How to soften the job loss blow

Software firm Mastek's decision to give 425 of its employees the option to resign, or to stay with the company at a nominal compensation and receive training shows that giving workers the boot isn't the only way businesses can reduce costs.

None of the 425 employees will accept the option with big smiles, but chances are that they would understand the management's compulsions and probably be grateful to the company for this gesture. For it was easy for the company to issue pink slips as almost half of these employees are trainees who had joined in July, 2008 or later.

It's obvious that Mastek, which expects about 80 per cent of the 425 employees to stay with the company, will be able to reap dividends that go far beyond simply avoiding reprisals. Gestures such as these go a long way in sending a morale-boosting message to those who survive layoffs.

Mastek's compulsions are understandable as it has slashed its revenue growth target for the year-ending June 2009, saying it expects hits from a continued slowdown in demand and an adverse foreign exchange environment.

HR experts say this shows the increasing maturity of Indian employers in handling potentially-messy situations in a country where layoffs are still frowned upon. Many other companies are also pitching in to make sure the retrenchment process can be as painless as possible. The idea is to hand-hold these employees while helping them to get jobs, so that they can walk out of the door with their head still held high.

Software giant Cisco was the first to show the way in 2001, after the tech bubble burst. The company allowed employees to take sabbaticals while they were paid one-third their salary.

During that time, they received employee benefits, vesting and access to training and continuing education. If jobs opened up, these employees enjoyed an advantage over external candidates. If their sabbaticals ended without placement in another Cisco job, they remained on Cisco's rolls for an additional 60 days while job hunting.

Some left; others didn't, but Cisco saved money, talent and - more importantly - its reputation as an employer of choice. So when Cisco rode the technology boom again, it had enough people wanting to come back again.

Swedish Postal Services, Posten, for instance, launched a Futurum Programme for outplacement with the objective that all participants in Futurum must have a new job within 18 months and 70 per cent of the participants must have a new job within 10 months. The professional support helped restructure operations quickly.

In India, Motorola relied on outplacement (helping employees find jobs elsewhere) in 2006 when it closed down one division and wanted to reduce its employee strength by 150. A job fair was held on Motorola's campus with representatives from other companies and recruiters. Those who cleared the interviews were placed with other firms.

Tata Consultancy Services gives non-performers an opportunity to raise performance levels through additional training and consistent mentoring over the next 12 months. It also sends resumes and contact details of these employees to its external placement partners to help outplace the employees.

Infosys gives rigorous training to employees who have been found wanting. If things don't work out still, the company gives them almost a year to find another job. Almost all them get jobs.

ICICI Bank too makes sure that those who fail to make the grade in appraisals are not out on the street immediately. The bank gives them enough time, feedback and additional training before taking the hard decision. In most cases, the bank's rigorous selection and training ensures that most of these people get jobs soon enough.

There are generally three parts to such outplacement actions: Emotional counselling, financial counselling and career counselling. Though the concept is relatively new to India, the findings of independent surveys in countries where it's been in vogue for a while will remove any doubt over whether employers should care when so many layoffs are predicted.

For example, a survey done by Reed in the UK found 66 per cent of top managers saying outplacement support improves staff morale, motivation and productivity during times of change. A whopping 87 per cent believed that offering outplacement eased the pressure on line managers.

While no outplacement company can guarantee jobs for all its candidates, it helps turn the redundancy process into a positive move forward for the individual, and helps the company's reputation as an employer - good enough reasons for many companies to include outplacement services in executive severance packages.

For employers, outplacement is a small price to pay for helping people to find jobs. After all, losing a job ranks fifth in life's most traumatic events and occupies an undisputed first place in work-related trauma.