Shades of Gray

Cost-cutting must be one of the most commonly used words these days. CEOs and MDs of top companies are making appearances all around us and are declaring that cutting costs is going to be one of the focus areas in the next 12 months. Of course, these statements are tied to the economic slowdown which doesn’t seem to be ending soon.

That the purpose behind cutting costs is sustainability of the business is beyond doubt. And in tough times, expenses must be cut. However, almost every time someone from the senior management utters the phrase – ‘we will cut the fat, not the muscle’, it indirectly means that people are going to be fired. HR personnel throughout India and the world are busy searching for excuses in order to meet their sadistic objectives and almost always the reason cited is poor performance. I find it hard to believe that all of a sudden so many people from the Indian IT industry have turned poor performers. Hard to digest till Infosys declared that now the tolerance for poor performance is zero. Does this mean that companies that valued excellence and claimed to be driven by intellect were actually turning a blind eye to incompetence all these years when the going was smooth?

To an extent, this allegation is true. Most IT companies, big or small, have tolerated laggards and not just tolerated them but have even promoted such employees. I remember one Ms. P. Sahu, an Account Manager with a leading IT firm, who was in the habit of having weekly project status meetings that lasted for a minimum of two hours every Friday and all that was discussed there was what children were doing in school and how her children didn’t let her sleep the previous night. You will easily come across people who did fabulous work in their projects but were given a lesser rating as they didn’t participate in account-level initiatives like celebrating birthdays of their colleagues. Many of such poor performers like Ms. Sahu are among the senior middle management now presiding over the ‘pink slip distribution ceremonies’ that happen every now and then.

I am all for cutting costs and promoting a culture based on meritocracy. But IT companies have themselves to blame if they find themselves with a large pool of employees who don’t have a project and are on bench. These companies always had a sizeable bench size and this was seen as bench strength. But these firms cannot shrug the blame now as they themselves created an illusion of explosive job growth in IT sector by hiring in far larger numbers than required. Even today as these top firms fire people in the name of poor performance, they are continuing to hire freshers in large numbers. This is because freshers will be paid lesser salary compared to the experienced associates and as a result the wage bill will be in check. A true capitalist will find nothing wrong in this selective firing but at least the companies should have the guts to admit that this is for purely economic reasons and not for performance.

Coming back to cutting costs, companies must fully exploit other avenues before resorting to layoffs. Here are some of these:

Cut back on deputations and transfers: These increase costs for the company as well as for the employees.

Try to retain employees: Like acquiring a new customer, acquiring a new employee is costlier than retaining the existing one.

Reduce Business Travel: Despite teleconferencing and videoconferencing technologies being available, only a handful of companies have effectively utilized these.

Discourage the culture of working extra hours: A lot of managers look down on employees who work for 8-9 hours and want their subordinates to stay late in the office. Owing to this culture, a lot of employees also prefer staying back, both for the sake of appraisal and for using free internet and air conditioner. Just imagine the electricity that will be saved if people worked for not more than 10 hours and no more than 5 days a week unless business required them to work on weekends.

Switching off PCs before leaving: Make it mandatory for employees to switch off their monitors when leaving their workstations for more than 1 hour and to shut down their PCs before leaving for home.

When confronted with tough economic conditions, senior management should lead by example by turning down their bonuses and curbing wasteful marketing and relationship building expenditures like paying high stipends to summer trainees. Only when these steps have been tried, should companies consider firing employees. Granting leave without pay or with 25% pay for 3 months may be a better idea than snatching away somebody’s means of livelihood. I am not turning communist but one must explore all other avenues before taking extreme steps like layoffs.