Thursday, December 25, 2008

Job Preservation - People Management

Say no to lay-offs.... Job preservation is the need of the hour.
  • · Lay-offs can levy a heavy emotional strain on those who stay, besides those who leave
    · Organisations have to weigh both the emotional and financial implications of executing a lay-off

The current economic turbulence has hit the worker population hard. The blow has come in many forms, the most severe being lay-offs. The laid-off workers are both anguished and desperate; they need jobs, irrespective of the industry. The fate of the economy is not known and the surge of predictions and assumptions is making the scene even more chaotic. If the economy turns for the better sooner than expected, then the lay-offs would have been premature. But if the downswing continues for a long time, employee morale will take a definite beating, creating an adverse impact on corporate performance.

Lay-offs in an economic downturn are inevitable. Organisations resort to lay-offs because they lack the ability to sustain the existing staff strength due to reasons that are beyond them. However, laying off workers is not the only solution to the recessionary crisis. While there are organisations that have their own compulsions to lay-off workers, there are others who have the option of reconsidering such a move. Experts suggest that lay-offs should be the last resort for any business, and therefore organisations must use all their strength and creativity to find alternative solutions.

Beyond lay-offs Voluntary retirement, salary cut, reduction in work days/hours and recruitment freezes are some of the other options that organisations can consider. Innovative alternatives to lay-offs can help companies restore worker faith that could help them emerge stronger post-downturn. However, there is also a belief that workers may run out of patience, especially the top 10 percent, as their work hours and salaries get a cut, and may leave for better opportunities in the competitor's yard. There are many assumptions about the way employees might behave in a downturn scenario, but there is a counter-argument for every assumption. While some say that organisations that opt for 'creative' lay-off measures are more likely to foster employee commitment, others argue that such commitment would be hard to come by. Another thought is that employees may be willing to take the salary cut so that their co-workers do not lose jobs.

Irrespective of what the assumptions are, experts strongly recommend that organisations refrain from axing their employees. Lay-offs, they believe, spread a very strong feeling of negativity among the worker fraternity and leads to a feeling of insecurity, frustration and depression. The emotional baggage that comes with lay-offs will be huge, requiring a healing process to sooth the nerves of those left behind. According to corporate psychologist Richard Shawn, only those organisations that have a plan to assuage the hurt feelings of people affected by the lay-off of their colleagues must resort to the harsh measure. Organisations that are ruthless and fail to address the emotional trauma that comes with lay-offs will regret it as its impact will be felt in the future when prospective employees do not want to be associated with the company. Hence, from a long-term perspective, lay-offs should be the last resort and if organisations have to implement lay-offs, they need to be extremely sensitive to the emotional needs of those affected.

Mathematics of lay-offs In addition to the emotional burden that lay-offs levy, there is a big financial strain that they bring with them. The cost of severance packages and outplacement of laid-off employees is huge. The unemployment insurance premium charges too have skyrocketed. Organisations often find themselves having two equally troubling options. In such a scenario, it is wise for them to make a choice that is humane.

It will also be worthwhile to analyse the impact of lay-offs on organisational performance. According to Shane Wayne, the CEO of, there is also an upside to lay-offs. In times of a downturn, lay-offs may help organisations take care of their performance issues by eliminating poor performers and sieving the staff for better. It would be a good bargain since these underperformers would only eat into organisational productivity which will be hurting more in a downturn, and therefore axing this layer of workers will benefit the organisation as a whole. The move may not create motivation and morale ripples.

To do, or not to do! While the question is difficult to answer, experts say that the choice is individual. While lay-offs may offer an opportunity in terms of performance issues getting solved, they surely should not be used as a quick-fix measure to business problems. Organisational leaders need to weigh all possibilities and make the decision in the larger interest of the staff, since it is the employees who are going to resurrect the organisation back to life finally.


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