When Layoffs Go Wrong

As the cash spigot dries up, companies are downsizing and discovering that firing can be tough

- Aggi Cantrill and Olivia Solon, with Lizette Chapman and Ivan Levingston

Workers at online brokerage Trade Republic Bank GmbH had good reason to think their jobs were safe when rising interest rates began putting a strain on startups last spring. As rivals cut back, the Berlin company secured fresh funding and continued advertising new positions. But in a brief video presentation on June 9, the de facto chief executive officer announced a workplace reshuffling—and then said the 700 employees should check their email to learn whether they still had jobs. About 100 had been cut, including new hires who hadn’t even made it into the office. Some who missed the presentation heard the news from social media or by getting locked out of their corporate email accounts.

With central banks around the world tightening, companies that have grown up in an era of cheap credit and easy financing are finding out the hard way that shrinking can be just as complicated as growing—especially when it comes to firing people. Workers around the world have reported similar stories of awkward dismissals as managers attempt to cut costs. “We’ve seen a lot of startups try to make redundancies exceptionally quickly,” says Anouk Agussol, CEO of UK staffing consultant Unleashed. “The problem is that people who leave feel like rubbish, and the people who stay lose a lot of trust.”

The details from Trade Republic were gathered from interviews with 13 former employees who asked not to be identified. A representative declined to confirm the overall number of workers let go and characterized the changes as a “realignment of the team structure,” in which some people were offered new roles and some lost their jobs.