Madhu.T.K
Industrial Relations And Labour Laws
Tsivasankaran
Consultant
Rgs_mys
Teaching-professor [hr]
Singhabhishek
Humar Resource
K.Ravi
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Trisha_hr
Director, Target Hr Solutions
Richa Gour Chauhan
Human Resource
Bashamsp
Office Administration
USHA RANI DAS
Hr Recruiter
+1 Other

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Hello Members,

Would like your views on the subject matter.

When an org. faces financially crises, the first thing which comes to the mind is “lets lay-off some of the employees !!! ” But is it the solution for the problem?

Lets consider this, we have excess employees in the organization and we want to cut down on this number. Now the general suggestion is, first select the guys who are not working at all or are a burden on the organization. Now the problem which arises over here is :

If you sack these guys they'll go to the union n will make a scandal of the whole stuff. Infact some of these guys are the ones who are big shots in the UNIONS !!! So, rather than coping with only financial issues we have to cope up with these scandals too....

Now if we talk about the good employees or the assets to the org., so as the organization's financial condition is not very good, they would have already planned to leave the org. and join some good org. with good financial backup. Thus making the org weaker.

So we have seen the effect of manpower !!!

According to me, one should always get to the root cause of this financial crisis.... Whats are the reasons behind these crisis ??? Is it competition, poor quality or less quantity of production, delay in production, sour relations with suppliers/vendors or customer..... etc.

Why cant we cut on the extra unnecessary expenses which every company goes through?

For example, I have seen at many big manufacturing industries, they hardly pay any attention towards electricity ! Their electricity bills usually runs into lakhs of Rs. every year, but then also say “its necessary as you see its a production house !!!”. I have seen that they waste electricity by switching on all the lights of the whole unit at the day time when ample amount of sunlight is available! No one cares enough to switch them off !! They are not only wasting their money but an important resource too !!

Any organization can come up from the financial crises by cutting down on such EXPENSES.

My question is that,

Is retrenchment/lay-off the best remedy for a financially weak organization??

Please provide me with your view.

Regards

Richa

From India, Mumbai
Dear Richa
Festival Greetings.
You have asked a wonderful question after providing all the details abt how a financially sick company suffer to retain talents in their company. There is a saying that when the "ship sinks rats will jump".
These companies to think why they have gone sick before taking any cost reduction measures. Also for a fairly old company, employees age may be at the verge of retirement, thereby they also fails to get employment in the market.
Lay off / retrenchment is a tool to downsize the company strength to allow the company to survive and take profits.
This is a vast subject we can discuss more on this in the days to come
Cheers
Trisha
HR Professional

From India, New Delhi
Hello Trisha,
Greetings to you too !
Thanks for the compliment & for providing me with your views.
I just mentioned one way of reducing the cost. There are other ways too. People generally leave their PCs, ACs and other official equipments switched on even when they are not in the office. One can save power and expenses by taking care of it. Another resource is stationary. People waste paper, printouts and similar stuff. Saving them can also reduce expenses by a great degree !!
I know its a vast topic and thats the reason why I have kept it for an open discussion. Would really appreciate to know everyone's view on it.
Regards
Richa

From India, Mumbai
Dear Richa,
No individual(s) is bigger than or more important than the organisation.Given the situation where the co. is overstaffed the most suitable remedy would be to retrench or lay off.One has to be practical in such cases even though it is not so easy to severe people from organisation for whatever reason.The consequences,psychological and other wise can be devastating for not only those who leave but also for those who stay back.Within the frame work of the co.'s stated policy try and do your best as to lessen the burden of those being sent off giving reasons - All this for the sake of the organisation & its survival .

Regards,
RGS

From India, Bangalore
Thanks RGS for your valuable comments.
I agree with you that in worst situations one has to lay-off the employees , but what if as a aftermath a scandal is made by the Union ? And believe me this is exactly what happens in practical life . So the management has to deal with 2 adverse situations now.... One is the financial condition & other being this SCANDAL ..... Plz suggest what one should do...
Regards
Richa

From India, Mumbai
Dear Richa,

The situation you have mentioned is indeed delicate and needs to be handled with utmost care.First & foremost every problem has a solution.Now organisations which are having surplus employees should opt for :

1.Golden handshake scheme.

2.Retrenchment

3.Layoff

4.Pay cuts .

Most of the above may not evoke the desired response initially but once reality creeps in and the seriousness of the situation is understood things will fall in line.The first option is not for you because of huge amount of money involved ,the other 3 options can be tried out.

Retrenchment involves termination of service while lay off does'nt.In lay off emloyees can be called back once the co. has recovered and has the ability to provide employment.It is temporary severance of employment due to factors beyond the co.'s control.

Coming to pay cuts ,a good no. of co.'s abroad,have used this option and succeeded.Here the money that was involved in pay cut is made good when co. is doing well.A clear understanding bet. employer & employee is a must and the unions should be taken into confidence. Rgds,RGS.

From India, Bangalore
Dear RGS,
Thanks for your suggestions. It really helped me in getting to know the inside of the topic.
Can you or any one can plz through some light on the other money saving ways....
What you are suggestion, Retrenchment/Lay-off/Golden handshake scheme/Pay cuts all are related to MANPOWER. I want to know about the money saving things which can be done without effecting the employee. Like I have quoted about wastage of electricity, stationary, fuel etc.
Please help me out in telling the Cost-cutting ways which wont effect any employee !!
Regards
Richa

From India, Mumbai
Hi Richa,

I am little bit agree with RGS's comments. In my views, retrenchment would not be a milestone which the co. look at that time because being financially unsound, it will difficult to handle the post retrenchment scandals. Yes, Lay-off, Pay-cut may pull co. out of the situation if its done with confidence of union.

And a practical sour truth is that the HOD or other higher designated employes are generally not use to reduce the expenses on meetings, production, & other departmental expenses such as if the strategy meet can be done in company itself why its been done in Hotel & even out of the country.

To retain a talent in the company its necessary to conduct an internal ssurvey periodically on which basis company could go ahead. Employees are the most important assets of the organization and could not be retrenched bcoz of company's weak financial condition. While company was financially sound, employees were loyal to it . Now if they are retrenched, they feel cheated themselves and cannot be loyal with co. at all.

I think the best option is to identify the unlike expenses and reduce them.

Yes, employees who are proved that they are not assets of the co. can be retrenched with a proper guidelines and lows. In that case they should be given proper allowances as per the IR/labour lows.

I believe before retrenching, one should get its feasibility study done by the IR experts which would avoid the headache of post retrench scandals.

Best Regards

Haider


Hello Haider,
Thanks for your views...
I agree with you on the point that HIgher authorities never pay attention to their bad deeds. But thats where the HR comes in the picture. Its HR Personnel's duty to raise these topics......
I completely agree with your point
"Employees are the most important assets of the organization and could not be retrenched bcoz of company's weak financial condition. While company was financially sound, employees were loyal to it . Now if they are retrenched, they feel cheated themselves and cannot be loyal with co. at all."
And thats the reason y I would like to know about other ways of saving the money for the organization.
Can you plz through some light on your line "I think the best option is to identify the unlike expenses and reduce them. "
Plz explain me what all you include in "unlike expenses".
Regards
Richa

From India, Mumbai
hi

financial crisis is different and high cost of electricity bills, paper wastage. is different..

YOUR FIRST POINT:

NO MATTER A COMPANY IS IN FINANCIAL CRISIS OR NOT IT IS THE DUTY OF EVERY INDIVIDUAL NOT TO WASTE ELECTRICITY, PAPER, AND IN GENERAL THE FAST DEPLETING NATURAL RESOURCES..

THIS IS COMMON SENSE, BUT MANY INDIVIDUALS DONT CARE FOR THIS. THEY UNNCESSARILY MAKE EXCESS USE OF OFFICE RESOURCES[POWER, PAPER, COMPUTERS ETC], WHICH ACCORDING TO THEM IS FREE TO THEM, BUT THEY SHOULD THINK THAT THE SAME OFFICE GETS THESE RESOURCES FROM SOME NATURAL RESOURCES AND IT IS THEIR DUTY TO PRESERVE NATURAL RESOURCES... THESE INDIVIDUALS ARE FOOLS AND NOT TO MENTION MORE ABOUT THEM.....

YOUR SECOND POINT::::

A financial crisis is a situation wherein the expenses are greater than profits....

bcoz of

market conditions,

competition,

outdated product, technology, design

the city economy

etc etc etc

so to come out from financial crisis there are two options to balance the profits and expenses,,,,,

OPTION ONE::::

either reduce the expenses so that they come to less or equal to profits

OPTION TWO::::

or increase the profits with new INNOVATIVE ideas so that they become more or equal to expenses...

BOTH ABOVE OPTIONS HAVE MANY POINTS in DETAIL

OK

ThANKS

From India, Pune

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