SaaS major Freshworkshas laid off around 13% of its global headcount, impacting 660 employees out of its 5,000 strong workforce.

Dennis Woodside, CEO of Freshworks, in an internal memo, said, the decision reflects the company’s focus on key growth areas, including AI, Employee Experience (EX), and Customer Experience (CX) offerings.

“One of the first things our Board of Directors asked me to do when I became CEO five months ago was to assess our strategy and ensure we’re focused on the most critical drivers of our business. This work resulted in our three strategic imperatives (our Employee Experience business, AI and our Customer Experience business) and gave us a clear view into where we need to simplify the way we work and operate more efficiently,” said Dennis Woodside in an internal memo. 

The Nasdaq-listed firm will notify affected employees through a “Transition Discussion” meeting, with discussions scheduled on different timelines depending on regional laws and practices. The memo further stated that impacted employees in the US and India are expected to receive notifications on Wednesday and Thursday, respectively. 

“To add more focus on our EX, AI, and CX priorities, we are realigning our global workforce, putting us on a path to have a bigger impact for our customers. We’re making these changes while our business is profitable and our AI-powered products are providing increasing customer value. We believe this will help us accelerate our growth and simplify the way we work, so that we’re running Freshworks in a way that’s efficient and scalable,” Woodside noted. 

The company said it will provide support for departing employees, including severance packages, extended healthcare coverage, career transition services, and immigration assistance.

Freshworks recently launched Freddy AI Agent, an easy-to-deploy autonomous service agent designed to enhance both CX and EX efforts. The introduction of Freddy AI Agent comes at a time when many enterprises are adopting AI agents to streamline their workflows. 

The AI agents can be deployed within minutes and have resolved an average of 45% of customer support requests and 40% of IT service inquiries, said the company in a statement.

Meanwhile, Freshworks has reported a 22% growth in revenue, climbing to $186.6 million for the third quarter ended September 30, 2024, up from $153.6 million in the same period last year.

The company parred its losses by 3.55% to $29.9 million during the quarter under review, compared to $31 million in the previous year.

Software-as-a-Service (SaaS) major Freshworkshas reported a 22% growth in revenue, climbing to $186.6 million for the third quarter ended September 30, 2024, up from $153.6 million in the same period last year.

The Nasdaq-listed company parred its losses by 3.55% to $29.9 million during the quarter under review, compared to $31 million in the previous year.

“Freshworks delivered a strong third quarter, with revenue growing 22% year over year to $186.6 million, net cash provided by operating activities margin improving to 23%, and free cash flow margin improving to 21%,” said Dennis Woodside, CEO & President of Freshworks.

“We continue to see mid-market and enterprise companies choose Freshworks as the AI-powered service platform that enables them to scale with exceptional customer and employee experiences,” he added.

Total income from operations amounted to $24 million, up from $17.4 million in the third quarter of 2023.

Earlier in May this year, the California-headquartered firm announced the appointment of Dennis Woodside as the new CEO, with Girish Mathrubootham transitioning to the role of Executive Chairman.

The company reported a rise in its total operating expenses to $195 million in Q3 of 2024, up from $166 million in the corresponding period last year.

The firm reported free cash flow of $40.1 million for the third quarter of 2024, up from $22.1 million a year earlier. As of September 30, 2024, cash, cash equivalents, and marketable securities totaled $1.05 billion.

The net dollar retention rate stood at 107%, compared to 106% in the second quarter of 2024 and 108% in the third quarter of 2023.

Net Dollar Retention (NDR) is a key performance metric that measures how well a company retains and expands revenue from existing customers over time.

The number of customers contributing over $5,000 in annual recurring revenue (ARR) grew 14% year-over-year, reaching 22,359.

In addition, Freshworks onboarded several new customers to its portfolio, including Republic Airways, City of Bellevue, ChampionX, University of Oxford, Sparebank 1, aand TechStyle Fashion Group, among others.

Freshworks also announced that its Board of Directors has approved a stock repurchase programme, authorising the buyback of up to $400 million in outstanding Class A common stock.

A stock repurchase programme or buyback is when a company buys back its own shares from the open market in order to increase the value of the remaining shares by reducing the overall supply.

The firm ended the quarter with the launch of Freddy AI Agent, an easy-to-deploy autonomous service agent designed to enhance both customer experience (CX) and employee experience (EX).

The introduction of Freddy AI Agent comes at a time when many enterprises are adopting AI agents to streamline their workflows. The AI agents can be deployed within minutes and have resolved an average of 45% of customer support requests and 40% of IT service inquiries, said the company in a statement.

In September, Freshworks welcomed former ServiceNow executive Murali Swaminathan as its new Chief Technology Officer. Additionally, after nearly five years, the company’s Chief Product Officer Prakash Ramamurthy stepped down to pursue new career opportunities.

An SEC filing on August 5 announced the appointment of Philippa Lawrence as Chief Accounting Officer. Earlier in the year, Pradeep Rathinam, who served as Chief Revenue Officer, left the company in February.

Imagine starting a new job and hearing your manager proudly say, “We’re like a family here.” It sounds warm, inviting, and comforting. But while this sentiment is well-meaning, it may not be the most effective way to frame a business environment. The “family” metaphor is appealing because it promises loyalty, unconditional support, and unity. However, it also implies blurred boundaries, potentially toxic relationships, and unbalanced expectations.

In the realm of business, where clarity, structure, and professionalism are paramount, treating your company as a ‘family’ may set you up for challenges that undermine both productivity and well-being.

The origins of the ‘family’ mentality

The idea of the workplace as a family emerged from a desire to foster camaraderie and trust among employees. Companies wanted to create spaces where people felt safe and motivated, boosting morale and retention. While intentions may have been noble, the execution often leads to problematic outcomes.

Why the ‘family’ mentality falls short

Blurred boundaries and unrealistic expectations

Families are typically associated with unconditional support. However, in a business setting, this mindset can lead to unrealistic expectations where employees feel pressured to go above and beyond their professional scope. This often leads to burnout, as employees may struggle to say no or set boundaries out of fear of disappointing their ‘family.’

Difficulty in addressing underperformance

In a true family, love and loyalty often override consequences for poor behaviour. In a business, however, the stakes are different. Maintaining a ‘family’ mindset can make it difficult for leaders to objectively address underperformance or make tough decisions like layoffs. This approach can create a culture where mediocrity is tolerated, affecting overall productivity and efficiency.

Favouritism and unbalanced treatment

Family-like dynamics can also lead to favouritism or perceptions of unequal treatment, fostering resentment among team members. In a business context, it’s vital to maintain fairness and transparency. The ‘family’ approach may compromise this, as leaders might subconsciously favour those they feel closer to, creating division and tension among teams.

Toxic relationships and emotional burden

Families can have complex, sometimes toxic, dynamics that don’t translate well into professional settings. The ‘like a family’ mantra can encourage employees to bear the emotional weight of their coworkers’ problems or poor behaviour. This added emotional labour is unsustainable and distracts from the primary focus of achieving shared business goals.

Resistance to change

Families tend to value tradition and continuity, sometimes at the expense of adaptability. For a company, clinging to the ‘family’ ideology can hinder innovation and growth. Businesses need to be dynamic, and capable of making strategic shifts without being tied down by the emotional attachments that come with a familial mindset.

What companies should aspire to instead?

Instead of aiming to be ‘like a family,’ companies should adopt a framework that prioritises clear roles, responsibilities, and support structures that respect personal and professional boundaries. Here’s what companies can aim for:

• A supportive community: Unlike a family, a community is built on mutual interests and goals, with a shared sense of purpose but clear boundaries.
• A high-performing team: Teams are focused on collaboration and mutual accountability, maintaining professionalism while fostering trust.
• An empowering culture: Cultivate an environment that encourages personal growth and collective success without imposing unrealistic emotional burdens.

While it’s tempting for companies to aspire to be ‘like a family’ for the sake of unity and morale, it often comes at the cost of professionalism, clear boundaries, and effective leadership. Instead, organisations should strive for a balanced culture that upholds mutual respect, accountability, and a shared vision. The key to long-term success lies in creating a work environment that empowers individuals while maintaining clear lines between the personal and the professional.