STRATEGIES TO HANDLE LAYOFFS WHILE BUSINESS SLOWDOWN

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The brief article has been written based on my industry experience and the ways lay-offs and downsizing are perceived and handled.  It has been written from organisational strategic perspective and not from a legal perspective.  The market has divided workforce broadly into two categories, blue collar and white collar.  Layoff and downsizing of blue collar is regulated to a large extent in India whereas for white collar it is regulated based on the culture and perception of the employer about the workforce.  Every business manager will have to understand that it will survive and grow only if it knows how to handle with respect and logic dynamic deployment of workforce. 

However, layoffs irrespective of the type of workforce is painful for both employer and employees. The action of layoffs starts when there are certain conditions prevail for example, company is not performing well, and the business is down, cost cutting measures are to be adopted to survive, or mismatch between number of people with specific competencies needed vs. available.

Our research indicates that every employer learns the strategies or techniques based on their own experience.  Each company has its own culture and understanding of its people.  Therefore,  to replicate it from the experience of other companies won’t deliver the same results that you desire.  However, you may become little more educated and cautious by learning from other’s experiences.

The time is changing, the techniques and strategies adopted in the past manual era may not applicable to present automated era. The social profile of worker is changing.  Earlier days workforce was less educated, and they did not have access to the information.  Today in the age of mass transparency whether blue collar or white-collar employees they have access to the information on social media/online.  It has brought a revolutionary change in the thought process of workers.  Today, both set of workers blue or white demand parity in terms of respect and recognition by the employer.  Therefore, in certain situations like lay offs they want similar treatment.

Organisations will have to learn this fast that employers can’t survive for longer period if they adopt a discriminatory attitude.  Blue collar workman will show violent behaviour whereas white collar worker will show a non-cooperative behaviour at the workplace, if layoffs reasons and decisions are not communicated to the workforce with logic and reasoning.

Another important area is mass scale deployment of contractualworkforce.  Employers think that one can reduce or increase contractors’ workers at will. This is becoming tough in today’s period if the number of contractual workforce is large.  The very recent case in vogue is of a Chinese company as reported in “The times of India Friday 30th November, 18 reported that hundreds f workers of manufacturing facility in Noida Sector 63 went on a rampage on recently.  Around 1200 workmen barged into manufacturing facility and pelted stones at the company’s building.  Newspaper reported that it appeared to be a case of “miscommunication”.  Message had not reached the workers that not come for work to the factory in an appropriate manner”.  

There are many similar cases reported by multinational companies and big private sector companies. The response from the workforce is changing wherever the decision to layoff or downsize the workforce is abrupt, and not well thought out from all perspectives.

Mindset towards the workforce deployment needs to change.  Manpower flexibility i.e. Ability of the management to increase or decrease the manpower with the change in the economic and business landscapehas to be well thought out and planned.  It is thought that manpower deployment through the third party is the panacea to all the problems. It is not.

The forces that are changing the business landscape are automation and tough global competition.  To stay competitive, organisations had to rethink their workforce strategies, like restructuring and routine lay offs, but in the long term both damage employees engagement and company profitability.

It is the time to rethink the strategies as workforce has become educated and have a family to support. Environment has become highly transparent.  Organisations will also have to take into consideration the consequences from lay-offs in more holistic manner which include loss of creativity and innovation, loss of intellectual property, cracks in business relationship, reduced trust among remaining employees and the talent turnover who get concerned about the company’s health. 

What organisations can do systematically handle layoffs are:

  • Communicate across organisation: It is widely accepted that it is in the interest of the employer to widely share the information about the health of the organisation with all concerned employees on an on-going basis. Keep sharing information in a manner that there should not be any gaps.  Also Give the most pressing information first even if it means may not go well with employees. 
  • Team work: Always have cross functional team in place to handle such situations.  Never 100% delegate to HR department. HR department provides the legal perspective and employment terms related process. 
  • Avoid delegating painful information: Information which is painful should not be delegated.  It should be handled at appropriate level.  Senior managers of the organisation should be trained in imparting difficult and painful decisions to employees in a professional and polite manner with data and logic.
  • Deliver the message respectfully and listen: As far as possible deliver the message through personal mail ids or in personal face to face situations with as many as employees possible.
  • Provide outplacement support: Employees who are likely to impacted by the lay-offs or displacement of the jobs should be provided with all necessary help to place them in other companies with the help of professional consultants. The company HR department offers out placed services, including career coaching, career fairs and networking events to help search an alternate job.
  • Learning new technologies: offering training grants for business management trade school course in many areas.
  • Helping start a new business: Individual employees or team could present business proposals to win an amount upto say Rs. 25 lacs.  Employees should be given few months to develop their plans as well as support such as coaching and mentoring, networking introduction and training.  Company will have no stake in it.
  • Provide moral Support to survivors:  People who remain in the organisations should be also be communicated regularly to maintain their high morale.

Increasingly we will come across situations where transformations itself results in layoffs in such cases, companies have to ensure that employees are treated fairly.  Research has shown that companies tended to get better financial results after a lay-offs where employees thought it was handled equitably and done for strategic reasons rather than cost cutting.

Experience has shown that letting people go is an emotional event not only for those being laid off but also for those who remain.  Employees who survive the layoffs will struggle with doubts about the company’s future.  They want to know how their jobs will change.  Will they now be expected to do their jobs plus the jobs of their ex-workers? Or will their goals be changed accordingly?  What is the present state of financials of company.  Are further layoff imminent etc. These kinds of questions come to the mind of workforce.

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