Hiring mistakes lead to layoffs

The world is in a grip of the worst recession the corporate world has seen in last few decades. Sales dipped, revenue targets were not met, and cost management became the key word for all CEOs and CFOs. Laying off people became one of the easiest ways to cut costs, as traditionally human resources have always been a major cost and even more so in the services sector.

Let us understand why companies are laying off people. When the going was good, companies hired people in excess of what was required, and this brought in complacency. Was the employee to blame here? Definitely not, it just happened to him. This basically questions the manpower planning of every company and their recruitment policies.

All this while, if employee productivity was well managed, gaps would have been identified much earlier and sorted. Instead, companies kept hiring to meet their perceived growth. And eventually, when the world started talking about an economic slowdown companies realised they had been carrying excess employees on their back and they needed to be offloaded. Finally, in the name of recession, the task was carried out. This has affected all employees in many ways; in the form of increment freezes and no bonuses apart from lay offs.

In the last few years, employees' failing to multi-task was overlooked; companies otherwise would not have recruited additionally for every single task. What this means is that there should be people doing several jobs within the organisation, and wherever required their knowledge be leveraged.

For example, with sales going down and defaulters going up in banks, people in the marketing team can be moved to the collections team, and the call centre can be used to follow-up with defaulters as well. Companies should recognise these talents before going in for a blanket lay off of people.

Quality recruitment has declined over the last few years. This again is directly related to the numbers that companies wanted to rake in. Many companies have been carrying under performers for some time. All of a sudden, with recession setting in, they realised this and companies that have cutback have been prompt to mention that only the under performers have been removed. The question is: Did these people become non-performers all of a sudden?

This trend should not continue. For now, the hard decision of laying off excess people has happened. Going forward means that as the economy revives, companies should not immediately start hiring, but assess the need for staff and wherever possible try to use existing resources.

Only when HR feels staff have been fully utilised, and there is indeed a shortage, companies should go in for recruitment. The recruitment process needs to be full-proof so that only the best are recruited. Only recruiting when there is a need means employees won't be on the bench for months as companies anticipate projects. If this were to happen, companies would again end up laying off staff, as recession and boom are cyclical trends.

Having said that, for now, let's keep fingers crossed and expect the economy to turn around at the earliest for the betterment of one and all.

- Sanjiv Anand is the managing director and V. Ramakrishnan is the engagement manager at Cedar Management Consulting International.

The world economy is indeed in a serious (steep) recession, unlike some who chose to believe that the recession is "conjured" through perception. Ask yourself, if big banks/Investment house like Citibank, RBS, Lehman, etc are declaring huge losses and in the later has collapsed then is this a matter of perception or reality (state of the economy)? I agree with the author. The issue with layoffs, even with the state the world economy, is with complacency.
John Chua
Dubai,UAE
Posted: May 07, 2009, 08:39

This is the real fact of all the organisations globally. But the way recession is portrayed has created a panic in the industry. Companies have utilised the situation to groom their organisation but this could have been done in a low profile to avoid all the commotion prevailing in the market which in turn has also affected the share market.
Arudhra
Dubai,UAE
Posted: May 06, 2009, 15:05