Retrenchment is a word that makes even the most confident employees feel uneasy. It is defined variously as "the introduction of economies" or "the reduction of expenses". What it has come to mean in the minds of many is job insecurity and a loss of self-esteem. This is part one of a two-part series from leadership solutions provider Cycan assisting employers and employees deal with the new IT reality.
Once the scourge of lesser skilled workers, retrenchment has now spread its tentacles to include multi-skilled, tertiary educated, white-collar workers. More than 1 million people have lost their jobs in the US alone since the Dot-bomb fallout began.
There are two sets of victims who suffer as a result of retrenchment: those who are retrenched, and those left behind: the "survivors".
"People who are retrenched usually leave their positions with a package of some sort, and know they need to make an immediate decision about their future. While they go through great trauma, at least they have been dealt a clear-cut position with which to deal," says Bryan Hattingh, CEO at Cycan, a leadership solutions provider.
What companies often overlook is the reaction of the employees who remain on with the company. Much as with people who have lived through an earthquake or other traumatic event, retrenchment removes people whom employees may have come to see as more than just colleagues. Research has shown that the "survivors" experience a significant psychological impact. They tend to have subliminal feelings of guilt, along with the uncertainty of future job security and a general lack of trust towards those in a position of power in the company.
On top of these feelings of negativity, the "survivors" often find themselves having to deal with considerable change. They may need to assume responsibility for functions that do not fall strictly into their area of expertise or interest, and find they carry a greater workload to compensate for those who have left. They may find themselves working for new managers, whose styles may differ from that to which they have become accustomed.
"The organisations themselves also tend to suffer loss," continues Hattingh. "Training budgets are cut and money spent on skills development diminishes. Importantly, crucial knowledge accumulated by the retrenched employees disappears out the door. Seldom will a retrenched employee ever speak well of their previous employer and the reputation and image of the company may suffer as a consequence. Retrenchment is seldom carried out with precision. An axe is used, instead of a scalpel, and people vital to the company are often lost."
Hattingh also emphasises the problems encountered during mergers and acquisitions, when the company is forced to reduce staff numbers, with little working knowledge of the company that is being acquired.
Unintentionally, it is not only people with core competencies, skills and leadership qualities who may be lost, but also people who reflected the brand and contributed to it.
In order to approach the business of retrenchment with a mature, educated perspective:
* Competency assessments should be done of each staff member in order to enhance the appropriateness of the reallocation of the workload.
* Don`t take it for granted that the remaining staff are so grateful to be employed that they are willing to do anything.
* Keep your communication open and honest to reduce destructive rumours.
* Keep your eye on the customer.
* It is essential that managers understand the business reasons for the retrenchment, whether it is over-staffing, a diminishing market, loss of market share or reengineering, to list a few examples.
Retrenchment should be the last resort in a long chain of events. All other alternatives should be considered before retrenchment, as it is irrevocable. For example, in the case of a business of a cyclical nature, one possibility would be to reduce the working week from five to three to four days, and cut salary accordingly in quiet months. Cisco has employed a similar method whereby staff take one week unpaid leave per month. The additional benefits of this, especially for cyclical businesses, are that productivity increases and staff are more rested when seasonal business picks up.
While the unwanted news of being retrenched is seemingly far harsher than the challenges facing survivors, it can be less insidious and damaging if approached correctly. Survivors often have to remain on in a company that is different and may not necessarily turn around, whereas the retrenched parties, once they have overcome the shock and regrouped, can turn diversity into opportunity.
If retrenchments are the only option available to a company, then a climate survey of the restructured organisation needs to be conducted, urges Hattingh. In this way it is possible to ascertain the extent of the haemorrhaging. A gap analysis will identify shortcomings and areas in need of attention that can be acted on immediately.
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