I was in the bay area when the dotcom bust of 2001-02 happened. I got to see, first hand, the pink slip mayhem that got unleashed right after. Start-ups folded up virtually overnight, with no funding in sight. Big companies saw their sales plummet, and had to re-size their operations if they wanted to stay afloat. The impact was not restricted to one sector or industry. As retail demand slowed down, the big-box retailers had to let go of their staff. The real estate market crashed, and there were way too many agents for the fewer sales that were happening. Only the healthcare sector was doing well, as you could not postpone your illness with or without a job! The dotcom bust was followed by the Iraq/Afghanistan war, which again took a toll on the economy. Then came the financial crisis of 2008. So, clearly, the boom-bust cycles have become quicker in the last decade, than in any other period. And they are no longer restricted to one country.
What happens in the larger economies of the world immediately impacts the others across the globe. We have seen how each downturn in the US and Europe has affected the Indian economy in the recent past. If big brother sneezes, the economy in India will catch a cold. The other key point that has emerged over the last decade is that even governments need to live within their means. The European crisis brought out clearly that countries like Greece that splurged on hosting Olympics and building large bureaucracies, are now virtually on the street with a begging bowl. The unthinkable is happening, as even socialist governments are now cutting jobs and benefits because they have no other choice.
Why am I talking about all this now and what does it have to do with layoffs? I am highlighting this situation we are in today, because we, in India, are constantly debating about whether it is in our culture to do layoffs. We hanker back to the time when Indian companies treated employees like family and would rather sell the family-silver than let go off a loyal worker. Very recently when Jet Airways announced a large-scale layoff, there was a hue-and-cry with emotional employees crying on tv. Sure enough, Naresh Goyal, the md of Jet Airways, made a statement taking all the employees back and pronouncing that they were like family to him. Is this sustainable? No, it is not…especially when Indian companies are competing in the global market for customers and employees. There has been a tectonic shift in the job market post economic liberalisation, or rather post the cold war era. Today, there is really only one economic order, and that is one or the other form of capitalism. wto will ensure that countries open up markets.
Corporate India has to accept the same metrics of performance measurements as its counterparts elsewhere. It has to follow the same economic cycles as others in the developed world. So, willy-nilly, Indian firms will have to follow international practices when it comes to hiring and firing. No longer can we question whether layoffs are a part of our culture, because companies big and small will have to resort to it to tide over bad times.
It’s only when we accept that a layoff is as inevitable as hiring, can, perhaps, both employers and employees be better prepared to face it, and hopefully come out of it with the least amount of trauma. First, let us talk about what employees can do, as this is one aspect that is often ignored when this topic is discussed. But there is a lot that is in your hands, and I’m listing a few here to get started:
Dummies guide for the about-to-be-axed
- Save: Today’s employee is earning substantially more than the earlier generations. In our parent’s time, more often than not, the salary was just enough for home cooked food, dresses twice-a-year, one vacation a year, and a public school education. So the monthly income, and monthly pension post-retirement, was crucial for survival. It is not so anymore. Thanks to the mnc’s, and the globalisation of the labour market, Indian employees demand and get market salaries. This has increased the disposable income at all levels. The flip side, as we saw earlier, is that this higher income is a double-edged sword. It means you will have periods in your career when you are jobless and have no income. Assume that this will happen, and then make your spending plans. Put enough away so that you can be out of job for 6-12 months and still manage. Do not get into binding outflows like multiple loans, which demand a steady high level of income.
- Retrain and Reskill: Job market, today, is a merry-go-round. Even as one employer or one industry is firing, there will be others who will be hiring. But they may require totally different skills. For instance, even as the jobs available for a typical software developer is going down (all the it services companies like Wipro, Infosys have slowed hiring), the demand for Data Scientists is shooting up (Data Scientists are experts in analysing data). Watch out for trends in your industry and your job, and try to think ahead about what the new jobs would require. Enroll in the right courses, network with the right people, and stay on top of your game. Sometimes as industries morph, you might need to transform yourself completely. It may be at times, a good idea to use the time between jobs to strategise, plan and prepare yourself for a complete shift, instead of just jumping on to the next available but a similar job.
- Remain plugged-in: No, I’m not asking you to join the gossip bandwagon to know what is happening in the company. Rather I’m asking you to do a harder task. Whether you are a technical, marketing, finance or hr professional, make it your job to understand the business your company is in. How is the company making money? Who are the customers? What are the competing products? What are your instincts telling you about the company’s prospects? It was interesting to see how most of the best leaders in Cisco like Mike Volpi and Charles Giancarlo left the company in 2008, when the company by Wall Street standards was at its peak. This is because they probably realised that the networking industry was changing, and that Cisco was not in the sweet spot with the right products. They may have anticipated that Cisco will slow down and they would be better off exiting early.
- Join and leave for the right reasons: Sometimes, exits are not in our hands. But many a times they are, and we can leverage that positively. If you join for the right reasons such as the role, culture, belief in the product or service, then the probability that you will like your job, perform well, and stay on are a lot higher. Similarly if you leave because you want to move to a high growth sector, a significantly higher responsibility, or for exposure to a different market, then employers will appreciate even if they see some gaps in the resume.
- Be transparent in your financial dealings: Times are a-changing, but your parents, in-laws, uncles and aunts might be very much in the past. Instead of encouraging this mindset, you will do a yeoman’s service to them if you educate them on how the job market has changed. Share with them about the work you do, what you contribute, what drives you, why you chose a particular company etc; so that their expectations are set right, and they can be the right support when you need them.
Dummies guide for the axing employers
Now, let’s switch our attention to what an employer can do to ease layoffs and ensure they have a productive workforce, so that when the inevitable happens, it doesn’t destroy the morale of the current employees or the long-term prospects of their attracting better employees in the future. Much has been said about this time and again, but a few points stand out in the context of the Indian scenario. These are:
- Think before you hire: Today there are multiple options to outright hiring. Outsourcing, using short-term consultants, hiring people part-time can all be leveraged very effectively to manage peaks and troughs in demand. While we spawn one of the biggest outsourcing industry, our companies are loath to use outsourcing and try to do everything ‘in-house’. There is also an inherent yet inexplicable aversion to hiring professionals who only want to work for say three days a week or six hours per day.
- Prepare and train managers: The leadership and management team needs to be coached early, on probable scenarios and how to react in a professional manner when such actions become a reality. This will ensure that they do not make unreasonable promises to their subordinates, and will help them set expectations correctly.
- Be transparent: Share as much as practical, especially around the company’s financial situation. Treat employees as mature adults who are partners in helping you achieve your business goals. Help them to internalise what they can do to get the company do better, and thereby ensure that their job is protected. It will also lead to employees keeping track of costs and minimising waste. The other side of this coin is that you will need to reward them when the going is good. Employee relations built around trust and respect go a long way, in getting employees on your side when the going gets difficult.
- Disconnect the individual person from the job: Layoffs can happen because you just need to cut absolute number of employees, or it might be because your business has changed requiring different kind of skills. So in reality you are eliminating or redefining roles, which may or may not appeal to the existing incumbent. So, why not say that ‘we are eliminating your role’, instead of saying ‘we are eliminating you’? This will make the action more unemotional, and help the employee look at it dispassionately. Unfortunately, Indian companies do exactly the opposite, telling media and people that they are asking people to go because of performance issues.
- Learn from your experience: This is the Internet era. There are enough case studies on companies that did it right. What support did they provide, how much severance did they give to their employees? How did they communicate? Invest time to learn, because this is not just about getting the job done but getting it done the right way. For instance, many established companies offer one month for every year served, as severance pay, besides offering outplacement services. Some offer early retirement, while others offer a sabbatical. Kingfisher’s management, of course did not follow any of this, for it did everything against-the-book — no transparency, rumours floating thick and fast, executives contradicting each other, and money running out even as the inertia deepened!
All said and done, layoffs can be hard for parties on either side of the table. There is no easy way to do it or be prepared for it. An important step is to realise that it is not something that can be wished away. Therefore accepting it early and being prepared could go a long way in ensuring that it is handled correctly.
