Why LAYOFFS are not the way to go
Over the last few months, scores of companies have chosen to either lay off loyal employees, defer the joining date of prospective employees or cancel their appointments altogether. As of August 15th, over 10.8 million Indians have lost their jobs, and we need to talk about this. In today’s highly competitive marketplace, companies constantly try to outmaneuver their competitors and hence grab a larger share of the market. However, laying off employees, deferring the joining date of new recruits, and revoking the offer letter of candidates are by far the most unfavorable ways of achieving the desired market share for the following reasons: -
- Short-term gains vs long-term sustainability – Companies that are engaging in either of the above three practices are no doubt saving on employee expenses, but they are also putting at risk their long-term growth prospects. This is because every crisis comes with an opportunity, and in order to make the most out of these hidden opportunities, companies must be well-poised to be able to take the required action to fill the demand-supply gap in a post-COVID economy. The post-COVID economy will likely be a world different from the one that we knew, with customers thinking thrice before committing to a product or service. Moreover, consumer preference and loyalty would undoubtedly shift to favor those organizations that were able to meet customers’ demands even during the darkest days. Wouldn’t additional manpower help a company to pivot more favorably during such a time?
2. Reputational risk – A company is only as good as the market perceives it to be. For a company, the “market” includes both its customers and its employees. If one is dissatisfied, there is no way the other can be happy. In other words, it takes a bunch of happy employees to provide good customer service. However, no person in their right mind would be willing to join a company that is willing to dispose her at the 1st sign of trouble. Therefore, companies resorting to a cut in workforce today would surely pay the price tomorrow, in the form of subdued trust and reputation. In this regard, the COVID-19 pandemic has certainly revealed the true nature of companies worldwide.
3. Two heads are better than one – During crises, families and friends huddle up and help each other out while the storm is blowing at its fiercest. This is because two heads are better than one and hence the collective wisdom of many is sure to benefit the family as a whole. However, by treating their employees as disposable assets, corporates are engaging in a very different ball game altogether. Whereas they should be expanding their workforce to better strategize and tide over this crisis, organizations are doing quite the opposite, and in the process, harming their growth prospects.
4. The invisible employee dilemma: - When a company ends up firing a bunch of employees or even deferring the joining of a new batch of employees, it puts additional pressure on the existing employees to do both their own task and the task of their ‘invisible peers’- people who were supposed to join the organization and take care of certain responsibilities but couldn’t. Thus, employees would feel that they are not sufficiently compensated for their efforts and thus demand a raise. This would result in companies trying to satisfy their employees, thereby spending the money they thought they would have saved by cutting down on their workforce.
5. Time value of experience – “A year later, I will be one year older but no wiser”, said the employee whose joining had been deferred by one year. Jokes apart, we have all heard of the concept of ‘Time value of Money’ – a dollar today is worth more tomorrow. In other words, there is greater benefit to receiving a sum of money now rather than an identical sum later. Why can’t we extend this definition to experience? – there is greater benefit to getting work experience in your respective field now than at any future point. Millions of young and talented employees, who have slogged all their lives just to be able to work at their dream organization in their dream profile, have been asked to wait around and come back when the skies are blue again. What about the lost experience in months? Can that be got back?
The Way Forward: - Companies should strive to follow a more balanced approach during these testing times. Instead of outright laying off employees, they should retain their workforce and try to work out a compromise wherein employees are paid a percentage of their salaries till a certain future date. Of course, this would not always be feasible for hatchling companies and new businesses to pull off, but the sturdy, cash-rich market leaders of the world must rise from their plush settees and set an example to the market. This would not only develop trust in the existing workforce and future employees but also pave the path for a more dependable and robust corporate culture.