Garbing layoffs as restructuring: it matters to those axed

Julie Sweet, CEO, Accenture, revealed mid-August that it plans to lay off five per cent of its global workforce, affecting around 10,000 in India. The exercise is to take place post the appraisal cycle, wherein the bottom performers will be asked to leave. The organisation is not hiring anytime soon and has put a hold on expenditure in other areas as well.

Similarly, in July, there were reports of Cognizant laying off almost 18,000 employees — it had asked them to resign voluntarily, failing which they would risk termination. While the Company claims that it was laying off employees for their inability to secure projects, the employees’ union in Karnataka believes the terminations were initiated in the name of ‘effectively managing workforce utilisation’.

In both cases, employees were or will be laid off in the name of optimising the workforce.

There is a trend of layoffs under the guise of restructuring, which companies big and small continue to follow. When they do so, the fallout effect on the organisation itself is much however, the toll on the employee is something entirely different.

Painting the wrong picture

It is true that many companies have been hit by a financial instability. While layoffs may be necessary as a survival strategy, the manner in which they are carried out determines the fate of the workers.

With Covid-19, however, there is a big change in how layoffs are viewed which softens the blow a lot. Employers now look with empathy and objectivity and are open to absorb faster such cases

When an organisation lays off its people, claiming inability to pay them in light of extenuating circumstances, the employees still stand a fighting chance of securing another job. This is because they may honestly claim they were victims of external circumstances, as many have been doing in the present context.

On the other hand, claiming restructuring or optimisation and then removing jobs paints a different picture altogether. Despite any intentions that the company may have had, the workers still face a cruel fate. In such a context, they are likely to be labelled as non-performers, which ruins their future job prospects.

This is effectively the case here.

Social stigma

Abhay Srivastava, chief talent officer, SVP-HR, Cipla, says, “When restructuring is used as a euphemism for reducing manpower, then it is plain unethical.”

Biplob Banerjee, chief people officer, Allied Blenders and Distillers, agrees that it takes a toll on the employee. “A layoff affects one tremendously — there are no two ways about it. It takes a toll emotionally, psychologically and socially. While in the West, this is seen objectively, in India it is still seen socially and not holistically.”

There is of course a lot of empathy for employees who got laid off in this time. Recruiters are more willing to take a chance on them considering that they might have been victims of the situation. Srivastava agrees and says, “Recruiters are more willing to meet candidates today. The stigma has been replaced by caution.”

Adding to that, Banerjee says, “With Covid-19, however, there is a big change in how layoffs are viewed which softens the blow a lot. Employers now look with empathy and objectivity and are open to absorb faster such cases.”

However, any recruiter would tend to be doubly cautious when hiring such candidates and the depth of recheck would be much higher to ensure that they are not hiring an outcast. And such caution is right on the recruiter’s part.

When restructuring is used as a euphemism for reducing manpower, then it is plain unethical

While laid off employees will attract empathy from the recruiter, their empathy will not extend beyond the interview process because nobody would want to hire a non-performer, which is what employees laid off under restructuring are dubbed as and the background checks will reveal as such.

This is the toll that layoffs under the garb of restructuring take on the employee. Being labelled as a non-performer impedes a candidate’s prospects of securing their next job by a great deal, to the extent that they might not get one.

In the current context, that is a huge disadvantage.

Which is why a little caution on the part of the organisation is called for here. Terming it ‘restructuring’ or ‘optimisation’ is bad enough for the organisation itself, but increases the difficulties for the out-of-job individual tenfold.

Moreover, in these times the job market has bottomed out. Hiring has been slow or non-existent and whatever hiring is being carried out, is for niche roles and people with critical skills. What this implies is a greater time standing in the line for the worker with regular, routine skills in search of a job. The year is almost gone and probably for the next six months, one would have to wait it out. “This is the hard reality”, as Srivastava puts it.

Most employees do not have the odds in their favour and when organisations do not own up to the crisis, it only compounds the problem for the worker.

This trend being followed by organisations is leaving an incredibly damaging trail in its wake and the victims are again, the people. Layoffs are understandable and even employees themselves might be sympathetic to the plight of the company. However, the communication needs to be clear from the company’s side regarding the ground on which layoffs are being carried out.

The way things are done will shape the future for the ongoing worker. The onus lies on the organisation to face their staff and own up how the crisis is affecting the system.