Thursday, March 12, 2009

Recession Blues - Companies, think twice and retain your employees...

The market is very turbulent and news of people getting laid off just does not seem to end, in fact the trend seem to be increasing. Pundits are saying that this is just the beginning and the gloom may last till 201o end. What should a company do if they do not have enough work for their employees? Should they feel themselves to be helpless and fire their people. For some companies it is an opportunity to 'cut the fat' and only retain the best talent that they have. Some have planned lay-offs and others are just doing it as knee jerk reaction to the market sentiments as the measure to cut cost. Is this the only option they have - the western model of hire and fire? We think this is not the right approach. After all it costs a lot of time, effort and money to train people - technology-wise, culture-wise and business-wise. Hence when the tide of recession turns, the company will need to go hammer & tongs to recruit people and reinvest time, effort and money to train the new recruits. Should there be some method to this madness and mayhem? We say yes, in such times companies need to be more sensitive to their employees, after all we are in India and companies should take this opportunity to truly treat their employees as family members. Here we propose a conceptual model to come out as a winner and leverage these hard times to imbibe our Indian cultural ethos in our companies and not just survive by firing people and cutting cost.

Numbers attached to this model:
1. Retain the employees with salary cut.
2. Find the differential between the amount saved if employees fired (A = All salary) vs. retaining employees with salary cut (C = Salary Cut). D = A-C.
3. Create of pool of such people and assign tasks with quantifiable results. (R = Worth of results).
4. We need to keep R >= D to make this work.

Variables affecting the model:
1. Resource pool count fluctuation
2. Unplanned entry and exit to the resource pool (temporary project assignment, resignations)
3. Other costs associated with the resources (seating cost etc.)
4. Top management support and commitment.
5. Measuring the results and converting it to quantifiable numbers