Pakistan's corporate sector in the recent past has been hit by the ripple effect of the much researched and analysed phenomenon called the Global Economic Crisis. Although the effects of this phenomenon on our corporate sector have not been as drastic as has been observed in other regions; banking, media and telecom are three of the many sectors that have shown signs of damage due to the slow down in economic activity in Pakistan.
In response, Local as well as multinational organisations within these three sectors have been shedding weight to avoid the losses that they have incurred due to a decrease in demand for new services and a steady rise in operating costs. This has led to the practice of downsizing on the basis of both performance and cost cutting by organisations belonging to these sectors. As a result, a number of positions in these organisations have been declared redundant and a considerable chunk of qualified high performers have been left jobless and insecure about their future.
Downsizing is essentially considered to be a negative practice among the stakeholders as it affects all involved. For laid-off employees this becomes a matter of dealing with the challenge of acquiring employment quickly without compromising on their market value. For the HR function and departmental heads this presents challenges related to team building and employee motivation, and for the organisation as a whole, downsizing has a negative effect on its reputation and prestige. In this situation, exploring ways to avoid cutting jobs has become a rising concern for all.
Organisations that downsize can argue, and rightly so, even though they have shed headcount, they still provide employment to their employees and good services to the market. All of which would end had they not taken measures to ensure their survival. There are, however, some precautions organisations can take in order to avoid downsizing or at least reduce the intensity of its effects on all stakeholders concerned. These options include but are not limited to the following:
ENGAGING IN BUSINESS STRATEGY BASED HIRING: In tough times cost cutting as opposed to cost management becomes the norm. As a general rule of thumb, large organisations then squeeze down to their optimum size to be able to survive through rough times. To avoid a bloated state, organisations should keep a keen eye on the rate at which their workforce is expanding vis-à-vis their operational expansion.
This essentially implies a centralised control on headcounts right from the beginning of a business operation or project. This can be achieved by literally linking business strategy with HR objectives to ensure that only the required and justified resources are hired for business units, departments, functions, and / or special projects emerging from yearly strategic goals.
Upon putting a close eye on how fast the organisation expands, contingency plans related to employee transfers, job rotation, reassignment, etc should be developed to come into effect at a stage where a need is felt for revision in team structure, cost cutting in a particular venture, or business unit closure.
Placing an emphasis on employee engagement: Workload analysis and employee engagement studies are two areas that are quite instrumental in controlling the overall growth of an organisation. In Pakistan in general, it has been observed that workload analysis and employee engagement studies are conducted when organisations are in need for a structural change, an occurrence that is not routine.
These studies should be conducted on a routine basis in order to ensure 100% engagement of existing employees before deciding to expand the team. Where work can be distributed and absorbed, let it be done so, before headcount is added. It is fine line to be walked between overburdening key performers within the team and having not enough work for everyone within the department, but it can be done.
Employee engagement takes on a whole new significance when reviewed in the light of opening up of new business lines. Good employee engagement contributes to ensuring that business lines can continue to function at close to optimal levels in sub optimal economic conditions. This allows senior management to avoid being put in the position of having to cut costs and can concentrate on managing costs instead.
BUILDING RESOURCES INSTEAD OF REPLACING THEM: Organizations through an analysis of their past experience have started recognising the importance of training, growing and retaining resources instead of losing them to the competition Every organisation needs the right team which possesses the optimum mix of competencies that is required by that organisation to compete and take the lead.
The right team can only be developed through training, growing and retaining employees over a longer period of time. Therefore, when times get tough, having a business goals aligned headcount growth, good employee engagement, and training can then assist in ensuring productivity and help protect the bottom line.
Aiming to revive a failing business unit: Whenever a business unit fails to deliver the expected outcome, organisations need to identify the missing link in the chain and give the venture one last push in order for it to revive before a drastic retrenchment or business closure related decision could be considered.
Failure of a business unit could be attributed to a number of aspects that may include the following abnormalities:
1. Lack of aggressive delivery at execution level
2. Lack of operational control
3. Lack of strength in business processes
4. Substantial increase in operating costs
5. Poor market response
6. Failure of support functions, etc
7. Management
This type of a review enables the organisation to re-engage resources towards turning the fate of a failing business unit. This exercise also enables the top management to gain clarity with regards to deciding the fate of that particular business unit.
Cost savings instead of cost cutting: During critical times, a better way to drive costs downward is to opt for a cost saving strategy. In this strategy instead of straight away cutting cost by downsizing and disinvestment, focus is placed more on reducing operational costs by:
1. Controlling consumption of electricity and communication services
2. Issuing policies against expenditure on overall outlook related items such as expenses on flat panel displays, office furniture, etc.
3. Temporarily reducing employee pay scales and premium benefits without affecting their position.
4. Rotation of employees and reassignment to more profitable business units that are in need for resources
5. Reducing logistics costs, etc.
6. Sending employees on short term unpaid leaves
Measures of this sort to a great extent enable organisations to save up on volumes of costs and this becomes noticeable in aggregated form. Cost savings can prove to be a good tool in order to give the failing business unit ample time to revive which means that the respective employees can hold on to their jobs a little longer.
Placement services to facilitate laid-off employees in finding jobs When downsizing becomes unavoidable, organisations can then focus not whether they should downsize, but on 'how' they downsize. A good practice to follow would be to establish a unit within the recruitment function to assist ex-employees in communication of job slots within the sector, CV placements and interview generation in order to at least reduce the insecurity level amongst the affected. This is a great practice even in the case of performance based downsizing.
CONCLUSION: Downsizing is as unpleasant for the organisation as it is for the downsized. The downsized employee needs to find new work, while existing employees come in to work and find friends and colleagues gone, a scenario that severely impacts morale and motivation.
Organisations must plan before they expand their units, introduce measures to ensure 100% employee engagement, build and grow resources, retain the right team, and convert an organisational failure into an opportunity thereby changing the fate of a failing business unit and retaining employees whilst managing costs.
Also, there are a number of avenues organisations can explore after deciding to downsize. Outplacement programs and counselling become feasible. Organisations can consider allowing employees to use office facilities for a limited time to assist them in circulating CVs and finding employment elsewhere. The options are many, but the lessons remain the same: cost management in good times to avoid cost cutting in lean times.
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