Don't Deal With Employee Dissent This Way
Dealing with disruption has been the name of the game these past few years. Nearly every organization has had to dodge curve balls at one point or another, sometimes unsuccessfully, but Coinbase has stood out as a clear example of what not to do for leaders interested in keeping a healthy company culture.
The nation’s leading crypto exchange has been struggling in recent months, with a mix of both internal and external issues. For one, cryptocurrency markets are facing a major correction in price. At the end of 2021 for instance, the standard-bearer for the market, Bitcoin, was trading at more than $67,000. That number has been cut to a third of that.
Partially due to that sell-off, Coinbase's stock has dropped precipitously. It sits at about a seventh of the pre-correction pricing. But Coinbase shouldn’t necessarily be affected by the rises and falls of cryptocurrency markets. As an exchange, what’s good for the company is activity of any kind.
But Coinbase CEO Brian Armstrong has had an uneven hand in leadership. He spearheaded some amazing pushes, like full-time remote work and weeks of paid time off after work sprints. He’s also had some major misses, like when he clamped down on social issue discussions and predicted that crypto would stabilize.
Companies have weathered worse issues, but how the company has responded is what makes Coinbase stand out. And they're not out of the woods yet; more complex challenges await the crypto darling.
How Not to Respond to Employee Concerns
In June, Coinbase employees sent around a petition of no confidence in three of the company's executives. The note was made public — intentionally or not — and aired the company's dirty laundry. The petitioners denounced a number of actions, including those led by Chief People Officer LJ Brock.
For example, employees said Coinbase’s performance review system, called Dot Collector, had created a toxic workplace culture by incentivizing colleagues to rate one another on their every mood and action. While the system was a bad experience for existing employees, most of their ire was directed at the company's recruitment practices.
Coinbase had aggressively hired for thousands of roles earlier this year, despite what writers of the petition called an unsustainable plan that ran contrary to the established wisdom of the industry. Because of this, Coinbase ended up rescinding job offers despite leadership initially claiming that the offers wouldn’t change. The company also got poor marks for its lack of communication about its vision and strategy, including the possibility that there would be layoffs.
While humiliating, the petition could have been an opportunity for Coinbase leadership to take notice of deep-rooted issues within the company culture and change course. Instead, whether driven by the publicizing of the petition or its contents — and probably a little from both — Armstrong decided he would not let this go quietly into the night.
The CEO responded in all the ways leaders shouldn’t: Warning employees, publicly, they’ll get fired, telling them to quit, playing the victim, blaming remote work and taking zero responsibility. It was tone-deaf and ended up adding fuel to the fire inside and outside the organization.
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From Dissent to Layoffs
What might be more surprising than Armstrong's response itself is the number of people who supported it. From replies to his tweet storm, to comments on articles about the meltdown, there’s a whole class of seemingly regular working people who cheered on the “my way or the highway” approach.
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Less surprising, perhaps, is that the chaos didn't end on that note. Just a few days after that, Armstrong announced a nearly 20% reduction in headcount — a far cry from the 2,000-person hiring spree that was announced just months prior.
Meanwhile, Coinbase’s biggest competitor, Binance, is hiring:
"The crypto space is still in its early stages, and bull markets tend to care more about price while bear markets have more value-conscious teams that continue to build the industry. We see this as a great time to bring on top talent," said Binance co-founder Yi He.
Seems like a more sound talent strategy, but it’s not as simplistic as Binance being right and Coinbase being wrong.
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It’s About Consistency
As Coinbase’s CEO, Armstrong has accomplished some positive things, including giving employees the ability to work remotely if they chose to do so. But at the crux of the issue is his consistency — or lack thereof — as a leader. After all, this is the same person who said employees couldn’t discuss social causes at Coinbase, another take-it-or-leave-it declaration.
When things get chaotic externally, strong and consistent leadership can keep internal work from spiraling out of control. Companies survive bad stock beatings and down markets all the time. In the crypto market, good leadership seems like the best possible insurance policy against consistent disruption in the industry. At critical moments, leaders can stand up and show discernment as they lead through challenges.
Coinbase’s fortunes will flow through the leadership prowess of Armstrong for the time being. It's unfair to point fingers at the rest of the organization without taking a closer look at how he’s led. Consistency in leadership style could help Armstrong win the boardroom as well as the proverbial break room as he looks to lead Coinbase through the rough patch ahead.