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AirBnB's Response to Covid-19 Impacts - Layoffs and Strategies Employed

Onset of Covid-19 Pandemic and AirBnB's Decreased Bookings

The onset of the Covid-19 pandemic had caused chaos amongst many organizations involved with travel and tourism. AirBnB was no exception, as during the pandemic their booking rate head decreased by 96% in many of their popular destinations. Due to the reduction in revenue, in May 2020 the CEO Brian Chesky announced that 1,900 employees would be laid off (source). This amounted to 25% of their global workforce at the time. This change in operating structure was announced through a widely distributed letter addressed to all employees, penned by the CEO himself, in order to provide transparency on the reason behind the mass layoffs. The letter indicated that due to Covid-19’s impact on revenues layoffs were required, and the heavy decision was not a reflection of any employees performance. The letter offered support to those affected by the layoffs, which provided resources on networking opportunities, support in finding new employment, and outlining a generous severance package. The letter also mentioned that laid-off employees who had not reached the stock purchase cliff were able to purchase options. Laid-off employees were also notified that in terms of operational changes, many employees who were staying on would need to shift roles in order to meet the new challenges brought on by the pandemic, which would be communicated in 1on1 meetings with their managers. And finally, there was a renewed focus on the core aspect of the business, connecting humans, meaning the reduction in headcount would be primarily from their experimental ventures. (source) 
Guiding force behind the change 
The guiding force behind this change was the Covid-19 pandemic and its effect on travel throughout the world. AirBnB’s core business is centered around out-of-town travel for both business and pleasure, and due to travel restrictions, most of these services were not able to be utilized. Another guiding force for the change was stakeholder appeasement. These lay-offs were required due to the revenue targets falling short for 2020, and given the level of private investment that had been funded into AirBnB’s growth it is logical to assume that the venture capitalists and equity partners required significant cost-cutting measures to prop up their profitability metrics. In this sense, satisfying the board and shareholders was an additional guiding force.  
Strategies employed 
To reduce the number of lay-offs required, or the impact of the change, AirBnB raised an additional $2 billion in capital to weather through the storm of Covid-19. As well, they dramatically cut costs across the board (source). This included a reduction in new ventures outside of their core offerings such as Transportation services and AirBnB Studios, a film and television production arm of AirBnB. This was a reduction in both financial allocation and headcount. Leading up to the announcement, the CEO had been posting open communication regarding the effect that Covid-19 was having on their operations. Throughout his letters, Brian Chesky had mentioned that “nothing was off the table” regarding layoffs, attempting to be honest with the employees. The letters themselves were transparent regarding the situation and the impact it had. The layoffs were done through 1on1 meetings, and the employees would formally be let go the Monday after the announcement in order to provide the organization to adjust and allow said employees with time to come to terms. To ease the transition for many of the newly laid-off employees, compensation was provided in the form of the benefits described in the previous sections. This included 12 months of additional health insurance, professional support in networking and job-hunting, and generous severance packages to employees which included financial benefits and tangible resources like keeping company laptops (source). In terms of company operations post-layoff, many employees were tasked with providing support to teams outside their normal scope of operations. For example, the talent recruitment team was reassigned to their call centre to help field inquiries from anxious hosts and travelers. Recruiters were also given an additional task to provide support for departing employees and sourcing them at new organizations (source).  

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