Oct 31, 2008

Being at the receiving end and Layoffs

Prasad reviews Abhijit's book (my review is here ) and looks at the HR lessons from it. I'd like to highlight two:
 I have found that 'being at the receiving end of HR' (experiencing an HR process as an employee, especially if it is a 'not so pleasant' experience) can be a great eye-opener for an HR professional. This helps one to be more sensitive to the 'human' in 'Human Resources'. While most of us have been employees also (in addition to having been HR professionals) for most part of our careers, we often have this strange tendency to discount our experiences as employees (as internal customers of HR strategies/ processes/ policies) as compared to our experiences as HR professionals (who design/run HR strategies/ processes/ policies).

The last point I want to talk about here is insight that the book provides about the 'increased cost' (human and social cost) of retrenchment in the Indian context. Since there is little or no social security provided by the state, the role of the employer/expectations from the employer in this domain get heightened. I would even say that since the joint family system (that used to provide some sort of insurance/social security) is breaking down, this aspect can become even more significant. Then there is this issue of 'family involvement'. Since many of us still have the tendency to 'get our families involved' in most of the important decisions that we take (like marriage and job!), separation from the job has an impact on the family that goes beyond the economic impact (as it can have impact on dimensions like family pride and even identity!). This also has implications for the 'innovative' employee engagement & employee retention strategies/ initiatives that many organizations are trying out these days - initiatives/strategies that try to 'lock in' the employees by actively involving their families (like parents day, get the families to the office etc.). Yes, these can help in reducing employee attrition/voluntary turnover. However, this would also makeretrenchment/involuntary separation more difficult for the organization and more painful for employees (and their families).

On a related note today's Corporate Dossier in ET looks at the inability to layoff people in the Indian context, from a legal and cultural angle.
 In their defence, CEOs dole out a long list of compulsions and arguments. The foremost argument proffered is that of ‘Company is Family’ . Ask Kishore Biyani, chairman, Future Group who almost agrees with Goyal on the latter’s patriarchal approach to leading a business.  “Indians tend to be very emotional , and we treat our employees as family. Culturally, we are very different from other countries. In our society , the workforce is treated like the kutumb (family) and the CEO is the karta (a guardian, if you will) of the family. It is his responsibility to maintain the well-being of all employees. If an Indian company is firing people, you can be certain that it’s the very last resort left for the company,” he says.

When posed the same question, Harsh Goenka, chairman of one of the older Indian conglomerates, the RPG Group, puts forth a similar argument. “Traditionally, our mindset doesn’t allow us to downsize, and labour has always been a sensitive subject in this country. Companies have gone sick and died but they have refused to resort to layoffs,” he says. What they don’t realise, he adds, is that the entire workforce suffers instead of a few.

Though there have always been political dimensions to firing people, such pressures have only become more acute lately, as the Jet episode clearly brings out. “Political effects seem to be of a more serious nature since most of our unions are affiliated to political parties. Therefore, the politics takes an upper hand, compared to the business needs,” confesses Niraj Bajaj, chairman of stainless steel products maker Mukand.

No wonder then, companies are often all too careful about managing their financial troubles with socially responsible solutions. For instance , the Tata group, which has actively scaled down its workforce in companies like Tata Motors and Tata Tea, and is of the view that economics doesn’t always win.