As an employer or leader, letting someone go from their job is never easy. Business training consultant Sheila Singam shares insights on how to avoid having to do so or if it needs to be done, to do it with compassion
As the economy cools, companies are responding by focusing even more on maximising profits and minimising costs as opposed to growing exponentially. Across Asia, numerous startups and organisations have begun to let go of staff and shutter low-priority or unprofitable business arms.
E-commerce giant Shopee, for instance, has laid off hundreds of workers from its payment and food delivery departments in order to rationalise its business across several of its markets like Indonesia, Thailand and Vietnam.
Unfortunately, shrinking the workforce is one of the most common measures taken by companies looking to cut costs, especially in the face of a recession. But how can employers best handle the complex and sensitive task of relieving someone of their post? We speak with business trainer Sheila Singam on this and how else companies can manage costs without reducing manpower.
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Assess all of your options
There's a reason why the saying, "people are a company's greatest assets", has survived the test of time. But not all leaders who proclaim to understand this actually follow through in their actions, especially in the face of a crisis. And this can have wider business repercussions.
"Layoffs have a huge impact on employee psyche," says Singam. "Surviving employees will suffer from decreased morale and it sends a message to everybody that there's no guarantee you will be able to keep your job."
She adds that instead of seeing cutting manpower as the quick and default choice for reducing operational costs, employers have the responsibility to determine if layoffs are necessary or if there are other solutions to consider.
Companies can look at disposing of some of their fixed assets that do not generate income, for instance, such as buildings or equipment in order to increase cash flow. Retraining staff to take on new roles within the organisation or transitioning some of them to a retainer contract are other possible options that allow people to keep their jobs and contribute to the company's growth.
Maintain clear and open communication
Having a frank discussion with employees can help leaders to weigh their cost-cutting options. "It would help to ask employees what are they willing to do to cut costs to survive and avoid conducting layoffs," says Singam.
If layoffs must be done, she stresses the importance of employers explaining the situation to their staff clearly, efficiently and with compassion, while allowing time to address any concerns.
"It is better to straighten the narrative instead of letting rumours spread among employees," says Singam. "If not, there is a good chance that some of them will publicise their complaints on social media, which could negatively affect the company's brand."
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