Klarna job cuts | Video call redundancy announcements can spark outrage, but is the anger valid?

Video call redundancy announcements can spark outrage, but is the anger valid?

‘Buy Now Pay Later’ firm Klarna announced this week that it was cutting around 700 jobs, following months of financial struggles. The company’s CEO Sebastian Siemiatkowski shared the news, which will see approximately ten per cent of the 7,000-strong workforce leave the company, via a recorded video message.

In the clip, Siemiatkowski said the “tragic and unnecessary war in Ukraine... a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession” were the leading factors behind the company’s “very tumultuous year”.

“It saddens me to say that as a result of this, approximately ten per cent of our colleagues and friends across all domains in the company will be impacted”, he said, later adding: “I [am] deeply saddened by seeing friends and colleagues leave. I want to thank each and every one of you for your hard work and above all your contribution to Klarna and our mission.”

And while mass lay-offs will always be unwelcome news for the majority of employees, it was not the redundancy announcement itself that ran the risk of controversy, but the way in which it appeared to be communicated.

A growing trend

The practice is far from unique – in fact, recent findings from a Chartered Management Institute (CMI) survey that was carried out for the Daily Mail found that almost a third (29%) of managers have axed someone via video call or knew of a colleague that has done this. But some firms have sparked more outrage than others with their handling of this virtual redundancy announcement process.

In March 2022, P&O Ferries hit the headlines for the wrong reasons, when hundreds of the company’s staff were told, via a video clip, that this would mark their final day of employment. In the same recorded clip, the firm told staff they were being replaced with cheaper agency staff.

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Earlier in the pandemic, HR Grapevine reported on the news online US mortgage firm Better.com sacked 900 employees over a Zoom call. After a backlash on social media, CEO Vishal Garg, apologised for failing to show adequate "respect and appreciation" for the employees he sacked.

Additionally, in 2020 it was reported that workers at the ride-hailing firm Uber were informed that they would be losing their roles via a three-minute video Zoom conference call.

Anthony Painter, CMI’s Director of Policy, previously condemned the growing trend, staying: “Firing staff by Zoom is callous and shows a complete lack of empathy. Letting staff go may be a commercial necessity... but there can be no justification for doing it in this way.”

Is the anger appropriate?

Whilst it’s clearly a sensitive subject, several experts have jumped to the defence of Klarna, highlighting the fact that the company is launching a full consultation process with impacted staff in the coming days, and providing them with further information about the next steps.

Nina Robinson, Director at ESP Law, part of WorkNest, even said that video announcements of this kind could be ‘fairer’ and more consistent.

She told HR Grapevine: “It is perfectly possible and lawful to make announcements like this by pre-recorded message, with individual consultations to follow, which is what Klarna appear to be doing based on the communication to their employees that they have published on their website.

“In some situations this approach will actually be fairer and will be preferable due to the need to communicate a consistent message very widely – especially with staff in different locations and even different time zones. The key is really what they do next. What they do next will also depend on which employee populations are impacted and the local laws in those jurisdictions they are employed in.”

‘The message is more important than the medium’

Adele Edwin-Lamerton, Senior Associate, Employment at Kingsley Napley, told HR Grapevine that the move to digital-first working practices mean that many in-person meetings now take place virtually.

She said: “Due to the increase in hybrid working, meetings which previously would have only taken place in person now frequently occur remotely. Although this can feel impersonal, what is key is that the appropriate process is followed. It’s not so much the medium which is used, but the message it conveys which is important.

“However pressed they are for time, employers should remember that they need to adopt a fair process and consult with their employees.”

‘Leaders need more digital training’

Professor Jonathan Passmore, Senior Vice President at CoachHub, felt that digital communications do have an important role to play when announcing job losses, particularly at large firms like Klarna, hearing the news personally from ones' line manager is preferable to hearing you have lost your job in a broadcast communication.

Passmore said: “... as part of the C-Suite’s wider communication remit there is also a role to be played by a broadcast communication during the process of letting an employee go. This communication should explain more about the background to the decision, taking responsibility and sharing in the pain which such decisions cause for the individual, their family and the wider community, if the firm is a large local employer.

“Technology is a facilitator of communications, but just because we can, does not mean we should. Leaders need to leverage technology while not losing sight of the humans who are receiving such messages. A broadcast message ensures everyone receives the same message, at the same time, but its strength is its weakness, as not every individual is the same. For some a redundancy may be welcome news, for others a mild disappointment, while for many it provokes both a financial and personal crisis."

Passmore concluded: “At present, leaders have little training on digital communications and few organisations have protocols. As we move forward in 2022, business schools need to look again at what a leader in a hybrid world looks like and adjust what they teach. Meanwhile, organisations must look critically at their processes to ensure they still concentrate on the people which make up their organisation, putting into place support mechanisms such as workplace and career transition coaching, to help their employees navigate recent years’ life changes."

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