Layoffs should be a last resort amid global crisis

Many companies are grappling with how to maintain financial and operational stability while navigating the global health crisis. This has led to layoffs in hundreds for small-medium firms but thousands for larger companies leading to a massive wave of unemployment.

Many people around the world are affected by this, myself included. I get it, I used to have a business of my own once upon a time and that solvency remains top of mind in the face of a potential economic downturn.

And as I have written before, business leaders must understand that pre-crisis targets and practices are no longer relevant, and that priority should be on how to lead their organization and people through the "New Normal" and its wide-reaching ramifications.

A second wave of layoffs has begun

People who thought their jobs were secure, including white-collar professionals, increasingly face unemployment. The first people to lose their jobs worked at restaurants, malls, hotels and other places that closed to contain the coronavirus pandemic.

Local airlines (Philippine Airlines & Cebu Pacific) and a Japanese Casino (Okada) shed thousands of jobs in within 3 months (March-April-May).  Even one of the oldest and biggest bank in the country, Bank of the Philippine Islands (BPI), has begun “rebalancing” its workforce to brace for the upcoming challenges. The bank plans to let go 30% of its probationary employees, or about 2% of BPI’s total workforce (BPI had 21,429 employees as of 2019 annual report).

And now, private hospitals are reported to be having a hard time fiscally as well, which may lead to additional wave of unemployment adding to the over 7 million unemployed in the country (according to PSA as of April). As countries around the world deal with the health crisis, OFWs may experience lay-offs as well. Although online freelancers have an advantage right now, some clients they serve have chosen to cut costs and downsize as well.

Review all the options

Leaders are obligated to make responsible decisions to keep their companies afloat. But before cutting jobs, consider all possible options. Cutting headcount can provide a relief for finances, but it is not a cure-all.

Be Open & Share the Pain - Be clear with them about the financial health of your firm and what goals you will prioritize. Multiple work arrangements can be considered such as a job rotation measure or worker transfers (for bigger firms) from one company to another to ease costs.

Work & Wage reduction - There are many ways to go about this:

P Time reduction - Unpaid leaves, or consider implementing either a four-day workweek or partial shutdown for certain departments and roles.

P  Pay cuts - It can be for management or 10-20% across the organization.

P Cost cutting - Ban overtime and freeze salary increases.

Crowdsource ideas - Whether it is downsizing or cost cutting, it is the best time to think and innovate together.

Fast track digitalization - Consider investing into digitizing your workforce through adopting WFH measures, use of more digital tools for communications, productivity and training.

While these measures can be a painful in the short term, however in the longer term, companies who manage the economic effects of this crisis in a clear and compassionate way will create more value for and will come out of this pandemic better, more productive and stronger than ever.

“Change is difficult, but it can be managed when you stay aware of the power of your choices, even if it's simply your attitude.” — Michael Thomas Sunnarborg