be no second chances from now on. The whole thing was demoralizing.” Effective CEOs don’t inspire their employees in this way.

In the days after the layoffs, the leaders of the Better.com communications, marketing and public relations functions resigned. Neither these employees nor the company publicly commented on the resignations.

This is not the first time Garg has demonstrated his lack of people skills. A Nov. 20 Fortune article labeled Garg’s management style as “scorched earth.” The article quotes an email written by Garg and sent to his employees, in which he wrote, “HELLO – WAKE UP BETTER TEAM. You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS and … DUMB DOLPHINS get caught in nets and eaten by sharks. SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME.” No CEO can retain their best people if this is the way they are speaking to them.

On Dec. 7, Garg apologized to employees over Zoom, and posted a letter on the company’s website stating, “I want to apologize for the way I handled the layoffs last week. I failed to show the amount of respect and appreciation for the individuals who were affected and for their contributions to Better. I own the decision to do the layoffs, but in communicating it I blundered the execution. In doing so, I embarrassed you.”

In recognition that Garg could no longer lead the company, on Dec. 10 the board of Better.com, in an email to employees, announced that Garg was “taking time off effective immediately after the “very regrettable events over the last week.” CFO Kevin Smith was named interim CEO. The board also announced that it had hired an independent firm to perform a “leadership and cultural assessment” of the company.

Sir Richard Branson, co-founder of Virgin Group, has been quoted as saying, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” Garg did not understand this principle. CEOs need to treat employees with dignity and respect.

Stan Silverman is founder and CEO of Silverman Leadership and author of “Be Different! The Key to Business and Career Success.” He is also a speaker, advisor and widely read nationally syndicated columnist on leadership, entrepreneurship and corporate governance. He can be reached at Stan@SilvermanLeadership.com.

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