Best Practices in Retrenching Employees
Prof Sattar Bawany CMEC
Board Advisor, Certified CEO & C-Suite Master Executive Coach, Author & International Keynote Speaker on Crisis and Disruptive Leadership in the Digital-Driven Era
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Many companies are quick to reduce headcount when economic headwinds appear, but they risk weakening their businesses.?The pattern has become painfully predictable in recent years: As the economy shows signs of a slowdown, companies hand out layoff notices to stabilize profitability and calm investor fears.?
However, in a strong economy, we have seen layoffs surging in some US industries as tech and professional services companies grapple with slowing demand and mixed economic signals. Downsizing during a healthy economy can help lay the foundation for efficient growth or make space for new roles that harness newer technology, such as artificial intelligence. Companies such as Dropbox and Intel have also announced staff cuts in reaction to slowing or declining demand.?
The best practice for organizations embarking on retrenchment exercises is to be mindful of demonstrating both "organizational justice" and "procedural justice" to protect employee branding and organizational reputation.?
Retrenchment and layoffs are challenging exercises that can have significant long-term impacts on an organization’s brand, reputation, and employee morale. While economic downturns and slowing demand in sectors such as tech and professional services may necessitate workforce reductions, companies need to approach these decisions with a focus on fairness and justice to maintain trust and protect their reputation.?
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In the context of workforce reductions, the concept of organizational justice plays a vital role. ???????????????????????????? ?????????????? ???????????? ???? ??????????????????' ???????????????????? ???? ?????? ???????????????? ???? ?????? ?????????????? ????????????????-???????????? ??????????????. ???? ?????????????????????? ???????????????????????? ???? ?????? ?????????????????? ?????? ????????, ?????? ?????????????????????? ???? ???????????????? ?????????? ?????????????????? ???????????? ?????? ????????????????????????, ?????? ?????? ???????????? ???? ?????????????????????????? ???????? ???????????????? ??????????????????. Companies that prioritize organizational justice ensure that their approach is clear, consistent, and respectful, thereby fostering a sense of trust even amid difficult changes.?
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Clear criteria are defined for making layoff decisions.?
Opportunities for input are available, allowing employees to express their concerns or provide feedback.?
Consistent application of criteria is maintained, so that all employees are evaluated in the same manner.?
Demonstrating procedural justice helps to build credibility and reduce the perception of bias or favoritism. Employees are more likely to accept difficult outcomes when they understand that the process was fair and thoughtfully executed.?
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Transparency: Communicate the reasons for workforce reductions openly. Share how the decisions align with the company’s current challenges and future goals. This transparency helps employees understand the necessity of the actions and reduces feelings of resentment.?
Consistency: Apply criteria uniformly across all teams and departments. Inconsistencies can breed mistrust and lead to accusations of favoritism or discrimination.?
Respectful Communication: Address employees directly and empathetically. Use clear, compassionate language when discussing the impacts and next steps. This approach not only supports affected employees but also reinforces trust among the remaining staff.?
Support Mechanisms: Provide support for those impacted by the layoffs, such as outplacement services, counseling, and severance packages. Demonstrating care for employees even as they exit reinforces the organization's commitment to its workforce.?
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Organizations that manage layoffs with a strong sense of fairness and justice can protect their brand and reputation in the long term. Failure to uphold these principles can lead to negative publicity, diminished trust among current and future employees, and a damaged employer brand.?
Ultimately, handling layoffs with both organizational and procedural justice is not just a matter of ethics—it is a strategic necessity for sustaining morale, trust, and a positive company culture during challenging times.?
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Adopting organizational and procedural justice in retrenchment processes demonstrates the company's commitment to fairness and respect for all employees. It enhances trust and minimizes the adverse impact on the organization’s reputation, which can be essential for future talent acquisition and internal stability.
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?1. CNA TODAY (2024) The Big Read "Amid an uncertain outlook and spate of layoffs, fresh graduates are finding it tough in the job market." Channel News Asia, 8 November 2024. Available Online at https://www.channelnewsasia.com/today/big-read/uncertain-outlook-fresh-graduates-job-market-4729351 .
2. Sattar Bawany (2023) "Leadership in Disruptive Times: Negotiating the New Balance." Business Expert Press (BEP) LLC, New York, NY. (page 40-41). Abstract available at: https://www.disruptiveleadership.institute/second-edition-book/
3. Sattar Bawany (2019) "Be objective when retrenching staff." Forum Letters in Print, The Straits Times, 16 September 2019. Available Online at https://www.straitstimes.com/forum/letters-in-print/be-objective-when-retrenching-staff
4. Sattar Bawany (2018) "Sound retrenchment practices can make a real difference." Forum Letters in Print, The Straits Times, 10 October 2018. Available Online at https://www.straitstimes.com/forum/letters-on-the-web/sound-retrenchment-practices-can-make-a-real-difference
5. Sattar Bawany (2018) "Weed out hidden ageist bias in the workplace." Forum Letters in Print, The Straits Times, 26 February 2018. Available Online at https://www.straitstimes.com/forum/letters-in-print/weed-out-hidden-ageist-bias-in-the-workplace