Skilling, Labour, Talent for MSMEs: It is imperative for entrepreneurs to gear up for the future. During the slowdown, it is crucial for the companies to think on the lines of ‘What will you need when the economy starts to look up’.
- By Sonica Aron
Skilling, Labour, Talent for MSMEs: The last six months have been tough for the Indian economy, which is adversely impacting employees across the industry. GDP touched a six-year low. Eight core sectors have registered a negative growth of 2.1 per cent in July, compared to 7.3 per cent in the corresponding month last year. According to the Centre for Monitoring Indian Economy (CMIE), the overall unemployment in India has now touched 8.2 per cent, with a high urban figure of 9.4 per cent. All four contributors to economic growth – domestic consumption, foreign consumption or exports, private investment, and government spending – are hit by the slowdown.
In case of an economic slowdown, startups and SMEs experience the worst hit. Unlike large organisations, they do not have the clout to be able to hold vendor payments for long periods or to raise funds through alternative means. And hence their ability to survive cash crunch, delayed payments can often lead to shut down of operations and winding up. While startups and small businesses represent hope and a promise of employment, the harsh truth of chasing profitability, uncertain economic environment, inability to raise funds can lead to promising beginnings to slow down leading to layoffs. In many cases, employees themselves move on. This could be because of delayed salaries, cash flow issues and cash crunch, slow down in NPD and expansion, higher stress levels etc.
In a recent interaction with an employee who was looking to move on from such an organisation, which had expanded really fast, he told challenges being faced. Some of them were delayed salaries by 3 to 6 months, hiring on hold, and hence the work pressure on existing employees kept on mounting along with long working hours, cash crunch leading to reduced amenities/ facilities at the office, and inability to raise funds leading to reduced new product development/ expansion/ innovation/ scale-up.
All this leads to crashing of the dream of being a part of something big….or creating something big. 2019 has been a rough ride for the startup fraternity with examples such as Rivigo, Food panda, ShopClues, to name a few, where there were visible layoffs. One of the reasons here is that the journeys start with a bang, they get funding, and they hire in large numbers, sell a dream and start operations. But, somewhere along the roadmap, lack of experience, mismanaged expectations, pressure from investors fragile the dream run.
Slowdown Impact on Employees
The slowdown has a percolating effect on employee engagement and performance. And, in the startups and SMEs, there is high pressure to deliver on business results, higher stress level with increased demands, training and travel are frozen and resources are low along with reduced budgets. News of layoffs, decrease in consumption, shut down days at factories further impact the sentiments. Low motivation further impacts productivity, retention and triggers the vicious downward spiral. This brings us to the question, how can organizations, and employees as individuals tide over this period.
Well, the economy has its cycles, and if we are experiencing a slowdown, we will experience a boom as well. And we suggest that organizations and individuals spend this time preparing for the boom.
What Businesses can do
We understand the budgets are tight and some tough calls might need to be taken. But it is at this time that the true mettle or organizational culture and leadership are tested. Maintaining transparency and ongoing communication to avoid any sudden big decisions is key. This will help in ensuring that employees continue to trust the management and insecurity is kept at bay.
Managers and leaders will play an important role, and organizations will see the emergence of new leaders. Managers who hold teams together in these difficult times are the leaders of tomorrow. This is also the time to think innovatively and invest in employee development. Use of technology, open sources, in house resources, inviting leaders from other companies to hold guest lectures are some of the zero budget initiatives but will keep employees engaged.
It is imperative for entrepreneurs to gear up for the future. During the slowdown, it is crucial for the companies to think on the lines of ‘What will you need when the economy starts to look up’. Companies need to keep the employees’ focus towards that direction and get everyone working towards it.
What Employees can do
The onus is not entirely on the organization. Every employee has a role to play. They are too responsible for their skill development as well. They can always explore new avenues like reading, exploring new developments in the respective fields, and attending industry events and conferences, volunteering for cross-functional/location projects.
It is important for the professionals to grow their network, irrespective of the fact if they are from an MNC or a young company. Professional networking platforms and events are good areas to find peers with common interests as well as industry mentors. In a nutshell, individuals need to take charge and prepare themselves for tomorrow. Some ride the wave, and some let the wave wash over them. As an organization, and as an individual, one has the power to choose what they want to be.
(Sonica Aron is the Managing Partner at HR consulting firm Marching Sheep. Views expressed are the author’s own.)