Corporates can survive bad times without downsizing

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Shiv Dhawan | 26 Feb, 2009
News of downsizing is bad news for any employee. Though downsizing is a common strategy adopted by organisations to cut costs and keep performance standards high, during the current recession it appears to have become a survival imperative.

Top management often forgets to recognize the trauma employees undergo when they or their co-workers are laid off. Downsizing in the immediate run might contain operational costs. But it tends to adversely impact the morale of the remaining workforce - which suffers from 'survivor's guilt syndrome'.

This is a collective feeling of melancholy, fear and worry that their jobs might go in the next instalment of layoffs. They are simultaneously relieved, and feel guilty that they still have that job. The surviving workforce suffers from the loss of co-workers and, despite being downsizing survivors, feels just a bit like a victim, too.

The survivors are probably also experiencing an increase in the level of stress relating to both the increased workload and their distrust of management. Anxiety and a lack of motivation also accompany the loss of co-workers in a layoff.

Some of the key players may decide that they don't want to stay and polish up their resumes waiting for the next bad news, in an environment of mistrust. All this is bad news for any company that is in any case caught in the talons of a recession.

In any profitable corporate set-up, human resources never forms the largest chunk of operational cost. A large portion of cost is attributable to monolithic glass and steel offices in swanky commercial business districts of metropolises along with their attendant costs on energy and other services. In any workforce there are always teams that don't need to be in physical proximity of one another and can function equally well in a virtual mode.

An innovative approach to containing operational costs is to review the deployment of such workforce.

What is being suggested is a "hotelling" concept. This is a work practice where a category of workers do not have permanent desks or cubicles and call the office to reserve space when they need to be there, check in at the given time, and then check out with another employee checking in after them - just like a hotel. IT, insurance and consulting firms encountering severe cost pressures in the New York region are containing expenses by spinning out their employees as high-tech work from home professionals.

For instance, IBM has started an entirely office-free sales force in New Jersey. A lot of Fortune 500 companies have hot desks and touch-down areas where staff can plug in laptops and have face to face meetings as and when required. The original idea evolved from the cyber cafes that were set up so that people could surf the web.

However, it cannot be applied indiscriminately across an organization. This is where HR needs to assume a strategic role and assess which work teams whose job profiles do not require them to work inside an office could shift to a virtual work from home mode.

The organization could save valuable capital through releasing expensive real estate that hithertofore housed these work teams. Even if the companies have to invest in appropriate connectivity enhancing and data security technology to enable these remote teams to connect with one another in a virtual model, it would be much cheaper than maintaining an office in downtown London, New York, suburban Gurgaon, downtown Nariman Point, Connaught Place, MG Road or Chowringhee.

This 'hotelling' model could be viable even when happier times return and would enable the companies to turn in larger margins having seen them through the hard times of recession without traumatizing workforce.