After becoming the poster child for callous mass layoffs, mortgage originator Better.com has adopted a new approach to reducing its workforce: the company is now asking staff if they want to leave voluntarily with benefits.
The New-York based lender, which has laid off 4,000 workers since December, launched a voluntary separation program, with a two-month severance payment and health insurance for those who leave their jobs, according to an email sent on Wednesday afternoon to the company from Richard Benson-Armer, Better’s chief people, performance and culture officer.
“As many of you know, the uncertain mortgage market conditions of the last couple of weeks have created an exceedingly challenging operating environment for many companies in our industry,” the executive wrote.
He added: “This is requiring many of them to make difficult decisions in order to sustain their businesses. Despite ongoing efforts to streamline our operations and ensure a strong path forward for the company, Better is no exception.”
The program is focused on United States-based employees in corporate and PDE who are level 10 and below. HousingWire asked how many employees Better.com plans to reach with the program, but received no answer.
On March 8, Better laid off 3,000 employees, roughly 35% of its staff in the United States and India. In December, the company was criticized when its CEO, Vishal Garg, fired 900 workers via Zoom and chastised their work ethic to remaining employees.
TechCrunch obtained a video in which Garg addressed the staff shortly after the layoffs in December.
“We are going to be leaner, meaner and hungrier going forward. We will not be spending time trying to raise capital,” he said. “We will not be spending time focused on what investors think. We will be spending time grinding this business forward in what will likely be a bloodbath in the mortgage industry in the next year or two.”
Garg also admitted to not being disciplined in managing the company’s capital and in its hiring strategy, which prompted the second mass layoff in March.
Better.com made a killing in 2020 thanks to low mortgage rates and a homeowner rush to refinance, but the second half of 2021 and the first quarter of 2022 have not been as kind.
Interest rates have climbed to 5%, turning the mortgage market to purchases, which Better isn’t well positioned to capitalize on.
The reputational damage from the December layoffs also hinders the company’s ability to develop relationships that lead to purchase business.
For the employees who decide to stay, Benson-Armer wrote in the email that the company is returning to in-office mode in the coming weeks. “Given the headwinds facing our industry, collaboration and innovation – the hallmarks on which Better built its success – will be more essential than ever,” he said.
Benson-Armer joined Better.com in March to help create and protect its culture, the company said. Before serving as Better’s interim CHRO and a partner at the investment firm Activant Capital, he was a senior partner at McKinsey and the chief strategy officer of The Thomson Corporation (now ThomsonReuters).
Garg, Better.com’s CEO, said in a statement that Benson-Armer comes to the company “as we move towards Better’s next phase as a public company.”
A document filed by Aurora Acquisition Corp. with the Securities and Exchange Commission (SEC) in late December said that the special purpose acquisition company will keep a proposed merger with Better, despite the recent layoffs. “Aurora remains confident in Better and the proposed transaction,” the company said in the document.
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