Sunday, October 1, 2023

Why layoffs should be a last resort in times of crisis?

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

Tom Gibby is the co-founder and CMO of employee experience technology company, The bot platform.

It becomes grimly predictable. During an economic downturn, it seems like every other time we turn on the news, there are stories of new mass layoffs. These situations can range from CEO myopia to cases where greater legal questionssuch as the recent layoffs at P&O Ferries.

In some cases, we have companies that have mismanaged the allocation of funds and, at the first sign of an economic struggle, decide to cut costs by laying off hundreds or even thousands of staff in one fell swoop. This may seem like a tempting button to push – an instant cost-cutting scythe that seems to balance the books in one move. But the reality is that cutting out much of your workforce is not a panacea; it won’t solve all your problems.

It will likely only create new problems such as plummeting morale, poor retention and productivity, and a skills gap resulting from the loss of years of experience that will impact business bottom line and long-term success.

Prioritize sustainable growth over rapid growth.

One of the reasons why some companies are withdrawing vacancies and laying off staff is due to a “grow at all costsmentality. Attempting to quickly expand a business in a short period of time can be destructive.

I think we collectively need to move away from an obsession with rapid growth. Sustainable growth and prioritizing creating a people-centric organization with a strong collective culture is the most important thing to focus on and is likely to be best for your business and the collective mental health of your workforce.

Taking two steps forward today to take three steps back tomorrow is destabilizing for a company and everyone in it, and the impact can be irreversible.

Being transparent can help strengthen corporate culture.

As mentioned by Simon Sinek in his “Why good leaders make you feel safeTED Talk, there’s another way to deal with strained corporate finances: During the 2008 financial crisis, leaders of the manufacturing company Barry-Wehmiller managed to avoid layoffs by discussing the situation and brainstorming ideas with the board. exchange on how best to act. advance, including leave and unpaid leave. The result was a strengthening of the culture within the company and an increase in loyalty and trust.

It’s easy to see why employees are suspicious or feel they are paying the price for corporate greed or simply incompetence, especially in the current climate.

For example, during the recent UK railway strikes, it became apparent that railway company executives were making a profit despite depriving workers of small compensation. pay raise in line with inflation. It was recently reported that Transport for London has: nearly 600 executives on six-figure salaries, despite Transport for London needing multiple governments rescue operations in the past year, raising tariff prices and then denying a wage increase in line with inflation to the workforce.

Fund management within companies is often shrouded in mystery, so being transparent and communicative with staff about the reality of the situation, how funds are allocated and consulting them on next steps in times of crisis can go a long way in helping weather the storm.

If layoffs have to be made, be aware and respectful.

Layoffs should be a last resort, but if they have to be done after all other options have been exhausted, the way they are done will have a lasting impact, both for those who have to move and those who stay.

In a market that very competitive now if you try to attract talent it will probably have a knock on effect to let people go in a disrespectful way. In 2008Nokia fired 2,300 workers from its Bochum factory in Germany, with Nokia’s SVP of Human Resources describing the announcement as a “totally hostile situation”. Within a week, 15,000 people took action and called for a boycott of Nokia products. The process caused Nokia’s market share in Germany to fall, and business executives estimate Nokia lost 700 million euros in sales in Germany over the next two years.

The world looked very different in 2008, but today there have been ill-treated layoffs and workers’ anger and protests can go online very quickly. According to Glassdoor, in the few weeks after the pandemic started, the number of company reviews that mentioned layoffs with 73%. Employees aren’t afraid to share their opinions, and that can affect future hires for years to come. Bamboo HR found that: 86% of job seekers look at employee rating sites before deciding where to apply for a job, and 50% of candidates said they weren’t interested in working for a company with a bad reputation, even if it meant a pay rise.

For those left behind, there is often a lingering bad taste in the mouth and a toxic atmosphere that can irreversibly damage their perception of the company and management team, resulting in layoffs and low productivity. A 2002 study found that after a layoff, surviving employees have a “41% drop in job satisfaction, a 36% decrease in organizational engagement and a 20% decrease in job performance.”

In a cost of living crisis, where people are already struggling and worrying about the direction of their lives, it’s critical to do this in the most empathetic, respectful way possible.

But even in crisis situations there can be opportunities.

Do justice through your people.

Now is the chance to do good by building your workforce and a people-centric organization based on transparency, trust and empathy that will help you weather the current turbulence and create a positive long-term impact that builds loyalty and respect.

Focusing on the employee experience is more important than ever if you want to maintain some kind of culture and morale after the shell shock of layoffs.

Recessions are temporary, but people will never forget how their leaders treated them. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

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