Keep employee layoffs as the last resort | Sunday Observer

Keep employee layoffs as the last resort

27 December, 2020

This year’s holiday season will no doubt be different - stress, anxiety, recovery, hope and optimism are some sentiments directly associated with it with no clear solution. Hope during a holiday season is a nice feeling to have – no doubt.?

Whether you celebrate and enjoy holidays in December or not, the way we work in 2021 will be very different and disruptive. The pandemic has had a significant impact on businesses during 2020 and more impact will be seen in 2021 too. Business will be forced to look at more concrete measures to stay profitable. Staying afloat during the initial impact to staying profitable for the medium term will be the tone of strategy for every employer.

Some local organizations demonstrated best of human values by continued employment for all despite the sharp decline in revenue while some big names in the market were brutal in their decision making and paid no respect for human values. Core values of the business were totally disregarded by some hugely successful award winning large organisations. Employees were laid off, salaries were cut, benefits were withdrawn but some small and medium scale organizations demonstrated their inherent values as compared to the bigger ones.?

More layoffs inevitable

With Covid-19 Employment downsizing has become a fact of working life as companies struggle to cut costs and adapt to changing market demands. But does this practice achieve the desired results? Studies have tracked the performance of downsizing firms versus non-downsizing firms for as long as nine years after a downsizing event.

The findings: As a group, the downsizers never outperform the non-downsizers. Companies that simply reduce headcounts, without making other changes, rarely achieve the long-term success they desire. In contrast, stable employers do everything they can to retain their employees.?

Employment downsizing is often implemented during pandemic driven economic downturns as a reactive, tactical action.

The most successful organisations, however, use downsizing more strategically as part of an overall workforce strategy. Layoffs become just one tool in a portfolio of alternatives to improve firm performance. Management may view this as an opportunity to enhance the organisation’s medium- and long-term agility through well-planned and targeted coaching, change and career-management interventions.

?Firms all over the world undertake downsizing with the expectation that they will achieve economic benefits. The belief that there are only two ways to make money in business — cutting costs or increasing revenues — leads to this expectation. Anyone who pays a mortgage knows that future costs are more predictable than future revenues. Payroll expenses are fixed costs, so by cutting payroll — other things remaining equal — firms should reduce expenses. Reduced expenses translate into increased earnings. Earnings drive stock prices higher, and this makes investors and analysts happy. The key phrase above is “other things remaining equal.” Many organisations define workers only in terms of how much they cost and fail to consider the value they create. For this reason, other things often do not remain equal, so many of the anticipated benefits of employment downsizing do not materialise.

Small companies demonstrate values

?Most global organisations use downsizing as a first response rather than as a last resort. When downsizing is a knee-jerk reaction, it has long-term costs. Employees and labour costs are rarely the true source of the problems facing an organisation. Workers are more likely to be the source of innovation, renewal and recovery.

Anyone can lay off personnel, cut budgets and change an organisation chart – it’s very simple and no brainer but it takes true genius and creativity to grow a business.

The ripple effects of employment downsizing are substantial — touching customers, suppliers and the local community. Try to avoid some of those effects by working with customers, suppliers and even vocational-training providers to collaborate on finding solutions.?

Employee morale is the first casualty in a downsizing. When a firm institutes its first round of downsizing, employees’ initial reaction is usually a sense of betrayal.

?Layoffs should be an organisation’s last resort for coping with challenges in its business environment. Nonetheless, most employers at one time or another find it necessary to lay off employees to handle competitive pressures or financial difficulties — or sometimes even to survive. When an organisation undergoes downsizing through layoffs, most of the HR problems that existed beforehand still exist afterward to some degree. Even if the organization becomes more streamlined, it does not necessarily see a quick improvement in productivity.

The downsizing may lead to other problems, particularly the surviving employees’ attitudes and concerns about job security and workload increases.

As difficult as HR’s role may be in a thriving organization, the role is no less challenging in a downsized environment because of additional tasks that HR professionals must address. They must make certain, for example, that communications related to the downsizing are ample and effective, they will help adjust job responsibilities if necessary, and they may have to help make requisite changes in compensation and benefits programs. In addition, HR will be instrumental in retraining remaining employees and in maintaining their engagement and job satisfaction. Over the long term, HR will continue to have responsibilities in retention and hiring, in customer relationships, and in evaluating systemic and individual performance.

You have the right reasons to enjoy the holidays. Release your stress – spend quality time with your loved ones. Also take time to reflect on yourself. Tell yourself that 2021 is going to be seriously more challenging than 2020. So unless you become a better competitor in the New Year, you may fail in your progressive efforts to reach your goals in life.?

The only way to succeed with or without Covid-19 is by being a better competitor. Be determined not to be a victim of downsizing. Have yourself a goal of last to be laid-off and not the first if your organisation were to downsize to stay profitable.?