August - 2008 issue > Guru Talk

By C Mahalingam (Mali)

All businesses are subject to cyclical changes; there is no escaping it. Honeymoons do not last forever; nor do depressions in the cycle. They come and go. In the last couple of months, we have all been reading about a slow down in the economic growth in the U.S. and the consequent reduction in IT spends fuelled by the subprime crisis. Its impact is being felt in the business results announced by many IT firms.

Prior to this, the depreciating dollar was not any helpful to the predominantly export-oriented IT industry either. It has its devastating impact on the margins of the companies. And as a result, all the hell breaks loose.

Bad business conditions take its inevitable toll on the peoples’ side of the business. Job losses in significant numbers hit the headlines of the newspapers every day. In the last three months alone we read about three or four IT majors showing the door to thousands of employees. And there are companies that are shedding jobs but are smart enough to do so without much of public glare! On the one hand, these companies are handing over pink slips to a significant chunk of employees. On the other, there are massive cancellations of offers issued to the campus pass-outs or repeated postponement of the joining dates shattering the hopes and dreams of these boys and girls.

Well, the point here is not why companies are doing this - issuing pink slips and canceling campus offer letters. This can be argued as a business necessity (and in the larger interest of one of the stakeholders, namely the share-holders). The issue I would like to focus on is how some of these companies interpret their behavior. Lacking the courage to admit what is obvious, i.e., a weakness in business performance, they put up masks and claim that they are ‘only getting rid of their poor performers.’ Poor performers must go, no arguments against it. That some of these companies are suddenly waking up and discovering that they have several hundred ‘poor performers’ does not seem to cut any ice, especially since they have been claiming year after year in their annual reports and in their jazzy presentations to the analysts that they have a ‘high performance culture’.

It is a matter of shame that the poor performance of the company (due to bad economy or whatever other reasons) is sought to be displaced and misrepresented as the poor performance of the people. The worse part is that ordering people to pack up and go home and branding them poor performers is like rubbing salt into the injury. In some sense, those that take such a public stance (that they are cleansing the system by getting rid of thousands of bad performers) lack moral courage. When leaders do not come clean on this, there is pretty little they can expect in terms of loyalty from their employees. What goes around comes around. You get what you sow.

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