Q. You believe: “It is abhorrent for companies to embrace a ‘hire-and fire’ approach in their human resource policy”. What do you advice, if not downsizing in order to improve the cash flow, at the time of depression?
A. It is not good to have a hire-and-fire management policy because the staff’s loyalty and trust are quickly eroded. Notwithstanding, there is a place for downsizing when the company has lost its monopolistic position, major client or during times of merger and acquisition when there is duplication of resources. The key principle to note is that downsizing is like amputation. The company needs to manage the negative side effect which is the erosion of morale. Most restructuring exercises require the support of the staff for it to be successfully executed. The CEO or HR department cannot do it in isolation.
A. It is not good to have a hire-and-fire management policy because the staff’s loyalty and trust are quickly eroded. Notwithstanding, there is a place for downsizing when the company has lost its monopolistic position, major client or during times of merger and acquisition when there is duplication of resources. The key principle to note is that downsizing is like amputation. The company needs to manage the negative side effect which is the erosion of morale. Most restructuring exercises require the support of the staff for it to be successfully executed. The CEO or HR department cannot do it in isolation.
The company has other options of improving the cash flow by resuscitation strategies, i.e., revitalise the business to increase revenue and profit. These may include re-inventing the business model, using the internet to reach out to new markets and customers, and identifying new and profitable market niche.
Q. In your terms, please prescribe some regular “check-ups”, which HR can take care of, to ensure the company’s internal immunity during turnaround.
A. It is quite ironical that many companies spend a lot of money on staff’s annual health checks but are quite negligent when it comes to their own corporate health check-ups. Early diagnosis is necessary, just as major diseases can be cured if diagnosed early. This can be done by engaging the turnaround experts because they are independent people and have less concerns to deliver bad news about the company.
A. It is quite ironical that many companies spend a lot of money on staff’s annual health checks but are quite negligent when it comes to their own corporate health check-ups. Early diagnosis is necessary, just as major diseases can be cured if diagnosed early. This can be done by engaging the turnaround experts because they are independent people and have less concerns to deliver bad news about the company.
An external turnaround specialist with the right expertise has no qualms in telling about the existing virus as he is commissioned to cure the sick business. Read more...
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