Article (September-2018)


Layoffs and job loss : An objective approach

Alok Nigam

Designation : -   Senior Vice President and Group CHRO

Organization : -  Bhartiya Group, Gurugram


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Rajiv had planned for a nice weekend with his small family when he walked into the office that Friday and was suddenly called into the boss's room for a meeting, and then it happened! He was told that the management has decided to shut down his SBU due to low market sentiments and his job has gone. He had been laid off by his company.
This scenario has been a reality for many. Getting laid off without adequate notice is a dreadful condition. The very thought of it makes our hearts skip a bit. It's nothing personal though (well, most of the time), companies simply choose this as an easy way out whenever their economies start going south. You call it cost-cutting, re-organisation, right sizing but the reality is that every business has a need and to remain relevant and viable, these business decisions will continue to be taken and people cost will get effected in proportion.
The more and more fierce competition in the market place will make the corporations cost conscious will look at scaling down the wasteful the expenditure and people cost easily becomes the first step to target. In the entire process sometimes, the transparency and objectivity take a back seat. The corporations need to look at laying off the employee as a last resort. There are surely more and enough avenues to look at for cutting the costs and expenditure such as materials, unwanted processes, fancy overheads etc.
The biggest challenge in conducting the layoffs is explaining to employees underlying causes and reasons behind it. The other challenges such as statutory approvals, wherever applicable, compensation etc. are insignificant. Employees have a reason to know why the organisation had to take a step like conducting layoffs and what else could have been done to avoid the same. The whole issue of proactive employee communication assumes significance.
The organisation must step up the employee communication processes in this foreseeable eventuality. The right explanation and perspective, if they are presented to the employee groups will help the companies to tide over laying off process in a much smoother manner which is otherwise quite painful one. The organisation need to be more predictable towards their employees. The decision to shut down any business, department or even the company is not an overnight phenomenon in majority of case but a well though through one and, therefore it is very much desirable that employee should get early sight of it in a positive and constructive manner. Once the intentions are right, perspectives are set, and transparency is observed, employees will understand the process with a positive frame of mind and will see a fair play.
For any good organisation the layoffs should be done only when all other alternatives have been exhausted. The large organisation, business groups, conglomerates look at redeployment, relocation, transfers etc. to save jobs of employees. Other progressive organisation proactively invest in re-skilling and training of their human capital. The companies also innovatively look at offering alternate career opportunities like becoming suppliers, consultants albeit at lower cost consideration. There have been instances globally where employees have been advised to take short breaks from full time jobs and wait for downturn to be over. Surely one can look at many more options before arriving at this dreadful decision to layoff the people.
There is always this big debate on the role of HR in layoff process. Is it HR's call or not? HR today is a true business partner and therefore, cannot wash away its hands from current business realities. Like any other function in the company, HR is equal partner in ensuring robust business success and advise/forewarn the management the impact on people in case of failures.
HR today is part of all business meetings and discussion and is in solid position to see where the business is going, and the signals should be good enough for HR to proactively think and act on people front. HR must be first to realize the need for re-skilling, redeployment, relocation etc. and start taking action towards it of course in due consultation and confidence of business. The HR should also ask the business leaders to find avenues for redeployment of laid off workforce in their networks of suppliers, vendors, customers etc.
Laying off people is surely not a HR call but a collective business call and once the call is taken HR is expected to play a crucial role in conducting and executing it. As custodian of talent and people, the call that HR needs to take is adopting and instituting a transparent and fair process to it. The aspects like who goes when, notice periods, adequate compensation, avenues of re-employment amongst others have to be dealt with by HR and they should appear to be just, transparent and fair.
Empathy and sensitivity is the name of game when dealing with layoff process. HR must take the best foot forward to demonstrate this and must educate the businesses and leaders too to exemplify this.
The leadership and HR should make it as simple and painless as possible.
Here are few strategies :
Recognize it will be painful. Job losses are upsetting for everyone. Leaders and HR managers should not be expected to smile through it. Doing so might make light of the layoff's impact and belittle people's feelings. Acknowledge that it is painful for all employees - those being let go, those who are staying, and for the HR managers who have to implement the reduction. It is also stressful on the organisation, as people go through this difficult transition.
Remain objective. It can be easy to personalize a layoff, but it's not productive. Managers should remain objective when selecting positions/jobs to reduce. They need to be mindful of their words when speaking about the reduction. People are not being cut-positions are cut, and the people are affected.
Have a well-thought-out plan. The lay-off must be well planned and executed. Address every detail. HR needs to help leaders ask probing questions to determine how positions/jobs will be selected for reduction. If the downturn only affects one area, will that department be the only one to face cuts, or will the entire company face restructuring? What will the criteria be for position elimination? Will it be last in, first out? Will it be performance - based? Has information been documented? Consult with legal counsel to know legal risks and implications of every activity involved in the process. Consider what talent, skills, and experience will be needed in the future. What teams need development to expand or refine needed skill sets?
Come to a consensus. Whatever the reasons for the layoff, the management team needs to come to agreement and move forward as a team. Managers should avoid casting blame or making side-line deals. The leadership team needs to develop a clear message and present a united front.
Treat employees with respect. We've all heard lay-off horror stories - people who arrive at work to find boxes on their desk and security standing nearby; people who try to get into their office and realize the locks have been changed; or people who were terminated via a formal email. Managers should treat every individual with respect and protect each person's dignity. Managers should treat each person as if he or she is the only person being affected. Each employee deserves a private meeting with a manager, a chance to ask questions, and be informed of any transition support, verbally and in writing. Deliver the news with kindness and compassion, remembering that the layoff has a compounding effect on family.
Communicate clearly and honestly. Rumours are often more damaging than reality. There is some information that is confidential, and it changes daily until the day of the reduction. And yet the status of the company, its finances, and its future are pieces of information each employee should have. If managers don't control the message, fear and rumour can rule the day, and negatively influence people's behavior. Tell what the company is doing to avoid eliminating positions and remind people of assistance for those in transition and support for those remaining.
Ensure resilience. Following a lay off process, consider an alignment of structure, people, and process. Create plans for moving the business forward. Retention and engagement of key talent becomes a priority, and managing change becomes the focus. HR ensures resilience.
Look to the future. Focus on what will happen next. Are strategies, goals, and roles aligned? What will the new incarnation of the company look like? Is there a communication strategy to re-engage people? Does the culture need to be reinforced? How can leaders support employees in managing change? The sooner you speak to the future, the sooner you can recover.
HR professionals need to be experts in conducting job losses to ensure that the people affected are treated with respect and supported in making a smooth transition. When leaders handle the process well, they can also reinforce their commitment to remaining staff, and communicate the mission so that the organisation continues to thrive.