Treat Your Employees Like
Your Customers Are Watching
CX darling Revolut slips up on layoffs, and it matters.
Fintech high flying startup Revolut is getting flack in the press for its handling of employee layoffs, and as we have had good things to say about companies like them as innovators in CX, it’s worth a closer look.
At the heart of the issue is their process for handling layoffs on what is, on the surface, a pretty small number of folk. For a company that claims 2000+ employees, 50-60 people being let go feels more like cleaning shop than actual belt-tightening. And with apparently unlimited access to venture funding at stratospheric valuations, it’s hard to see this as a last-gasp balance-sheet defense. However, what it does is remind us that customers buy more than your product, they buy your brand and – by implication – the way they perceive you treat your employees.
We maintain our premise that high performing companies maintain a level of balance and alignment between shareholders, employees and customers and that all three relationships are stressed by crisis, economic or otherwise.
A contrast is called for. AirBnB went through layoffs of 1,900 staff out of a total of 7,500 in the first half of May. Now, I’m sure that retail financial services are not immune to the impact of the pandemic, but I’d wager that the rent-a-room business got the shorter stick when it comes to lost revenue. AirBnB’s brand of innovation is not without its share of controversy, including impacts on neighborhoods, or dancing around regulations and tax issues. Yet, the narrative circulating about the layoffs and the way that CEO Brian Chesky handled them was glowing. So glowing – fawning even – that quite naturally we didn’t believe a word of it. Except it seems to be true.
Many laid off employees – rarely the greatest advocates for their former employer – have shared experiences that painted a picture of a leadership team that went far beyond the minimum, the expected, or even the generous. It wasn’t just about money. In fact, I suspect it had little to do with money. It was about respect.
I’m not going to document the stories, you can look them up easily enough, but I was reminded by a leader in their CX organization that the “peak-end rule” applies just as well to employees as it does customers, perhaps even more so. The high points of her career will naturally stay in her memory, but the way she was treated as she left will leave her a promoter of the company forever. I have nothing but sympathy for corporations in financial collapse that have little in the way to offer their employees, but those with ample access to capital should consider the investment AirBnB made in people who, in many instances, will likely never work for them again.
Customers and employees are symbiotic in many ways. A whole generation of talent wants to work for companies that share their values, that demonstrate that capitalism and profits thrive as a result of great teams, not at the expense of them. Customers want to do business with ethical companies; even more so for a company like Revolut that markets to younger demographics. We maintain our premise that high performing companies maintain a level of balance and alignment between shareholders, employees and customers and that all three relationships are stressed by crisis, economic or otherwise. Management teams need to achieve results across all three groups to sustain a great business: call it “stakeholder capitalism” if you like, but for us it’s just honest capitalism, plain and simple.
For many privately held high flying startups, shareholder retrenchment may be moving faster than their public counterparts. After all, venture funds assume the absolute failure of many of their investments, whereas the public markets rarely price in the risk of a stock going to zero. And public investors, certainly in the US, seem inclined to shake off the risks of recession (at the time of writing, we hasten to add). Those companies may be about to experience the flip side of an amazingly forgiving investor environment that they have enjoyed for the past decade; in such cases they will have to make rapid adjustments to keep that “leg of the stool” from collapsing completely. How they treat employees and customers while their financials go through surgery will say a lot about their long-term prospects.
ABOUT RICHARD OWEN
As CEO, Richard’s singular professional focus: Delivering financial value through CX. He co-founded OCX Cognition to combine technology and programmatic consulting in pursuit of that goal, and now leads the company’s coordinated efforts to deliver the right solutions for its clients.
Richard’s 30-year career has centered on transforming business operations with technology, and he is one of the best-known CX thought leaders. While CEO at Satmetrix, his team led the development of the Net Promoter Score® methodology with Fred Reichheld, creating the world’s most widely used CX measurement approach. With Laura Brooks, he co-authored Answering the Ultimate Question, the best-selling “how to” guide for NPS practitioners.
Richard transformed the supply chain and built what was then the world’s largest e-commerce business at Dell, and has led two software companies, AvantGo and Satmetrix, to successful exits. With an MBA from MIT Sloan Management School, he has served on several boards and committees at public and private companies and is an active venture investor and international business thinker. Richard has lived on three continents; he and his family now divide their time between Arizona and London.
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