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People strategy during slowdown
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Calls like “people – the ultimate competitive advantage”, “people – the key to success”, “people – the most important asset to have” etc. are very common across the globe. And yet when it comes to times like these, when recessionary pressures are felt all around, it is employees who are the first casualties and are immediately cast away. During the slowdown, large scale layoffs is considered as an obvious means of cost cutting strategy.
Here is a five point people strategy during the downturn, which has layoffs as the last resort. The strategy has been depicted in the figure below:
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Communication
When accurate and timely, you can never over communicate and the need to communicate is never more pressing than in a situation where bad news is the order of the day. Good or bad, breaking news from top most rungs is always appreciated. Leaders need to have empathy and yet be candid when communicating the current and unfolding business scenario. Layoffs or no layoffs, this is very important. HR team must ensure efficient communication channels in place which provide a platform for top management to communicate business issues and fallout of the same to all employees.
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People are not cost but the means to cut costs
There are organizations that follow this philosophy and creatively engage people in activities to identify and suggest ways to cut costs and create value for customers even during the difficult times such as these. Setting targets for cost cutting suggestions for individuals is another way of creating cost consciousness. Facilitating workout across the departmental boundaries based on the suggestions results in understanding of overall implication of cost cutting measures and most importantly it builds commitment among employees to implement the identified cost control initiatives.
Attacking man hours rather than men
In certain kinds of industries, it may be possible to cut the working hours to minimize the impact of slowdown on the company. This will also ensure balancing production with demand, which may also have a positive effect of increase in prices and reduction in working capital as well. Here the brunt of slowdown can be passed on uniformly on the total employee base, which is better than rendering a few of them jobless.
Redeployment before retrenchment
Focus of HR should be on multi-skills and job rotations even during the growth period and cross training must be greatly emphasized during slowdown or lean periods so that employees can be redeployed to areas which have the potential to do well even during tough times or the areas on which the business focus has been realigned strategically in view of the market conditions. An accurate mapping of man power requirement and business opportunities in different departments and sections is the first step in this direction. This must be followed by development of competencies for the people who suddenly find themselves redundant for redeployment in new roles.
Handling layoffs
In cases where laying off people is the only way out, it is generally done in a wrong way. As HR professionals one must know that there is a difference between a layoff and firing. Layoff occurs when the company cannot afford to keep all the employees and there is no violation on part of the employee. Layoff does not start with marching orders, instead it is a comprehensive communication programme that starts well in advance. Accurate and timely communication on external environment and its impact on the business, alternatives to layoffs available and options being tried, departments / jobs where downsizing is imminent, criteria being adopted for identifying people who have to be retrenched, details of preferential return policy, special counseling for to be retrenched employees and their family members etc. is the way to go for layoffs. This means that not only you are managing the difficult task of removing people, who are in no way responsible what is going on, in an amicable way but also ensuring that those who are retained are clear about the future prospects.
The points brought out above are very important, which would hopefully ensure retaining of the talent that you nurtured with care during good times, helping you in navigating during difficult times and fully motivated to ride the crest as the times change. At worst, Layoffs carried out by you do minimum damage to the employee’s self esteem and confidence and always carry a pleasant experience of your company.
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