Prof. T.V. Rao's Recommendations For Exit Planning Of Laid-off Employees

Amid the layoff wave, how should organisations ethically conduct the layoff process?

It is a very contemporary topic that you have chosen because this seems to have become pretty common, surprisingly, post covid whereas one would have expected after Covid, things were far better and there will be a lot more Improvement and a lot more things happening but we saw in the newspapers, many known companies resorting to layoffs. Coming to the aspect of doing it ethically, the first thing I would say is that I am sure that those who are involved in laying off would have thought through a large number of issues but I think it is important to sensitize all those involved at the planning stage to conduct layoffs ethically. 

My recommendation would be to please think of all possibilities and please project for the next three to four years in terms of the scenario that is likely to be in terms of your company in terms of technological development, in terms of the environment and so on. 

I think this is what we use to teach in all B-schools that your planning should start with looking long ahead and although companies will say that it cannot plan beyond a year today because I think it is a real Vuca world but I would still recommend that you should plan long term. 

My second recommendation would be to plan in terms of the skilled requirements whatever business you are I am sure each company will reasonably know the kind of expansion plans they have. It is very important not to plan in terms of numbers but more in terms of skill requirements. Today skills are more predictable, more decipherable on a piece of paper so I think that should be done.

Also, please remember the decision you take as a company, you may say that this is for the long-term benefit of the company, we can recruit more people or we may rationalize the decision with the right reasons but remember that every single laid-off employee has created a lot of disturbances within his or her family environment and in society and also created a dent on your kind of brand, so you need to think of the consequences of layoffs, so plan well accordingly. Think of the consequences and then manage the process that is the most important part of it. 

One must remember when an individual is recruited you have a psychological contract. One is a written contract and the second is an unwritten contract. The approach should be to treat every individual as an entity. A dissatisfied individual means a broken psychological contract. If somebody joins a well-known company, there is an unwritten contract because this person has talked very proudly about the company and maybe has taken some loans or maybe even got married without a dowry or anything of that kind. Someone might have taken a house loan and so on. Therefore it is important to understand that every individual builds his or her own ecosystem and when a company lays off,  It might be a number for that company but for that individual, there is a dent in the total ecosystem for a lifetime.

According to you, what role does an ethical exit play in an employee's life?

It plays a very significant kind of role because if a company has managed the exit ethically and compassionately, it gives the right message to the laid-off employee which goes a long way in making him feel respected. It's a great idea to suggest that we are not laying you off, we are only saying that you are still on our rolls and when we need you when we have an appropriate opportunity we'll get you back. 

This is something which can be built for uncertain roles at the time of recruitment itself by managing the expectations better. Organisations can look at creative ways of managing recruitment that consequently make exits ethical and humane. Don't just lay off people, when you have recruited them you have entered into a psychological contract particularly the unwritten contract, unless you have put into the contract a clause like the following one: 

“you are only an employee for two years after that we are not very sure if we have an opportunity, we'll continue to have you otherwise we are sorry.” 

I think gig employment is becoming the order of the day if we are talking about things like moonlighting and a whole lot of other kinds of things.  I don't see any reason why companies cannot plan the right kind of recruitment. Layoff is planned recruitment, that is the way, I would like to look at it.

Are layoffs the sole solution for employers’ problems of cutting down costs?

I think sustainable recruitment may be a jargonistic and strategic way we are looking at it. I am not very sure. I think what is important is the genuineness behind it so instead of calling it sustainable recruitment why don't you say that we are only recruiting on a project basis?

Many companies don't want to do that because there is a wrong assumption that hiring someone on a project basis won't get the candidate to give his or her 100 per cent to the company.

In my view, you can always set your standards and criteria for things like this.

I think it is possible to create a project basis culture so what you are doing is that the responsibility of finding opportunities to use one's talent is left to the individual. 

The companies can simultaneously work with the individuals on any alternate or entrepreneurial skills that foster the individual’s growth and development. There are many creative ways in which organisations can create a wealth of talent and when you develop people in this way, you may not even have to go outside your company to look for recruitment. You may have people within the organization itself so I think there are many creative ways in which layoffs can be managed. 

The HR chaps need to step up and make suggestions to the top management at the time of recruitment on the alternative ways of absorbing the talent. The organisation should think that they have enough to pay the candidate for the next 3 to 4 years. The HR manager as well as the CEOs should think creatively to generate alternatives to retain employees as part of strategic talent management and think of growing in such a way that it can absorb and retain talent. 

I would like to see zero layoffs. Even if somebody is useless I'd like to see a situation where the company says It can provide enough opportunities for the employee to contribute to society and take it up as part of its CSR initiatives. 

So instead of laying off the person, we are dedicating him or her to the service of the society giving them a sustainable kind of income. That would be a very respectable way of treating employees and companies should come up with more creative solutions like these.

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