- Robert Reffkin, the CEO of Compass, asked his leadership team to help root out underperformers.
- The residential brokerage firm is struggling and has conducted two rounds of layoffs this year.
Compass CEO Robert Reffkin knows how to spot laggards at the troubled residential brokerage firm — they don't show up, or they turn in work late — but he's less specific about what makes a good worker.
Reffkin wrote in a memo to leaders on December 4 that "if you know you have team members who are poor performers," it's "on you as their manager to move them out." The memo arrived after two rounds of layoffs, in June and October, at Compass, which has been struggling financially.
Asking leaders to manage out underperforming employees in a tough economic environment is relatively common. Meta, Alphabet, and Amazon sent similar messages this year. (Meta and Amazon also conducted mass layoffs.)
But the Compass memo, while giving strong examples of what workers shouldn't be doing, didn't offer as much guidance about what the company needs from employees right now.
Reffkin should have outlined what employees must do to succeed
Reffkin makes a compelling case for why employees need to step up their performance. In the first paragraph of the memo, he wrote, "We owe it to our 3,000+ fellow employees and their families and our 30,000 agents and their families and clients to get through this."
Adam Galinsky, a professor of leadership and ethics who's the vice dean for diversity, equity, and inclusion at Columbia Business School, said this context is encouraging because it emphasizes the broader impact of the firm's work. Galinsky said Reffkin was essentially writing, "We owe it to not just ourselves but a larger set of stakeholders to be successful."
But Galinsky said the memo lacked details about what exactly employees need to do in order to succeed at Compass right now.
Reffkin urged managers to meet with their direct reports "to formally have a conversation to ask them to confirm that they are recommitting to bounce back with passion in this next phase with Compass."
Galinsky said Reffkin might have given managers more guidance for these conversations — for example, by instructing them to tell their reports, "These are the three things you have to accomplish by May 1 of next year to be successful."
Galinsky added that Reffkin could have clarified whether another round of layoffs is imminent or whether the company still has a chance to right the ship. If it's possible to avoid additional layoffs, Galinsky said, Reffkin might have written something more motivating — for example, he could have instructed managers to let employees know that if everyone stays focused, "we're going to be successful as a company, and you're all going to still have a role at the company."
Compass has been flailing financially
As fears of a US recession have mounted, layoffs have rippled across industries, with employers such as Walmart, Peloton, and Salesforce letting go of staff members. The real-estate market is especially tumultuous, with home sales down significantly from last year.
Insider's Daniel Geiger reported that Compass lost $443 million in the first three quarters of 2022 and that by the third quarter it had a credit line of more than $300 million with Barclays.
In June, Compass cut roughly 450 corporate workers across departments, then in October it slashed about half of the 1,500 people on its technology team.