WHILE the Jobs Credit Scheme is likely to reduce the number of retrenchments expected, downsizing will, unfortunately, still be unavoidable for some companies in tough times.
Job cuts are rarely good for a company’s image. They are also nerve-wracking for departing employees and demoralising for “surviving” staff.
To turn a difficult time into a positive experience, risk and trauma for both organisation and the individual need to be minimised. Taking the right action can help prevent your organisation’s brand from being tarnished. Doing just a bit more can position your company as an employer of choice – a great advantage in the war for talent, especially when the economy recovers.
To help retrenched workers transit to the next stage in their career, many organisations engage outplacement firms, which provide affected employees with services such as interview skills, resumé writing and in some cases, one-on-one career coaching.
They also help employees to deal with the emotional stress that retrenchment may bring about.
However, the biggest source of stress that comes with retrenchments – money issues – is often overlooked-. With their income tap turned off, a huge worry for many affected people is how to prevent their cash flow from running dry.
While outplacement services are important and extremely beneficial, good financial counsel from the outset will allow your people to focus whole-heartedly on their job search without any nagging money worries at their back of their minds.
Employers have the opportunity to enhance their transition programmes with targeted and relevant financial advice, provided in a timely manner. That advice should be specific to the money issues that are related to the employer’s own remuneration package.
This allows the exiting employee to address critical financial issues, such as how to make the most of his severance package, managing cash flow to meet living expenses, restructuring debts and tax liabilities. He will also need to close the gap caused by the loss of company benefits such as health plans and life insurance cover.
For mature workers who are made redundant, this may be an opportunity to take an early retirement package, start a business or even go back to school. Quality financial advice at this critical juncture can help them determine if they can afford that next stage in their lives and career.
Having a financial plan that addresses a person’s long-term goals will assist him in gaining the confidence and drive to work towards that next leg in his life journey.
A small effort to review remuneration benefits for departing employees prior to their exit will provide a highly relevant and timely benefit and supports best practice “duty of care”.
The “survivors” of downsizing exercises should also not be overlooked. Not only will they be feeling demoralised and left to shoulder their ex-colleagues’ work, they will feel uncertain about their own careers and insecure about their financial future.
In a survey of 270 organisations, the Aberdeen Group found that the top strategic action for these companies to weather the storm in 2009 was to increase employment engagement. According to the report, “elements like layoffs, decreased bonuses, and cutting other incentives tend to affect morale and satisfaction. When morale is affected, the risk of turnover – especially of key talent – increases”.
The report states: “Engaging employees during difficult times helps them see the big picture and aligns them with the long-term organisational objectives that aim to increase efficiency and productivity. In addition, maintaining strong employee engagement ensures that critical talent is retained and aligned with long-term goals.”
There should be a strong focus on survivors’ personal development and strategic alignment to business goals, to engage employees during these challenging times.
Taking it a step further – removing their financial stress – can have far-reaching benefits, providing employers with a high-value, low-cost way to embed key talent to the organisation. Firstly, in a climate of reduced bonuses and incentives, this is a cost-effective benefit that is likely to be valued by employees.
A recent study on Singaporeans’ understanding of financial planning commissioned by ipac, an international financial advice and investment group, revealed that more than 70 per cent of the 310 respondents felt that employers should provide financial advice as an employee benefit.
The majority said that “financial planning advice is as important as other employee benefits” and this “shows that the employer cares for the employee’s well-being”.
Secondly, the same ipac study showed that more than 90 per cent of the respondents said that financial stress had a negative impact on productivity at work.
Thirdly, by helping employees achieve not just their business goals but also their personal and financial goals – companies demonstrate their commitment to employees’ long-term work-life success, a smart way to engage key talent more effectively.
Going the extra mile
Restructuring and downsizing is never pleasant for all parties involved. A well-planned exercise and going the extra mile can provide your exiting employees with a more positive transition, reassure the “survivors” and demonstrate responsibility and accountability to the market.