By Avik Chanda
While the recent budget has announced a number of tax holidays, waivers and incentives intended to pull the economy out of the woods, one school of thought opines that these may result in forced savings of earnings accrued, instead of increased spending. Even if these measures do buoy the economy via increased spending across all major sectors, that in itself will take considerable time to manifest itself on the ground. In the meantime, with persistent retrenchment in the service sectors, companies in India are continuing to struggle with personnel deemed to be ‘surplus’.
Retrenchment is possibly the means most frequently resorted to in a slowdown or recessionary scenario, going back at least to the days of the Great Depression of 1928, and arguably one of the least effective. India's unemployment rate has climbed steadily from 6.70 percent in November 2018 to 8.50 percent in October 2019, a record in over four decades. Any continuance of the approach of ‘sacking people’, while it may provide temporary pecuniary relief, is more likely than not to be counter-productive over a longer term. Retrenchment, especially once it becomes endemic, even within a given sector, dampens. It sends panic signals across allied sectors, which tend to follow suit, with a ripple adverse effect on investment and spending patterns. Further, it exerts a heavy emotional and psychological burden on the employees who remain and work under conditions of relentless stress and uncertainty, in turn diminishing their productivity – an aspect that is usually overlooked.
Among HR circles, furloughing is increasingly being proposed as the alternative, ‘softer’ approach. The idea is simple. Companies will work out the seasonality of demand for workload, and by corollary, the number of employees that need to be actively engaged at various points in a given year. Accordingly, it prepares a roster, for a chunk of the employees, who are then sent on furlough, in this case – leave without pay, for a period of weeks, if not months, to cover the lean period for the company. On paper, such an approach sounds efficient, responsive and compared to retrenchment, humane.
The challenge lies in its execution. First, the tenability of companies of being able to accurately predict downtime for its workforce. While this may be possible for companies whose products have an easily identifiable seasonality, e.g. manufacturers of aerated drinks, the principle is difficult to apply across a broad range of industries, particularly in a disruptive environment. Second, there is at present no robust and evolved framework of furloughing, within the legal system, governing the conditions and terms of disengagement. Consequently, the implementation of furloughing is likely to be more ad-hoc and company-specific. This in turn provides no safeguards to employees, and unilateral renewal of furloughing contracts on the part of employers effectively translates to retrenchment.
In companies where momentary cost-saving is the need of the hour, there’s another measure at hand, which while being more effective on the ground, has hugely positive symbolic import. Stakeholders taking a cut on their own sizeable bonuses, not to mention regular paychecks, will demonstrate that they can lead from the front in hard times, swiftly win them goodwill and trust from the workforce, and motivate employees to go the extra mile, in working towards common objectives.
Even so, the question of effectively utilizing surplus workforce remains. And this is where the judicious redeployment of personnel to other departments or initiatives becomes important. This has a number of advantages over furlough. To begin with, the employees involved continue to receive their pay, and so be in a position to enjoy a sustained sense of financial security. But being in a new role also entails value-addition in terms of experience, and possibly skills, enhancing the self-esteem of the employees, leading to higher levels of motivation and productivity, and therefore a better return-on-investment on the salary being paid to those individuals. Finally, deployment in tasks and roles that play to the specific strengths of individuals may actually serve to reduce the cost and effort of re-skilling, prior to redeployment. However, one ought to be cautious in terms of how this is being executed. There is a traditional method, for instance used in all recruit-to-order instances, where the HR team maps a combination of industry and domain experience, along with educational qualifications, in order to ascertain the degree of fitment to the roles in question.
The drawback here is that it misses asking some key questions. What are these individuals, slated to be redeployed, intrinsically good at? What’s their true potential with regard to the identified attributes that are presently in demand by the organization? And how can firms show that they continue to value the contribution of its employees? Instituting a new approach to talent management warrants not just a new mindset that is more open and experimental, but also a new set of tools. The starting point for a project of redeployment needs to be a comprehensive measure of the employees’ strengths, mindsets and potential – as opposed to focusing on the lacunae that need to be addressed. In this regard, the application of Positive Psychology, in lieu of traditional psychometrics, would be most effective. By fostering positive emotions in individuals, deeper engagement in one’s work and better relationships with co-workers, infusing jobs with more meaning and a sense of accomplishment, the mechanism may provide the answer that companies so urgently need.
Avik Chanda is a business advisor, researcher, columnist and entrepreneur. He is the author of “From Command To Empathy: Using EQ in the Age of Disruption”.