To start with…
…refresh your knowledge of human resource management on pages 162-163 (particularly Tables 6.2 and 6.3), to get an idea on how organisations cut back on their numbers, as well as how organisations grow them. Then, have a read of this opinion piece on the ineffectiveness of mass layoffs in The Chronicle, in response to the recently appointed Malaysia Airlines CEO, Christoph Mueller, terminating 20,000 jobs. Notice how much US influence there is on business people’s decisions, from the theories we all learn, originating in the US (Like Porter’s five forces), to the way employees and business is viewed.
So, to summarise…
Letting someone go is, and always will be, a reality of workplaces. When the economy slows down, it often affects whole industries. Human resources are often the single highest expense of an organisation – so if an organisation is in trouble and needs to cut costs, that is where it is assumed to be the easiest to go.
But people are actually very important to the success of the organisation, so although getting rid of the expense may reduce costs, it has a lot of documented negative effects, on shareholders, customers and of course employees. When researchers analysed lots of various studies, they found that mostly, negative effects dominate.
But still, worldwide headlines are full of layoffs. Some are expected as a result of mergers, which makes sense when redundancies are identified, but there are also layoffs resulting from organisational change, as part of an attempt to raise profitability, or merely survival.
There are also lots of experts advising how to downsize, emphasizing that there is no single right way, and attempting to prioritise people. The global giant Disney, for example, put people first, but not in a good way. In their strategy of replacing people with lower costing employees, Disney got the leaving employees to train the new employees before they leave.
Australia has similar examples, like the Packers, but it also has very different ones. Svetlana Zatsepin, Managing Director at the Melbourne-based Coolon LED Lighting, is a 2015 finalist for “Women in Industry” award. One of the main points highlighted in her nomination is her dedication to her employees, and to the creation of jobs in Australia. Despite the economic ups and downs that her company has experienced between 1993 and 2014, Zatsepin did not resort to layoffs.
On that optimistic note, let’s move onto the questions.
Some issues to notice and pay particular attention to here are…
- The effects of downsizing and layoffs
- Recruitment strategies
- Workforce diversity
Consider the following questions for discussion…
- How do redundancies affect the organisations described? Who are the likely affected parties?
- What are the risks of offering people redundancy packages? How would you, as a business manager, address them?
- Suppose you were told, as a manager, that you have to cut the staff numbers of your department by half. How would you, as a manager, decide on which employees to let go?
- If it had to be done, which way would you like to be let go? Which way do you think you would let people go?
- And on the other hand, recruitment. People from different cultures have different expectations. How would diversity in the workforce affect recruitment techniques?