The trend of garbing layoffs as restructuring

There has been a trend for companies, be it small organisations or big, to lay off people in the name of restructuring. While companies may actually be facing a financial crisis due to the pandemic, forcing them to lay off people, rarely do they have the courage to admit it.

According to Adil Malia, CEO, The Firm, “Organisations terminating employees due to business instability is a business reality. Businesses cannot be expected to carry on with the load if they are unable to sustain after paying salaries—the company may simply collapse and everybody may lose their jobs.”

However, in such a situation, Malia proposes a more graceful way. “The management should be bold enough to stand up and explain the reasons for the termination rather than hiding the truth. It calls for a courageous leadership. Give them a termination package and allow them to gracefully exit from the organisation,” suggests Malia.

“In spite of several financial hardships, good organisations will care and do things in a proper manner. Leaders in such organisations will take the ownership of undertaking cost-cutting measures or laying off staff. They will extend adequate coverage to the employees and their families and show concern.”

“If businesses terminate people gracefully, employees will realise and acknowledge the business reality. But if they do it unfairly, they will get bad publicity,” points out Malia.

He further adds, “Through disgraceful behaviour, businesses will only invite problems for themselves. When adversity strikes, the leadership should stand up with courage, look the employees in the eye and pour out the truth. Grace and bravery are very critical parts of leadership.”

Ultimately, organisations are dealing with people, and therefore there will be no dearth of emotions and sentiments to handle. It is true that leaders, who are in a position of power, will treat their employees the way they like, but being unfair is certainly not the best way.

Good vs bad companies

Broadly speaking, good companies aim to fix the problem whereas bad companies want to ignore them. In such difficult times, several companies have terminated or sacked employees, but have been apologetic about it. There was transparency between the employees and the management as to why the decision was taken.

“Companies that stand on very strong value systems and are fundamentally strong on morals and principles will not hide a story. Organisations driven by values will transparently reveal what the actual reasons are,” says Rajesh Padmanabhan, CEO, Talavvy.

A company’s core value really holds a lot of ground here. If an organisation is driven by values, it will not shy away from revealing the facts or reasons behind the act.

Padmanabhan further explains, “Good companies will own up to the fact that there is a downturn and hence, a lack of visibility, and that there is a need to cut jobs. The decision has to be clear so that nobody challenges the business rights. It is all about truthfully running a business.”

In the hospitality industry, or the aviation space, businesses came to a halt completely. The pandemic has pushed these industries in different directions altogether. Somewhere they had to take drastic measures to manage the business. These situations differentiate between a good and bad organisation.

According to senior HR leader, Ramesh Mitragotri, “In spite of several financial hardships, good organisations will care and do things in a proper manner. Leaders in such organisations will take the ownership of undertaking cost-cutting measures or laying off staff. They will extend adequate coverage to the employees and their families and show concern.”

“Good companies will own up to the fact that there is a downturn and hence, a lack of visibility, and that there is a need to cut jobs. The decision has to be clear so that nobody challenges the business rights. It is all about truthfully running a business.”

Hide & seek — the ground reality

Malia of The Firm states, “Some businesses that wanted to downsize are now finding a good economic and social reason to reduce their workforces. The pandemic has given them an excuse to shed staff at the right time.”

By now, it is quite clear that organisations are facing a tough time and there is hardly any business that has been unaffected by the pandemic. Layoffs have become a normal phenomenon nowadays. Still, companies choose to hide the truth and use irrelevant strategies to shed staff.

It is a sign of poor management according to Malia, who rightly says, “It is wrong on the part of companies to terminate employee ussing unfair means. Termination is a reality and companies should justify the act by giving reasons and making it a graceful process, which the terminated employees will understand. Organisations shouldn’t insult their staff’s intelligence by covering up the facts,” he adds.

“If businesses terminate people gracefully, employees will realise and acknowledge the business reality. But if they do it unfairly, they will get bad publicity.” 

“However bad the situation is, organisations should be honest with their employees. After all, decisions are taken from the business point of view. They should simply come up with real solutions for the employees,” states Mitragotri.

It is high time organisations focussed on balancing their decisions, rather than hiding them.

“At the end of the day, decisions have to come out. Organisations should not worry about the quality of decisions. Optimisation is not bad from any company’s point of view. However, if done through unfair means, it will be a struggle,” Padmanabhan adds.