Klarna, Carvana Receive Criticism for How They Fired Hundreds of Employees

Terminations are common — but how companies announce them is what customers remember.

Firing employees is difficult on its own. In the work-from-home era, it’s even harder.

Several companies have been in the spotlight this year for the firings of hundreds of employees. Klarna, a buy now pay later app, fired around 700 employees on a call — about 10 percent of its company. Carvana, an online used car retailer, fired 2,500 people via Zoom as well.

While firings are an inevitable part of any company, Klarna and Carvana’s situations were unique — and not in a good way. The way they chose to announce their firings wasn’t great, but their response to criticism was even worse.

Klarna delivered the bad news in a pre-recorded video from its CEO, then made employees wait two days before they would know if they were let go.

After Klarna was understandably criticized by people inside and outside the company, CEO Sebastian Siemiatkowski didn’t take it well. He called the criticism “unfair and uneducated,” according to Forbes.

It doesn’t stop there. After everyone received their notice, employees agreed to compile a list of everyone who was fired to help them find jobs. Siemiatkowski shared the list on his LinkedIn — which employees felt was “tone deaf.”

Carvana’s situation isn’t much better. Around 2,500 employees were fired via Zoom and email in May. CBS MoneyWatch reported that employees weren’t allowed to even ask questions about their firing on the Zoom call.

An employee told CBS MoneyWatch, “One of Carvana’s slogans is ‘Treat customers as you would treat your own mom,’ and we didn’t get treated that way as employees.”

The slogan is good advice for customer service professionals — but it should apply to both customers and your employees. Klarna and Carvana’s mistakes do affect future customers.

Potential users of Carvana and Klarna are likely to see this news. This will surely tarnish their image in some potential users’ eyes and scare them away. As a company, you can’t decide to treat your customers excellently, but your employees poorly.

There’s no easy way to fire hundreds of people. However, there are more humane ways to do it. You could ensure that managers speak to their direct reports one-on-one or split up the announcement by teams. Ideally, that would happen one-on-one — but that may have been less feasible at large companies like Klarna and Carvana.

On top of that, the employees should be allowed to ask questions. Their livelihoods are at stake, and they probably have a million questions.

Just like companies go out of their way to show compassion to their customers, they should do the same for their employees. Your company’s values should be obvious throughout every aspect of your organization.

If these companies made more of an effort to make the process more personal, even if it meant making the process less efficient, this wouldn’t have left as big a stain as it has. But if you’re in this situation, remember to put the person first — and handle inevitable criticism gracefully.