Follow us on
Share this page

You are browsing the archive for December 2013 - MANCER Consulting Blog.

Layoffs…not the only way…

December 11, 2013 in Knowledge Cell

While working on a mandate, a recruiter faces more than one challenge. It could be – not being able to source apt candidates in stipulated time or duplicity of profiles or candidates not interested to take up the role and so on. When it comes to candidate not being interested, they have their own reasons and limitations ranging from not finding the profile good enough, compensation expectation mismatch, location constraints, designation etc.  Also, sometimes it is the company that they are not interested in. Out of all these, once while working on a mandate, I came across a common feedback from most of the people I spoke to. People were refraining themselves from applying to a certain organization because that organization had very rampantly laid-off or terminated large number of its employees worldwide during the 2007-2009 economic slump.  Though the profile on offer provided both a good career growth as well as competitive pay package but the only reason that prevented them to move ahead was the notorious image that the company had earned by abruptly shutting down multiple processes and asking their employees across the globe to leave the organization in the past.

Most people I spoke to said they would prefer job security over attractive pay package and this particular company was nowhere close to offering a secure job.  They once terminated large number of people worldwide due to recession and they might do that again. This response and discussions with people (almost 90% of them reluctant to apply for the same reason) made me think that if layoffs could impact the company’s market image, what else falls on the list of Impact of Layoffs.

Firstly, it is important to understand what is it that we really mean by “forced layoffs”?  Wikipedia explains this term as “temporary suspension of an employee or (more commonly) a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs.”  

In current times, the term actually means permanent elimination of a position.

Layoffs, thus, become one of the most common but dreaded terms in corporate. In difficult economic times, forced layoffs have become the most popular (infamously) and common method that companies resort to in order to improve their financial condition. The logic seems to be- incurring a onetime cost to earn annual recurring savings subsequently.

Forced layoffs impact an organization both internally and externally. Considering the following would clear this:

  • Employees who were handed over the pink slip- the sudden change in the financial condition, uncertainty about their future career, impacts their mental and physical well-being as also that of their near and dear ones.  Cases of severe depression, stress and emotional imbalance have also been reported. Such conditions also impact a person’s performance when he/she appears for job interviews elsewhere.  The confidence level goes down, leading to poor performance and rejection which further de-motivates the person.
  • The effects of forced layoffs are not just restricted to those who faced the axe but also them who managed to survive. A study by British Columbia-Human Resource Management Association shows that retained employees show signs of reduced productivity due to fear of being next in line , lost of trust for the employer, also increased rates of absenteeism.
  • When it comes to external factors, the organizations resorting to rampant forced layoffs don’t paint a very good and positive picture for themselves. Prospective talent stays clear of taking up a role for fear of job insecurity.


With so much of negativity around it, can organizations find alternatives to forced layoffs?? There could be situations where this step becomes inevitable, here is where Human Resource Departments could play an important role by ensuring to make use of information available with them and then carefully analyzing with the business, each role and function that needs to be re-structured. Some organizations have started asking their employees to go for unpaid leaves for certain period of time, or opt for sabbatical till the situation becomes better. Having personally spoken to few people from a particular industry domain who were part of re-structuring and were on look out for a job, I found most of them agreed that if given an option within an organization they would prefer to take internal pay cut and lesser paid holidays with longer working hours rather than being handed over letter of Termination. Also if the re-structuring/layoff is well communicated and in timely manner, it will not come as a blow to the staff and they will have time to plan their future moves outside the organization, both personally and professionally.

Though sometimes it’s unavoidable, but layoffs are not the only way to gain financial stability, and simply removing people does not yield expected results.  Good talent management practices and proper understanding of business at all levels and domains is what will help organizations sail through difficult times.

Click here to subscribe our quarterly publication icube.