Organisational proactiveness and foresight helps prevent layoffs | The Financial Express

Organisational proactiveness and foresight helps prevent layoffs

Organisations will continue to grapple with a shifting and uncertain economic landscape, and one of the looming questions they will need to answer will be whether their current workforce can help them effectuate transitions for their success.

Representational image courtesy: Grip.

By Nimisha Dua

In 2022, close to 50 startups have laid off more than 20,000 employees due to financial constraints and restructuring or citing employees’ performance as a reason and some even claiming that the layoffs are standard and to be expected as a filtering mechanism.

Reports show that around 900 tech giants internationally have fired a total of 150,000 employees last year. Automation and ever-fierce global competition are two major forces that are transforming the very nature of work. To keep up, many organisations have had to reassess their workforce strategies – resulting in changes that are often painful and disruptive.

Due to a lack of long-term thinking, organisations take the easy way of controlling costs – by reducing their headcount. By turning to episodic restructuring and regular layoffs, they do not realise that in the long term, they hamper both employee engagement and profitability.

Subsequently, some organisations have realised this is neither sustainable nor ethical and innovative ways of thinking are needed. Leaders seldom achieve their goals through bad layoffs or layoffs for the wrong reasons. Let’s look at a better approach to sustainable hiring to make startups and corporates mass layoffs proof in 2023.

Why layoffs aren’t an effective strategy for sustainable and long-term growth?

Layoffs have become a default response to an uncertain future that is fuelled by advancements in technology, intense competition and tumultuous markets and macroeconomic conditions.

While organisations might use layoffs as an immediate fix for controlling their costs, yet, it does not improve their financial performance. With layoffs, an organisation not only loses the time they invested in training the employees, and their networks of relationships but also knowledge about how to get work done.

Additionally, layoffs can make employees feel they have lost control, which in turn lowers morale and weaken the engagement of the remaining workforce. The fate of their peers creates an understanding that hard work and good performance do not guarantee employment.

In the aftermath of a layoff, survivors experience a decline in job satisfaction, organisational commitment, and performance. Short-term productivity may rise as fewer workers have to cover the same amount of work, but it comes at a cost-and not just to the workers. Over the long term, quality suffers and innovation declines as the rate of employee burnout and turnover increases.

Being proactive

Organisations need to be proactive and need to develop better ways to handle their changing workforce needs. An effective workforce planning strategy has three components – talent philosophy, sustainable hiring practices and cost competitiveness.

Talent philosophy: A long-term talent philosophy should focus on commitment to employees’ long-term career growth. People should be hired for their potential and trained for their skills. It consists of creating an environment that enables an employee to expand their skill sets and have options to grow both vertically and horizontally.

Sustainable Hiring: The practice consist of regularly reviewing all open positions and doing a thorough rationalisation of the same with various business stakeholders. A sustainable hiring plan always keeps space for changing business needs, but also accounts for the uncertain macro-environmental conditions and hence is measured accordingly in its scope. Sustainable hiring aims to make the most compatible hire, who is both a role and culture fit and then maintain an environment that nurtures and develops the hire over the long- term.

Empathy – when a layoff is inevitable

In the new world of work and the changing world order, there could be scenarios where a layoff might be inevitable even after practising a sound talent philosophy and sustainable hiring practices.

This might be because of a hostile takeover, forced restructuring, market shifts due to competition leading to the closure of business among others. In such events, organisations should try to handle layoffs with utmost empathy and sensitivity, ensuring employees are not only treated humanely during this difficult process but also these difficult changes are dealt with; with utmost fairness and empathy.

Organisations will continue to grapple with a shifting and uncertain economic landscape, and one of the looming questions they will need to answer will be whether their current workforce can help them effectuate transitions for their success.

As a result, organisations may tend to lean towards short-term financial outcomes rather than the long-term sustainability of their business and the welfare of their workforce, but employees are the only source of competitiveness an organisation has today, in a world where everything can be replicated to ensure that the company keeps delivering products and services that generate shareholder gains.

For all corporations, sustainable hiring practices combined with thought-through workforce planning instead of quickly resorting to layoffs is a better strategy to address the vicissitudes of market volatility and growing competition.

The author is Chief Human Resource Officer at Grip.

Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.

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First published on: 26-01-2023 at 10:30 IST