Navigating Layoffs With Purpose

During challenging economic times or periods of organisational restructuring, downsizing becomes a strategic imperative to navigate through uncertainties. However, ensuring sustainable growth while conducting layoffs is an intricate task that demands careful planning, compassionate leadership and a focus on the well-being of both affected employees and the surviving workforce. Prabhash Nirbhay, Founder and Director of Flipcarbon explores the impact of downsizing on businesses and offers insights into effective strategies for fostering sustainable growth amidst challenging times of layoffs.

How does downsizing impact the company's ecosystem? 

Downsizing is a reality. Beyond a point, companies struggling to meet profitability numbers or contain losses will not be able to divert shareholder capital to pay salaries. Having said that, the empathy or lack thereof displayed in the execution decides whether a company can reverse the reputational equity erosion. Downsizing in the wrong manner erodes trust all around. The worst affected are employees who are not asked to go or the ones that may need to be hired, follow that up with suppliers and bankers who may drop the creditworthiness score of the company. There could be potential customer side risks as well who may not associate their brand with a company treading a reputational landmine.

How can companies ensure sustainable growth by navigating through downsizing? 

My personal experience with a couple of clients who did this during the COVID pandemic has been great. One SME client held on as long as it could and once it ran the risk of running out of sustenance capital, it had a heart-to-heart in a townhall and offered choices from some salary cut to outright separation. Today, 80 per cent of those who left during the ongoing months of the pandemic are back in the fold because fairness was ensured, and people did not feel let down. Another client offered a community programme of saving job vs saving at least one more through a 10 to 50 per cent pay cut and followed that up with two increments within a span of 4 months when the tide turned. Values-based leadership is possible, so my advice to companies is to turn to your values and uphold all of them when this decision is being made and see where that takes you.

How does high employee turnover affect the existing employees? What effect does it have on high-performing employees? 

This depends on the personality type as well as the financial situation. Those who thrive on uncertainty and challenge are unlikely to be affected. However, those who build long-lasting relationships and have a high affinity for colleagues, tend to be sensitive as well as those who may not have a strong financial position may experience tremendous stress. Performers may also feel let down because having devoted considerable time and energy to the company, they may feel that their ROTI (return on time invested) is not sufficient. 

How can a well-structured employee assistance program (EAP) aid in retaining employees during times of layoffs?

There are three aspects of the employee assistance programme. One is emotional support and assistance through a wellness initiative, two is outplacement support through internal HR as well as retained search firms and three, an often-overlooked aspect is financial support. The last one on the surface is a strange suggestion given the fact that financial instability is one key aspect of the downsizing decision. However, companies can do well to offer a decent severance package and back that up with assistance programmes. Industry bodies can also create an industry specific Financial Assistance Programme during the cyclic crest of the industry. I think aloud when I say this, but is it possible to insure a person against job loss, as is offered in personal accident policies? 

How can leaders cultivate a people-first culture in the workplace? 

It should reflect in their values. Three of the 6Cs of Flipcarbon are Care, Conscience and Confluence. Care means being mindful of resources, conscience means not hurting a soul through your actions and confluence means learning to sit on the same side of the table with anyone, especially those with whom you negotiate.