Article (September-2018)


The critical role of HR during layoffs

Haresh Chaturvedi

Designation : -   Vice President - HR

Organization : -  Reliance Industries Limited, Dahej, Gujarat


303170 Total View        

In my 30 years of Job, 2008 the year of recession, was my first experience asking people to rest at home without any of their fault, the bitter truth - layoff. We have read and heard a lot about layoff but this experience made me think about the end-to-end process and the role of HR which apparently is neglected from management side.
During the rough weather, which was in 2008, management look for cost reduction. Hence the question arises whether layoff can be used as a tool for cost reduction?
Layoff is easy to say but difficult to practice. There are various challenges which needs to be addressed before asking employees to go.
First, the moment layoff is announced, the high potential employees will leave, who are actually the ones organisation needs the most. They are the employees who get the job easily in the market. Secondly, overall moral of the employee go negative and productivity goes for a toss in tough time.
In actual sense, we need to look for other avenues from HR point of view and the last resort should be layoff. The various creative options we worked out were :
  • Employee Exchange Program, where the task force given task to find out opportunity (permanent or temporary) where we can place employees who are to be laid off.
  • Looked for virtual office or work from home to curtail overhead cost when an employee works from home.
  • Encouraged sabbaticals which is for a long period and an employee knows he/she has a job once come back.
  • Forced Vacation where all the employees were told to plan vacation for specific period without pay.
  • For some time, post discussion with employees, there was a small cut in the salaries for few months.
Apart all that, we had stopped all the other facilities like canteen, late seating, overtime, change full time working to part time for few and many more. We also started job search facilities, and volunteer retirement scheme for those were waiting for a push to leave.
Over all the philosophy was to reduce cost to the extend and having a win - win situation where we can save talent who are an asset for the organisation.
As an organisation, it is more often observed, in the event of cost reduction pressure we find Manpower a soft target. Believe me if you consider various cost and compare with manpower cost, its no where. The impact of touching upon manpower reduction, we in turn increase other cost.
Lets take waste management, procurement of raw material, inventory management, preventing penalties, reduction in recovery, re-negotiating the contracts etc are the measure which will help us even once the turmoil of cost reduction is over. Once we lose good talent, which is often happen during layoff, getting them back would always has additional cost.
HR has the important role to play. HR is the bridge between people and profit. HR works on helping talent reach their maximum potential and employees in turn contribute to the bottom line of the organisation as we believe we are Business Partners. However, we should not forget our most important job: taking care of our people.
To make implementation of layoff seamless, from my experience I can share few of my learnings.
First, is to plan layoff - it should not be too big, and also should not be too small. If it's too big, then we are impacting too many damaging the reputation and damaged our ability to execute. If it's too small, we run the risk of having to do it again, that creates huge amounts of anxiety among employees.
Second, if layoff is inevitable, it makes sense to convey the same to all employees, but also the affected employees to be told in private.
Third, parting away is never easy. As everyone was informed, it did not lead to rumors or put the remaining employees under stress. HR is to put all effort to help with placements support internal opportunities or with some related industries or through reference also provide a social support system and help take away the potential stigma attached to the decision.
Forth, we as HR should stick to some unbiased methodology, like, last-in-first-out principle or the function not performing, or the skill not required. This would provide us with more co-operation, and gain trust and we can arrest rumors which help us prevent good talent to leave in hast.
Lastly, HR has a important role of recall. Once the economy comes back on the track, we need to connect the one got affected to provide with opportunity.
Having said that, the role of HR, the most critical part which is given to HR to play is to communicate 'the bad news'. No business leader would like to face and deliver 'the bad news' to the employee and ultimately the task is given to HR. Its basically I consider is an art where we take ownership and in the larger interest of organisation and employee we need to share Good or bad news. Culturally, the grooving is done in our mind with help of Satyanarayan Katha which summarize the result of procrastination, and we the leader out of fear delay the communication in framing what to say, how to say, how to handle reaction, why should I take responsibility as I am also employee etc., and in turn we dig our own grave by delivering 'the bad news' more badly.
I believe, in business, ups and downs are inbuilt. The excitement is to handle situation and where the real leadership plays vital role. As far layoff is concern, again it can be handle fearlessly, seamlessly and with lots of positivity. We should keep in mind few those are going to get impacted, are going to criticize the decision. Right time communication, right type of communication, with conviction and detailing keeping in mind real reason and way forward helping impacted employee today and tomorrow including families.