Perils of downsizing amid pandemic

Published April 14, 2021, 12:12 AM

by Manila Bulletin

As businesses are literally squeezed from all fronts, downsizing is one alternative to ensure survival. In any downsizing, the number one casualty is people.

During this pandemic, thousands if not millions of workers were laid off and still many are getting retrenched as companies continue to downsize to save on payroll cost because of financial difficulty.

While downsizing is allowed by law, implementing it is not easy both on the part of those laid off and on the part of the good employer. It is an emotionally charged process.

Management has to choose who will go first whether compulsorily or voluntarily. One advantage of compulsory retrenchment is that it is a good opportunity to remove the proverbial company deadwood: the slackers, perennial absentees and latecomers, troublemakers, and many other kinds of derelicts.

Management must have a defensible position just in case those laid-off go to court. The criteria for firing these people must be based on efficiency of performance, productivity, long service and seniority.

Employees who feel aggrieved can always question their termination before the labor court. Being haled to court could also be costly to an already hemorrhaging company.

Many companies have lost in labor cases because of failure to justify the reasonable criteria for termination. Thus, HR practitioners must ensure that company management is able to present solid justification that would pass legal scrutiny. Maintaining a credible performance evaluation system that provides a regular assessment of how well or poorly employees perform their assigned tasks would certainly serve the company well in case its decisions are challenged in a labor tribunal.

Voluntary or optional retirement is another option. The danger of resorting to this option is the possibility of losing good people and high performers who would opt to get their retirement pay and still get easy re-employment in other companies, or worse, by the retrenching firm’s business rivals.

And the firm will be left with derelicts who would choose to stay because their chances of getting new jobs elsewhere are remote.

Post downsizing, a company still has to deal with some issues such as the low morale of the survivors, reallocation of jobs to the survivors, retraining, and pay adjustments. A good company does not only give out the right separation pay, it has also the responsibility to help those laid off cope with the post traumatic stress that usually ensues from such event.

Indeed, organizations mulling the option of downsizing amid the pandemic are better served by a well-reasoned assessment of its wide-ranging consequences.