Read the email the Redfin CEO sent to employees announcing 470 layoffs

  • Real estate brokerage Redfin is laying off about 470 workers, or 8% of its workforce.
  • Demand in May was 17% below expectations and the company’s CEO said there was not enough work for its agents.
  • Read the email the CEO sent to employees announcing the layoffs.

Real estate brokerage Redfin is laying off about 470 workers as the housing market slumps.

He blamed the layoffs on “market conditions” in the Securities and Exchange Commission’s request. The cuts equate to 8% of its workforce, or 6% including employees from RentPath and Bay Equity.

Redfin is not alone. Compass said Tuesday it will reduce its workforce by about 10%, or 450 workers, as part of a plan to cut costs, along with reducing hiring in the United States and not taking jobs when employees leave.

Just last month, Compass reported record first-quarter earnings of $1.4 billion, up 25% from the same period last year, after transactions rose 18%.

A Compass spokesperson told CNBC that the cuts were due to “clear signs of slowing economic growth”.

Redfin has been more clear about the reason for the layoffs. In an email to employees, Redfin CEO Glenn Kellman said demand in May was 17% below expectations and that “we don’t have enough work for our agents and support staff.”

“Our culture has brought about an important shift toward performance and profits,” Kellman said. “If we hold our front-line agents to a high standard, we must apply the same standard to all of us standing behind the agent. It is not foolish to turn on people at the first sign of their weakness; but it is not ’emotional either to accept mediocrity.'”

Kellman said laid-off fellows will be offered 10 weeks of base pay, with an additional week of pay for every 12 months of service after one year, up to a maximum of 15 weeks of pay. He said Redfin will also pay departing employees the cost of extending health care coverage for three months.

“This should give you until the end of the summer to find work,” Kellman told employees in the email.

Read the full staff email, which was posted on the Redfin website, below:

Hey Redvin,

I’m sorry to say we’re asking about 8% of our employees to leave Redfin today, or about 6% if you include RentPath and Bay Equity employees. Over the next few hours, managers will contact the departing people. When we’re done with the calls, I’ll send a note. We will be hosting a briefing for everyone at 11AM PT to answer any questions, which you can submit via this form. Redfin will also announce the layoff to the public, posting this message on our blog.

Demand is down 17%
To all of you who have put your trust in Redfin, I’m sorry we can’t live up to our commitment to you. With May order below expectations at 17%, we don’t have enough work for our agents and support staff, and lack of sales leaves us with less money for headquarters projects.

Two to four months of stopping

We offer laid-off fellows ten weeks of base salary, with an additional week’s pay for every 12 months of service after one year, up to a maximum of 15 weeks of salary. For agent and support roles, severance pay includes the estimated value of productivity bonuses or sales bonuses. We will also pay departing employees the cost of extending our healthcare coverage for three months. This should give you until the end of the summer to find work.

I said we won’t fire people unless we have to. We should we should.

Layoffs always come as a terrible shock, especially when I said we’d go through with it to avoid one, and that we’ve raised hundreds of millions of dollars so we don’t have to dump people after just a few months of uncertainty. But mortgage rates are rising faster than ever. We may be facing years, not months, of declining home sales, and Redfin still plans to thrive. If the drop from $97 per share to $8 doesn’t crash the company, I don’t know what does.

It’s time to make money

We are missing out on a lot of good people today, but for the rest of us to want to stay, we have to increase the value of Redfin. And to increase our value, we have to earn money. We owe it to everyone who invested your time or fortune in this company to become profitable, and then very profitable.

performance oriented culture

Today’s layoffs are the result of a shortfall in Redfin’s revenue, not the people who have been laid off. But months before this layoff, our culture was making an important shift toward performance and profits. There is a reason Redfin, alone among brokers, employs our agents: to hold ourselves to higher standards. Jason Alim agreed to become the leader of our brokerage firm in February on the condition that he run it as a premium sales organization. We can only provide agent to dozens of clients every month if we think the agent is the best for our clients. And if we set our front-line agents to a high standard, we have to apply the same standard to all of us behind the agent. It is not zeal to turn against people at the first sign of weakness; But it is not enthusiastic to accept the average level. Soul possession is how we find our way between these two polishes.

Profit-Driven Decisions

Another key difference between Redfin and other brokers is our level of investment in software and support, which includes coordinators and support agents as well as field managers, renovators, display specialists and property specialists. There is a reason for that, too: to create a competitive advantage for our customers and ourselves. Our software and support is the best in the industry. But if our agents, lenders, and customers aren’t paying themselves to improve our programs or support, preferring instead to work with a company with lower overheads and better economics, we can’t pay for that improvement. This is a system we need every leader to embrace, not just executives. Fewer projects. smaller difference. short documents. Less analysis. Keep it simple.

where we cut

Because in every project we start, we have to think of another project that we will stop. We’ve already built tools for teams to work together in a transaction, so we need fewer engineers to add to those tools. We’ll spend less on analytics and user research. When we were turning down tens of thousands of clients in 2020 and 2021, we had to hire a thousand employees a month to catch up, which required rampaging levels of staffing, training and licensing. It is inevitable that these groups will be hit the hardest today.

We are still growing

What we continue to invest in is exactly what our agents, lenders, and customers value most: having an online presence to drive order; Site tours to see the homes first; Low rates for listing clients who need every penny of their possessions for the next stage of their lives; RedfinNow and renovations to sell homes quickly and at high prices; And other innovative services that only Redfin agents can provide to customers. We’ll also look for ways to increase investment in agents that can be a driver of company growth: Any agent can meet their first customers through, but our best agents cultivate repeat sales and referrals through those customers over time.

Still a place for big bets

We will continue to receive large payments, but only if there is a significant return: in the traffic to our site, in the success of our customers, in the range of services we can provide to these customers. We bet millions on a better brokerage service in 2022 because we believe client success rates will increase, making our more profitable business more efficient. We’re betting on rental listings because having access to a complete real estate destination can allow us to overtake our competitors in traffic, increasing our value by billions. We are investing in online tools to drive RedfinNow offers, which should lead to faster service and more profits. We’re moving our software to the cloud, increasing reliability and lowering maintenance costs even as we roll out more innovations from more teams. If you want to bet big, get to know your customer better than anyone else; Be honest with yourself about whether the outcome will be significant to that customer; And cut our losses if the result does not come.

Where do we go from here

Redfin will grow more slowly with the housing downturn, but we will continue to grow, and our share gains will accelerate. The world will write us off as it did before. Even more painful is the effort some of you will have to make to believe in ourselves as a good employer. Part of being good is accepting when the company falls short, without giving up on our determination to do better. We have broken our commitment to our people, twice now in three years. We cannot evade doing what is best for the entire company, not just one part of it, today and every day. But I will spend the rest of my life wondering how I could have avoided these layoffs. The most important thing now is to treat the departing people with humanity and respect. As always, you can call or email me to vent, grieve, ask questions, or get help figuring out your next move. A list of frequently asked questions about layoffs is available on our intranet.

Sincerely, Glenn

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