Corporates find ways to break layoff news without breaking employee morale

Apeksha Gupta (name changed) was half expecting a round of lay-offs at the multinational corporation she was working in given the slowdown in the industry, but when she and some others on the list came to know of their fate, they felt they had been shortchanged.

Why? “Communication or rather miscommunication,” she sums it up in one word as she proceeds to recall her anxieties and the overall process that was followed by the firm’s HR team.

“It can happen anywhere and as professionals we should be prepared for it. But every time we raised a query about what was going to happen to us, all we got was false assurances including one from the company’s India head during a public gathering. The last batch was given a hefty severance and people were told well in advance. We, on the other hand, learnt it from a media report barely a week before it happened earlier this year.”

What she and many others lost in the bargain was a good severance package, sufficient time to look out for a suitable new job and the gratuity amount which she could have walked away with if she were to serve the firm for some more years.

Earlier this month, food delivery app Zomato laid off 600 employees calling the decision painful and announcing a severance package and some medical benefits to be extended over a period of time. That came close on the heels of HSBC India laying off about 200 people. From a global financial company to an Indian startup and from lay-off buzz in the IT sector to massive job losses in the auto sector, the slowdown seems to have placed the Indian job seeker in a perilous position.

There might be many humane examples of companies parting ways with their talent but there is no way to make a round of “downsizing” sound like anything else but a blow to those staring at a forced exit. Yet, can the blow be softened? BS spoke to a string of experts to get a sense of the processes and practices firms are following at the moment — given that many are looking to cut costs as they stare at a prolonged slowdown. All broadly agree that while the Western “hire and fire” culture is seeping in, India Inc has also started working at strategies to mitigate bad news and manage “bad news” better.

“As per labour data, layoffs have increased by around 25 per cent since 2016 in India. And, when it comes to severance packages, India too is now matching global standards. This change is mainly driven by startups and IT firms that are offering high severance packages as part of the compensation package to draw top-notch talent. But they have also skewed the compensation trends in India in the past few years,” Ajay Shah, head, recruitment services, TeamLease Services.

Vulnerability and scepticism is rife amid hopes of a turnaround. This makes the job of the senior management and the promoters more challenging. As R Gopalakrishnan, corporate advisor and distinguished professor of IIT Kharagpur, who was a director at Tata Sons and a vice-chairman at Hindustan Unilever, puts it: “For the employees it is a loss of trust as they feel that they delivered diligently what was expected of them and blame the employers or senior leadership for having messed it up. So the employers start with a disadvantage wherein they are held guilty without a trial.”

He puts transparency and empathy as the two major prerequisites to carry out a “downsizing” exercise.

“In one such situation that I was involved in a few years ago, we said that those who got a C rating in three out of their last five appraisals, became potential candidates to be considered for a voluntary retirement scheme. People still had their grievances or explanation for bad ratings but framing of a set of rules at least makes it understandable,” he says.

According to Charu Sabnavis, trainer, coach and director, Delta Learning, those breaking the bad news need to exhibit emotional intelligence — managing one’s own emotions and be able to anticipate and manage the other person’s emotions. “To address the emotional and even logical counter-arguments that the employees give, one has to be direct, gentle and calm,” she says.

Experts say that in India, companies may not have SOPs written down for firing but informally they are in place. For instance, the “notice pay” in a contract may be two or three months’ salary but the severance pay is a larger amount. There are SOPs around continued insurance support or medical benefits for a finite period but companies cannot put it on record because documenting an SOP around layoffs will have a negative connotation.

Anurag Malik, partner, people advisory services, EY India, says that a global survey showed that less than two third of the people who are laid off get a job which is equivalent or better in terms of at least salary within one year from the time they lose their jobs. That means grim prospects for an employee who has been downsized, but for many employers, too, the process can prove to be nightmare.

Almost inevitable with job losses is bad publicity. Blooomberg reported last week that after the Zomato lay-off story broke, Info Edge India Ltd., which holds a stake in Zomato Media, saw its market value erode by about Rs 2,600 crore ($360 million).

Bad publicity comes in many forms and fired employees taking to social media is also an emerging threat. How to preempt and minimise such criticism then? “Human Resources personnel who bring the bad news must be trained thoroughly to handle the delicate situation and the emotions that they might bring… While the business need may dictate that the person no longer be part of the organisation, communication to all stakeholders should be accurate and honest,” says Gaurav Chattur, managing director of Catenon Asia, the global arm of the tech-based multinational company that specialises in data-driven recruitment services.

In other words, layoffs are hard on both sides. EY’s Malik says it has a significant impact on the productivity of the people who continue. “Globally, there is a 20 per cent productivity loss even among survivors post the lay-offs of their colleagues,” he refers to the same survey.

Perhaps this is one of the reason why companies are doing their bit besides counseling and communication. If Apeksha’s case was one extreme, Siddharth Gupta, the chief executive officer of Mercer Mettl— which measures the competency of people, including predicting whether they would perform well or not and what areas people need to address from a reskilling or an upskilling standpoint — cites a very different example. “For a large conglomerate we helped create a complete skill map for the people who were identified for exit and we helped those people to learn about their performance aspects better before suggesting them certain job roles they were ready for and what training they needed to better their chances of being re-employed. We had a limited role but we appreciate that so much effort was being put by the company to help those people,” he says. 

Some don't see a silver lining at all. Arvind Shatdal, associate professor, organisational Behavior and human resource management department, School of Management and Entrepreneurship at Shiv Nadar University, says that the bitter truth remains that corporate history is replete with instances that prove that there is no right way to navigate through a severance minefield. 

"However, should a company be faced with the inevitable, it can work on strategies that allow to deal with this situation with sensitivity and possibly soften the blow. Usually the less painful alternatives can do the trick, which may include freeze on hiring, promotions or pay raises, providing voluntary termination incentives, among others. Companies should also consider providing employees opportunities to retrain/reskill and allowing sufficient time to clear out their desks. Despite the unfortunate circumstances, this will nurture an ecosystem of trust and fairness,”  Shatdal says.