Wednesday, December 31, 2008

On Layoffs - Advice to Indian Companies

The market conditions are bad now and those of us who want to survive until better times are upon us have to take harsh decisions. Those harsh decisions include cost cutting, and in most Indian companies, this means layoffs. By letting some people go, the company becomes better equipped to protect the rest of the company. That's reality. Now here is how I would like Indian companies to handle layoffs.

1. Do not couch layoffs as your regular performance related terminations.
Not only are you terminating people, you are also making it difficult for them to find other jobs. Who would want to hire someone who has been let go for lack of performance? If that is the genuine reason, do say so by all means, but not if your real reason is cost cutting. With no social or economic support, and a drastically diminished chance of landing another job, what will these people do?

2. Do it at one go.
Don't do your layoffs in bits and pieces. It justs makes the whole organization tense and does not create a management friendly or supportive environment that is required post-layoffs for the company to survive.

3. Don't start a witch-hunt.
Do not start scrutinizing employees' old resumes and expense reports to find minor discrepancies that can give you the opportunity to fire them on disciplinary grounds. If you believe somebody had genuinely cheated the company by falsifying records, fire them - I don't mean to condone such crimes. But not this way!.

4. Help the laid off employees to find new jobs.
Have a job fair. Give them good reports and genuine service letters specifically written by their managers. Introduce them to your trusted placement vendors. Use your network to place them in other offices. Give them open offers so that they get priority when a suitable position reopens again. Write them nice recommendations and help them improve their online credibility - there are sites like and linkedIn where you can do that easily. I am sure you can think of many ways to help them find another job soon.

5. Don't shy away from explaining.
Talk to the entire organization. Tell them your layoff plans - the reasons, the actions, the consequences (if you do and if you don't). Talk to those who are being asked to go and to those ones that get to stay. Do all that you can to make everyone understand why you are doing what you are doing.

6. See how you can provide some monetary support to the laidoff people
Can you afford to give more than the mandatory notice period payment? Maybe for an additional month or two? Those that are staying in company accommodation, can you let them stay for a couple of months more till they find their own place to stay? Waive/postpone repayment of any pending loans taken from the company? Double the notice period by halving the salary? Allow them to encash any of their unavailed leave? I am sure we can find ways to help without drastically affecting the company's future.

It would be a real nice New Year if some Indian CEO somewhere takes the lead and tells it like it is. It is time our society and the politicians face the truth. I guess Jet airways tried. Most commendable, but next time do not give in.

1 comment:

Mukesh said...

One good thing that I like in your blog is the idea of helping laid off workers find a job.
But I am against the concept of layoff(the word should not exist may be "termination on grounds" The reason being layoffs are caused due to improper management of funds when the company is growing with massive profits. I know in business one has to take risks but it would be wise to consider the option of investing a portion of the reserve for handling tough times, a portion to lead other developments, and so on. The problem is the upper level educated management with MBA's from reputed institutes aren't smart enough to help the organization grow during tough times, however a real good management should make the company prosper during all economic times. The current economic recession should have a taught that lesson, at least it did it for me.


Last but not the least it is proud to say that you work for a organization with reputation at all times than saying I worked for companies "A","B","C" which have an history of layoffs along with their popularity gained under thriving economic conditions.