Layoffs (Don’t) Lie (Ahead)…
When a high profile global company announces tightening of their HR belt and letting go of its employees, we scream all the negative words. We fret and fume. We curse and silently curb the concept of for-profit organisations.
Yet as a shareholder of the very same company, we would expect them to be profitable and to pay us hefty dividends.
Layoffs are not a new concept. It’s been around for centuries. Every Industrial Revolution 1.0,2.0,3.0 had seen its painful sight. At the end of sometime, we also learnt that it was not end of humanity. Many impacted individuals and their families suffered the pain - some for short term, and some for longer term. So we will continue to learn afresh in the current IR 4.0 world we live in.
Business, as usual
Layoffs are a part of course correction in business. Just as much as hiring newer staff is. A high profile company like Facebook (parent Meta) or Twitter gets attention when it announces headcount correction. Or in the Indian example, say a Unicorn will face near public-damnation for taking its own cost cutting calls. Let us not bring morality into this.
Why should we go into an excited overdrive of verbal volleys when a for-profit enterprise takes a business call - be it closing few offices or branches, or be it reducing or increasing staff ? Many well known consulting firms, let go of the bottom 5-15 per cent of their talent - every year !! No one talks of it. In fact, the same public, that’s us - will use that example as a wonderful talent efficiency building strategy.
For example, any global outsourced services, just like technology services companies are vulnerable to global economic cycles. They are dependant on their global clients and have huge pressures on their pricing ability. So if a mid sized manufacturing client based in rural America sneezes with recessionary worries, it could very well hurt (tech) job prospects in NCR or Bengaluru or Hyderabad. That’s the globalised situation we are in.
Cutting edge technology and digital sector is just evolving. It will come with its own vulnerabilities and challenges. Many newer innovations will be launched, and many amongst them might fail. Not fail because of the innovativess, but simply fail the test of right timing the innovation or market adoption. One can be too early or too late to the consumer market. Until that stabilises, business models will keep changing.
There is no Playbook, yet, to new age businesses. Just as much as we expect the new age industries to offer far greater valuation multiples than conventional businesses, we should accept that they will and might take unconventional and unprecedented business calls. So in these situations, businesses and their (private) investors alike could take calls to shut the product / product business into or to even put it on hold.
The current Indian education system prepares us for being salaried. And preps our mind for monthly cash flows that emerge from salaries. Generations of Indians grew up thinking employment is guaranteed and lifelong - be it from the government or the private industry. That ain’t so.
It is surely time for us to wake up to the perils of myths like assured Salary and constant business and market growth. This is the real world pain.
Humanity is going to find it difficult to have assured jobs for 8 billion people ! It’s as much as a worry for policy makers as it is for you and me. By decrying businesses about it, won’t solve for anything.
Layoffs are an then-indicator of a situation that needs that decision as economic or business salve. They are no indicator about the persons taking those calls. And they are no assurance that such calls won’t be taken yet again. And they are not indicators of the future.
As much as change is a constant, there surely will be more layoffs ahead, as long as enterprises are for profit.
