Navigating Retrenchment in Uncertain Times: Insights and Tips from SHRI's Executive Director

The International Monetary Fund (IMF) has revised its 2023 global growth outlook and predicts that global growth will decrease to 2.9% in 2023, compared to 3.4% in 2022. Despite this improvement from its October 2022 forecast of 2.7%, there are concerns that the world could still fall into a recession.

Against this backdrop, retrenchments have once again become a reality in the corporate world due to economic forecasts and headwinds. Our Executive Director, Alvin Goh, shares his insights on the topic of retrenchment and offers tips on how to handle it responsibly.

Prevent Layoffs: Increase Your Employee Count as Your Business Expands

This may seem obvious, but the "grow as you go" approach has been in use for a while now. HR professionals can assess the business operations and get involved early by collaborating closely with business leaders to predict resource needs.

By analyzing data on employee productivity and other key metrics, you can gain a better understanding of when the business needs additional resources and proactively hire new employees.

This approach also helps establish a pool of talent that can be quickly mobilized when necessary.

Take a responsible retrenchment approach: Not Just About Regulators

Under Singapore's Tripartite Guidelines on Mandatory Retrenchment Notifications, corporations must keep regulators informed and adhere to the guidelines. You can read more about it here .

However, when the term "Responsible Retrenchment" was introduced, many organisations focused solely on retrenchment as the port of call and modus-operandi. It's important to keep in mind that retrenchment should not be the only option considered.

For most on the receiving end of a retrenchment letter, it can be extremely painful and stressful. We ask, to what extent have our corporate leaders experienced some of this pain? Have other means been considered, perhaps through a pay cut or reducing some of the perks such as transport allowances, club subscriptions, and other good-to-have but non-mission critical expenses?

Additionally, has there been a review of the business run rates and operating model to find ways to minimise cost, particularly to comb through the monthly spend with a fine-toothed comb to find whatever savings there are in order to avert a retrenchment exercise? From a policy perspective, was there implementation of a flexible wage system or was there adoption of flexible work arrangements?

Corporations can look at reducing expenses, such as transport allowances, club subscriptions, and other non-critical expenses, or implementing flexible work arrangements and a flexible wage system to minimize the need for retrenchment.

End of the Road: Empathy, Transparency, and Tact

Laying off employees is one of the toughest decisions an organisation can make. I remember as a young HR professional, I had to let go of a senior executive who was almost the same age as my father. It was a painful process for me as I sat across the table and had to follow a script that was specially crafted. At the end of the one-way download, I simply felt disgusted with myself and how the company decided on this specific course of action.

There was no recourse for the gentleman, the whole process was a cold, one-way download and I did not even know how the employee was selected for the layoff!

When making a retrenchment decision, corporations should consider the impact on the affected employees, and communicate the process in a clear and transparent manner.

It can be emotionally difficult for everyone involved and it’s important to handle the process with empathy, transparency and tact.

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