Companies lost best brains in layoffs

Tuesday, December 01, 2009
By Mansoor Ahmad

LAHORE: Reduction in workforce has not worked wonders for most struggling companies, but has resulted in losing the best brains which will affect quality and service. On the other side, retained employees face the challenge of putting in extra efforts to ramp up productivity with fewer resources.

The manufacturing sector has been facing an uphill task to cope with high cost and dwindling sales. Most companies have been forced to cut their workforce in order to save cost. But after doing the exercise, many companies have found that they do not have anybody inside their organisations who knows how to downsize.

“Worker layoff is a risky job because there is a possibility when you fire a competent worker he may end up working with your competitor,” said Almas Hyder, an engineering entrepreneur.

In fact, he added, his organisation had benefitted from reckless firing by panicky companies and had actually been able to pick up the talent which otherwise would not have been available in the market.

He said layoffs were necessary after the economic meltdown but it should be an effective exercise which actually could improve efficiency rather than inflicting strategic damage to the company by relieving even the most skilled and sought-after workers just to cut cost.

Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) former chairman Syed Nabeel Hashmi said “it is unfortunate that many entrepreneurs fail to realise that downsizing not only hurts those who are forced to leave but also impacts the morale of retained workforce.”

What happened in Pakistan, he pointed out, was that companies kept their entire workforce at the peak of recession as they banked on the saved capital accumulated over a high-growth period. They thought the economy would rebound soon, but when it did not they exhausted all their reserves and got panicked and started indiscriminate layoffs.

“Now that the economy is on a recovery path they do not have the required workforce and the workers they retrenched are not willing to come back.”He said the companies where the layoffs were not fair closed down after some time as the retained workers failed to cope with high expectations of entrepreneurs.

Pakistan Hosiery Manufacturers Association Vice Chairman Adil Butt said many industries, anticipating a recovery in the clothing sector, were trying to rehire the workforce they laid off during recession. “Many of those industries are surprised that the workers they retained in hard times are leaving them.”

He said the unsatisfied workers did not like what happened during the downturn. They didn’t think the downsizing was handled well and also did not think they were dealt with well, though they may have kept their jobs.

Former chairman Technical Education and Vocational Training Authority and Sundar Industrial Estates Mohsin Syed said prudent entrepreneurs with dedicated professional management operated with lean but highly talented workforce even during the best of times.

“When productivity goes down appreciably and the need arises to cut the workforce, the management should take the entire workforce on board.” He said the workers should be given the choice to either accept a uniform cut in wages or agree on a fair formula for layoffs.

Another option, he said, was to offer some workers half salary or even less than that and let them spend the year working in some other area, but not in the firm. They could do something which would help them learn and would also improve the firm’s reputation in some ways, he added.