February - 2009 - issue > People Manager
Doubts and Dilemmas with Downsizing - A Leadership Crucible
C. Mahalingam
Thursday, January 29, 2009
Global recession is impacting the employment scene with a vengeance. Widespread job cuts have become common place. As if that was not enough, one of India's largest software services firms has run into a serious financial fraud of unheard proportions, leaving a huge question mark on the job security and career prospects of thousands of innocent and competent software professionals. In India, a job represents much more than livelihood. It is a social identity and is also a source of social security, with most of the employers taking care of post retirement health care and regular income for sustenance in the form of pension. While many IT and ITeS firms went aggressive with attractive sign-on and retention bonuses to win the much touted 'war for talent', and expanded their benefits programs and engagement initiatives to become the employer of choice, many of them have not thought of a proper 'outplacement' approach. This has resulted in many of these employees being left 'high and dry'.

This article focuses on the role of leadership during difficult times. This offers a perfect crucible for leaders to demonstrate their points of view about people, ensuring that everyone in the organization practices the much claimed 'our people are our greatest assets' value. Beyond creating the 'wall paper effect', these values need to be internalized by the leaders and externalized in their decisions and behavior. As a result of my discussions with many HR managers and business leaders, I have come to believe that there are some doubts and dilemmas that need the attention of the leaders and more importantly a clear articulation about them so that the whole organization understands how to navigate through these dilemmas with clarity.

Leaders come to represent a compass in the swamp – a situation in which organizations find themselves today. Let me focus on four key dilemmas that the leaders can help resolve:

1. Avoiding Adding Insult to the Injury

When you let go of people because your organization is not doing well, is it fair to brand these people as non-performers? If your organization's fortunes were intact, would you have still called them so and asked them to leave? Or would you have done everything you could to keep them 'engaged' and retain them? It is bad enough that they lose their jobs and have to suffer a loss of face among their dear and near. By calling them non-performers, are we not adding insult to their injury? And in the process, are we not also jeopardizing their future employment opportunities? As a minimum courtesy to people we interviewed and hired, we sold to our clients as our best people and more, can we not at least leave their self esteem intact by not branding them as non-performers? What is the compulsion for some leaders to claim, "It is business as usual and sending hundreds of people out with pink slips is a normal weeding out process?" Is it just to impress the media? Well the whole world knows that it is the meltdown and cost pressures that are driving this decision. The minimum the leaders can do is to acknowledge bad times and own the difficult decisions impacting people.

2. Facilitating Outplacement Support

Layoffs in India leave the impacted people completely shaken with very little support systems in place. Outplacement support becomes necessary for lessening the burden of the employees. Understandably, not all organizations will be able to afford to offer the same kind of outplacement support. Some of the organizations offer a very elaborate package that includes a generous severance package (six months to one year salary paid along with separation), resume writing support, fully paid or subsidized career counseling support, and tie-up with an outplacement agency for providing office space for the employee to go to for a few months and helping to find a job. In the past four months, this author was contacted by the HR leaders of a large global telecom product software company, one of the largest retail chains, and another large software service provider in their quest for finding jobs for people they had to let go. And they were contacting many organizations to explore this outplacement possibility. Leaders must mandate their HR teams to emulate such practices.

3. Ensuring that Laid off Employees are not Stigmatized

While there is enough awareness about what is happening in the marketplace, there is not enough courage and conviction on the part of the recruitment teams and HR leaders of those companies that are still hiring and consider the candidates who were laid off by others. In countries like the U.S., neither the employees are shy of saying they were laid off, nor the prospective employers consider them as unfit for rehiring. In India, we are far from getting there! Employees are understandably apprehensive of sharing their plight (and some of them would still keep claiming they left on their own because they did not like this or that…. the usual rhetoric in interviews). The fact remains that large scale (or even small scale layoffs) happen because organizations decide to drop some product lines or service offerings, reduce support functions staff as a direct consequence of the reduction in production or delivery capacity, and 'not' because these people are incompetent. Leaders of those companies that are hiring people have a key role to play in letting their operational leaders, HR folks, and recruiters know and understand that these laid off candidates carry no stigma and that they are viewed and treated like other candidates. In the absence of a clear messaging from leaders of the organizations, those concerned with hiring will play it safe, and in the process fail to do justice to the laid of candidates.

4. Exploring Industry-wide Initiatives to Lessen the Pains of Downsizing

During good times the leaders from the IT industry meet quite often and share platforms to discuss issues facing the industry, growth challenges, people-process-technology priorities, and other such matters. But during difficult times, there are only periodic statements about what is right and what is wrong, what individually they are doing to meet the challenges and help the employees. The need of the hour is actually to get together on the various available industry platforms and forums to take stock of the ramifications of the challenge the industry is facing, establishing coordinated actions for offering counseling support, creating industry level exchange for matching available job opportunities with those seeking jobs, making credible statements like why layoff is no stigma on candidates, and so on. Leadership is great during honeymoon times, but it becomes even more critical during difficult times. Concerted actions can have far more positive effects on the lives of the impacted lives than isolated actions and announcements.

Interestingly, difficult times test the leaders more than those who are led; they create more burden for leaders than for others. It is a perfect crucible for leaders to take stock of their inner strengths and leverage the same for the larger good.
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