In the current economy
In the current economy, successfully navigating retrenchment will be key to corporate success
successfully navigating retrenchment will be key to corporate success
In today’s knowledge-based economy, human capital is often regarded as an organisation’s greatest asset and its primary competitive differentiator.
However, with salaries commonly being a company’s single biggest expense, human capital is currently also a prime target when organisations look to cut costs.
This is where proper management of staff retrenchments play a critical role in demonstrating an organisation’s values and protecting its brand reputation.
The impact of retrenchment on a business
Business today revolves around unpredictable factors like global markets, a roller-coaster stock exchange, corporate acquisitions and mergers, legislative changes, and high-tech industry volatility. To ensure survival, or gain a competitive edge, in this lean-and-mean corporate environment, organisations frequently need to employ reengineering, restructuring and rightsizing strategies.
Although these options are positive, with the potential to cut costs and improve the viability, efficiency and wellbeing of corporations, it remains vital for staff retrenchment to be proactively and responsibly managed to ensure ongoing employee engagement
The impact of retrenchment on employees
Retrenchment inevitably has an immense emotional impact on employees at all levels within the organisation. Executives who assume that employees will continue to give their all to the business following a retrenchment announcement may be in for a rude awakening.
Management should always assume that any corporate downsizing is a potential threat to employee motivation, effectiveness, wellbeing, and productivity. If the retrenchment process is not carefully managed, discontent and demotivation can spread through an organisation like a virus, with a potentially devastating impact on the corporation.
Both employees losing their jobs and those remaining are likely to view downsizing with suspicion and resistance. The resulting disappointment, anger, and resentment can lead to an array of issues, ranging from reduced productivity, increased absenteeism, and poor morale to turf battles, heightened interpersonal conflict, cynicism about the corporation’s future, and even incidents of sabotage.
Upskilling managers to effectively navigate change
The enormous challenges of effective retrenchment require a motivated and well-informed leadership team. To rise to the occasion, management must proactively acquire the skills to: ● effectively negotiate organisational change,
● deal fairly with all relevant stakeholders, and
● successfully lead staff through times of transition.
However compelling a retrenchment plan may look on paper, it only becomes a reality when it is accepted and implemented by those who must operate the new processes.
To deal with the anger, questions, disappointments, defiance and difficulties of staff, managers must first develop the personal and technical skills to master their own emotions.
Mismanagement of the retrenchment process can cause irrevocable damage to the human resources that drive an organisation. For this reason, managerial training, union education and employee support is an essential safeguard, not a luxury.
Affirming employee value
In any downsizing exercise, it is incumbent on an organisation to demonstrably affirm the importance of its employees. This can be done through the considerate treatment of those who are leaving, as well as a renewed commitment to those who remain.
Improving a manager’s ability to deal with this process effectively, at both a personal and organisational level, maximises the probability of successful implementation and ensures continued improvement in the organisation across its various divisions, while providing support for retrenched employees demonstrates the organisation’s commitment to fair employment practices and its willingness to take responsibility for its actions.
How Summit’s coaching programmes can help
Summit’s coaching programmes help businesses minimise the negative impact of retrenchment on their organisation while maximising business continuity and organisational renewal.
Group workshops, individual coaching, and management mentoring helps to facilitate: ● Acceptance of the retrenchment process;
● Mobilisation of effective coping resources;
● Development of self-confidence and motivation;
● Continued commitment to productive employment; and
● The ability to make informed decisions about the future.
Don’t overlook ‘re-organisational survivors’
Often neglected and forgotten in the retrenchment process are the ‘re-organisational survivors’, inevitably left to do more with less in the aftermath of retrenchment. Following a massive downsizing, it can be hard to tell who is less fortunate – employees who have had to leave or the ‘working wounded’ who are left behind.
Not only are the surviving employees troubled by guilt, an ambivalent attitude towards management, and fear of future retrenchment, they also shoulder the burden of job enlargement, loss of expertise, and adjusting to a new organisational structure.
As retrenchment does not in itself ensure positive change, the first priority in the post-retrenchment process is rebuilding morale and establishing commitment of staff to the business. It is vital to overcome the fears and uncertainties associated with change, to share a new organisational vision, and to motivate remaining teams to tackle set objective with a renewed sense of determination and vigour.
If executives are to expect surviving employees to give of their best, they will need to provide a very tangible message of investment in the future of the company and in its remaining employees.
An opportunity for new organisational focus
No employee, irrespective of position, is immune to the possibility of job termination. Given the current state of our economy, there is every reason for employees to expect that retrenchment will continue to form part of corporate strategy for the foreseeable future.
On the positive side, retrenchment can provide an excellent opportunity for organisations to let go of outdated policies, practices or sacred cows that may have contributed to the need for downsizing.
If employees are guided through a process that enables them to trust the competence of senior management in doing what is necessary for the future success of the organisation, they are likely to show support.
With the right tools and skills, proactively earned trust, and a clear vision of the future, retrenchment can foster a subtle but significant re-alignment between employees and the organisation, while offering fair and responsible employers an opportunity for demonstrating people-centred corporate values.
