We have all seen it: An organisation’s profit diminishing over a period of time…
Little or nothing is done for years and then all of a sudden retrenchments are announced. Or a new CEO is appointed to turn around the company’s performance. More often than not this coincides with a two-year contract for the CEO.
Initiatives such as continuous business improvements, optimising IT systems, changing the company’s culture take time and doesn’t give the high impact and immediate results that cutting the labour bill does. A study quoted by Wayne Casio that refers to S&P 500 firms from 1982 to 2000, casts serious doubt on the long-term payoff of this approach.
The unintended consequences of retrenchments are many fold. When uncertainty is created in an organisational system, people start to panic and the ones that can (highly skilled and experienced employees) jump ship.
As humans we prefer stability. If we could keep control and keep most things the same, predictable then we would do so.
If a retrenchment initiative is the absolute last resort, then it needs to go hand in hand with a change management program and the support services of an Employee Assistance Provider (EAP).
Doing retrenchments over the festive period (December) to start the New Year with a clean slate may sound like a neat plan for the organisation, but this time is especially traumatic for people.
Having the expectations of a “festive” break, going into the New Year without a job, and the stress of school fees to be paid, have led to gloomy outcomes, in particular the suicide rate increasing over this period. Thus, the timing should be carefully considered.
We urge you to consider and implement the points discussed in this article. If you are uncertain about how to get started or how to apply it to the specific challenges in your own organisation, please contact us (firstname.lastname@example.org) and we will be happy to provide some further guidance.