Layoffs don’t solve any problems; they create new ones

Nov 24, 2016

Startups and enterprises, particularly those in ecommerce, have recently been doing substantial layoffs. They have been announcing job cuts and layoffs in hundreds. Taxi aggregator Ola fired around a thousand employees. It is reported that India’s largest e-commerce marketplace Flipkart too laid off around 800 employees. The trend is global. Network giant Cisco is predicted to cut 14,000 jobs in 2017. Intel announced layoffs of 12,000 employees. Zomato and Foodpanda also fired people.

Reasons for layoffs

There could be various reasons for such indiscriminate layoffs, ranging from poor financials to over recruitment to bad management decisions—although companies always tend to blame the below-par performance of employees for the firings. However, such arguments are hardly tenable and would fall by the wayside on closer scrutiny. It would be difficult to explain and respond to the several uncomfortable questions that would arise in such situations: how can employees barely a couple of days or weeks old (sometimes a few months old) be adjudged non-performers without giving them sufficient opportunity to prove themselves? In case of over-recruitment, there could be similar questions: Why were the employees hired in the first place? No one has the right to toy with the careers of so many people and such moves go against the grain of corporate responsibility. Irresponsible management decisions can wreak havoc on the careers of hundreds of people.

Layoffs don’t solve any problem

Additionally, layoffs seldom solve any problems. If bad management decisions are the reasons for an enterprise’s non-performance, relentless firing and layoffs would hardly solve it. It’s like treating the symptoms without actually tracing the root cause behind the deeper malaise. In fact, the organization would continue to languish if the bad management decisions responsible for the mess in the first place are not traced and rectified.

Industry experts are of the view that the best tactic in such situations is to course correct rather than go for knee-jerk reactions. It also contradicts the logic of fair play: why should employees be made to pay for something that they had no role in? If the blame lies at the doors of the management then it should be ready to take responsibility. Similarly, if market conditions are unfavorable then a wait-and-watch policy may be the best tactic to resolve such a situation. Whatever the response, axing a number of people should always be the last resort, after every other avenue has been exhausted. Moreover, layoffs don’t augur well for an organization itself; realistically speaking, it is an ill-advised decision that could backfire substantially.

Your axe may metamorphose into a boomerang overnight

Firings can have serious consequences for an organization: valuable resources may migrate to an enterprise’s competition; there could be anger and frustration in employees who stay back; there could also be long-term damage to a company’s image, reputation, sales, and production. With the coming of social media, disgruntled and dissatisfied workers could vent out their anger and badmouth a company on public platforms and portals like Glassdoor and spoil its reputation. Besides, companies, at times, are forced to hire the same set of employees that they fired at double their previous salaries. Actually, a paradox!

Recruitment should always be a well thought-out drive

Nevertheless, a well-thought out recruitment process and strategy is a precursor to avoiding any future mass firings and layoffs. With the exponential increase in the number of candidates these days that a big company has to deal with, it could be a long-drawn and complicated process. The HR department of today has to function in a complex environment with a lot of aspects to be considered before any recruitment drive is undertaken such as market conditions, background checks, manpower requirement, etc. Done manually, there would always be room for error; automation tools could somewhat ease the burden.

HR departments are forced to contend with myriad data coming from diverse sources such as the Internet and social media and be prepared to work them to their advantage. Current market trends and factors such as job history, benefits and compensation, and level of education, also have to be kept in mind. The ability of HR to describe, predict, and improve recruitment performance will determine their survival in the present times. They will have to ensure optimization of workforce and maintenance of optimal labor pool.

“The labor pool these days is dynamic and several factors play a role in it. An efficient HR department’s work in more complex than ever before. Managers need to be held accountable for their decisions. With the increase in the number of parameters errors would naturally increase. The trick is to tread the fine line in a manner that drastic measures need not be taken,” said Somesh Misra, VP, Products and HR, Deskera—a leading global business software provider .

In Conclusion

All said and done companies should avoid layoffs and retain resources that are crucial to their growth. In today’s world of cut-throat competition, HR departments have to be at the top of their game in identifying, recruiting, and retaining employees. After all, the image and reputation of an organization takes several years to build and cannot be toyed with.

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