THE ANATOMY OF LAYOFFS

The TCS pink slip controversy is an occasion to reflect on corporate terminations of employment. Plus, a survival guide for those at the receiving end

One morning in October 2000 in Dallas, Texas, I was waiting for my manager’s call to collect my pink slip and he was waiting for a call from the HR department on whether to give or not to give. He had to give out my pink slip, and then go to his manager to collect his pink slip, who would then go to the super boss to collect his own. The entire chain had to be completed before noon that day.

The recent media articles about layoffs at Tata Consultancy Services Ltd (TCS) and the outrage we are seeing in social media is a clear indication that it’s time for all stakeholders, employees, employers and the Government to pause and reflect on the menace of layoffs. In my 20 years of working in the US, UK and India, I have witnessed ten rounds of layoffs, in two of which I was personally impacted.

Three years before the incident in Dallas, I had job offers from the world’s top three companies in the business of supply chain management solutions, and I could choose any city in the US to work from. I chose the No 1 and this firm fought 18 months with the immigration department to get me to the US. Once I arrived and started working, it was very common for other managers to make unsolicited advances to see if I would be interested in working for them!

But the situation changed a lot within two years. Tough times started during the dotcom bust after the Enron debacle and we had three rounds of layoffs; our team shrunk from 60 to six. Layoffs are tough anywhere, but it’s even tougher when you are an immigrant on a temporary visa. In Dallas, all 60 of us—including managers—were not just colleagues at work, we were like family members. We would go out together for lunch, weekend clubbing, football, barbeque parties at each other’s place, etcetera, as we didn’t know anyone else in Dallas. It was especially tough for the managers to let go of employees whom they knew so well as family friends. After each round, we would all go out for lunch with our former colleagues, try to give them some emotional comfort, call all our contacts in other companies and look for openings for them.

Post the 9/11 attack on the World Trade Centre, the company decided to discontinue our product and we all had to go. The rest of my team-mates were more concerned about me than their own case as my wife was due in a few weeks. In the US, if you were on an H1-B visa, and lost your job, within weeks you had to find another employer who could sponsor your visa, or leave the country. That day I realised how ill prepared I was for a layoff and took some time to reflect on the beast. This time in Dallas I got lucky: we got a call minutes before my manager was to give out my pink slip; the corporate marketing division offered me a role, thanks to the efforts of a colleague and friend.

The second time in Maidenhead, UK, I was not that lucky, but I was better prepared. My manager called me into a meeting room for a planned meeting on our calendar. But she said the HR head wanted to discuss something. He joined us on the phone and broke the news about the company discontinuing my role. The HR head suggested that I go home, take a day or a week off to reflect on the decision, evaluate my options within and outside the company, and said I could work from home or office till the termination date. My response was I would rather continue with the planned meeting and work from the office till the termination date as I had already thought my options through. My manager was shocked by my response and said I seem to have known this before her. I didn’t, but I had heard the Board had already told the CEO he had just two quarters to turn things around or he would be asked to go. If the CEO’s job was at stake, I knew mine couldn’t be that safe.

I saw many more layoffs in the UK and in India, and we all need to reflect on how to handle a pink slip.

EMPLOYEES, IT CAN HAPPEN TO YOU!

The services sector in India, especially the infotech sector, has seen a significant growth in employment over the past two decades because businesses operated more like global companies in taking risks and expanding quickly. Employees, shareholders and the Government have all gained from this rapid growth. But we must not forget that external market conditions can change at any time and employers will have to do whatever it takes to remain competitive. First, you should always try to remain a valuable employee to the organisation.

Cheap Genius versus Cheaper Genius

Most professionals measure their progress based on growth in year-on-year income and responsibilities. This is usually done by learning to do things faster and smarter than last year and taking additional responsibilities which give you greater rewards. But we must not forget that global service sector jobs moved to India because we had an army of ‘cheap genius’ as per Tom Friedman. We should always be aware that as we seek more rewards each year, our job could move to a ‘cheaper genius’ within or outside the company or country at some point in time.

Individual Contributor versus Team Leader

During a high-growth period, employers are tempted to retain employees by offering them a fast-track career, which often means becoming a manager too soon, and during this process you move from being a specialist to a generalist. A specialist will always be in need as you are the doer; over time you become a unique expert in your field and will be in demand as long you remain cheaper in the overall market.

Second, you must have a plan B. Sometimes expertise doesn’t matter, as your product or division could be shut down for strategic reasons. Focus on what you can control. You should know exactly what you will do if you are laid off.

Buying Time

You should make an approximate assessment on how long it would take you to find another job and start saving cash to cover that period. It doesn’t matter if you own the most premium real estate in the heart of town if you can’t liquidate that in time for your next EMI or children’s tuition fee payment. While you save up cash, equally focus on reducing your monthly cost of living. Any compensation you could get from your employer during layoff should give you additional time.

Filling Time

Once you have taken care of your cash flow requirements during the period of layoff, you should know exactly what you will do till you find another job you like. If you sit idle indefinitely just applying for jobs, you will get frustrated and could lose your skills, further reducing your chances of finding a good job. Consider this time an opportunity to work on something you always wanted to do. It could be a startup idea, a book, helping your spouse to get back on his or her career, a charitable cause, and so on. Gain clarity in your mind about what you will do and start experimenting with these ideas while you are still at work. You will then be able to turn an unfortunate and frustrating event into a godsent opportunity to try your luck on a long-cherished passion.

EMPLOYERS, GIVE EMPLOYEES TIME OR MONEY!

Layoffs are a very serious exercise for any company and a very humbling one as it is an open acceptance that the management read the market wrong while hiring. Handle it with extreme care and transparency to minimise the impact on the employees you intend to retain and the ones you plan to hire in the future. You must resist the temptation to blur the lines between layoffs and performance related severance. Performance related exits are like gardening; weeding and feeding is a continuous process it doesn’t happen in batches. You are not expected to award any compensation if an employee is asked to leave for poor performance. But you are expected to give them Time—that is, time to improve their performance, with a mutually agreed improvement plan. If an employee has worked for you for many years, he or she deserves a chance to improve or find another role within the organisation.

Loyalty should always be rewarded in any organisation. At the time of layoffs, usually based on external market conditions including availability of cheaper genius, the employee should receive compensation proportionate to his or her tenure. It could be the salary for a number of days, weeks or months, but it should be proportionate. If you are not giving either Time or Money, you are blurring the lines between layoffs and performance related exits. You will pay a heavy price to regain corporate trust among the majority of employees you are retaining and the ones you try to hire when market conditions are better. After a well managed layoff, an employee would be glad to join the company again at any point in the future.

GOVERNMENTS, DON’T ADD INSULT TO INJURY!

We shouldn’t jump to regulate an industry because of one or two items of bad news; after all, these firms have proven to be India’s largest organised sector source of employment for women. If you allow them to take the risks they need to take in hiring, they will continue do well for India. One positive thing the Government can do is remove Tax Deduction at Source (TDS) from layoff related compensation packages. This is one ‘best practice’ I have seen in the UK. At the time of the layoff, the affected employee is looking at an indefinite period of unemployment. The UK government allows employers not to deduct tax for the period of time they are compensated for. The tax only applies if they find another job before that period. TDS on a layoff package is like adding insult to injury.

(James Joseph is a former Microsoft director and the author of God’s Own Office: How One Man Worked for a Global Giant From His Village in Kerala)

About The Author

James Joseph