Travel Crisis: Furloughing Employees

How would you deal with furloughing or letting employees go, when it’s on such a mass scale? Expedia laying off thousands of people, the whole travel space is doing the same. How would you approach that, as a leader?

I’ve just experienced this, actually. This is, again, unprecedented times and it’s horrible to have to go through this process. I really feel for any executive that’s going through this, right now. It’s got to be gut-wrenching. At the same time, in order for the business to be a viable entity, in the long run, you just can’t carry those costs for long periods of time. Once you start looking at where your burn rate is, and how much cash you have on hand, whether you are a start-up or a public company, it comes down to, how much am I burning right now, and how long can I sustain that, versus the cash that I have on hand? From a personal perspective, I know that a lot of folks are thinking, it’s going to bounce back at some point; what if we furlough? We’re not laying anyone off, we’re just pausing for a minute, while this shock happens. Then when it comes back, we’ll have all these people being able to jump back on ship.

But right now, one of the big things, in the US for sure, is that if you furlough, those folks are not getting paid. They’re getting insurance but they’re not getting paid their normal comp. They don’t have access to government unemployment. So there is a big debate going on, within companies. If I lay off, then they have the ability to get unemployment benefits. This is a really, really tough situation for companies. I think if I were in the Hotels.com space, I would be thinking about how much cash we have, as an Expedia entity and how much burn we’re doing. Thinking about, okay, if this thing bounces back in the summer – at some point it will bounce back – can I have access to people to be ready to jump on that, when it does happen? That’s where, I think, a lot of the travel companies are leaning more towards furlough, at this point in time, so they can get back on track as quickly as possible.

At the same time, the lay off does benefit the employee, because they get an unemployment cheque. It’s a tough one and I really feel for executives that are going through this, because it’s a no win.

Delivering that news to those employees is a huge challenge, because they have rent, they have running costs that don’t get covered and the company is burning cash. How do you navigate that difficult conversation, in that position?

Having done this multiple times, for me, the most important thing is to be as transparent as possible. If you try to hide behind something here, then you’re going to get roasted and probably rightly so. It’s really laying out, here’s why we had to do what we had to do. Here’s what our burn rate looks like and here’s how much cash we’re burning and what’s left in the bank. If we want to be viable for the long term, here are the decisions that we had to make. Furlough, versus laying people off. On the one hand, they get to keep insurance, but they don’t get paid. On the other, they get to have unemployment benefit for six months or so, at least. I think it’s being as transparent as possible, to the employee and to the public, for that matter, so that you are just letting people know that these are tough decisions and you didn’t take them lightly.