I got a call last week from a friend who runs his own decade old enterprise. He was trying to solve a conundrum – to keep his business profitable in this C19 era, how does he balance the under-pressure equation of a healthy balance sheet and a well nurtured workforce. While we debated that, it set my mind racing on a different track altogether – what is our role in this equation? Are we mere passive bystanders or do we have the remit to play an active role ? I spoke to various business executives on the topic. There are clearly two views on the table. But hold on, there is a third lateral dimension also we should consider. Let’s check it out…
The employers’ view is that with every passing day the cash flow has become a kind of leading indicator on the health of business. This is true for all businesses, even more so for manufacturing, automobile, hospitality, tourism, travel, non-food retail and others impacted by dwindling consumers, living in fear of the germ and reprioritizing the way they live life based on their reduced wallet size. To protect the bottom line the first place to go for many employers, after resorting to all admin cost savings, is downsizing people.
The employees’ view is different. The majority are empathetic towards the employer’s loss of sales, but feel that that the decisions taken by many businesses are myopic. The cost lens is rather smudged because laying off people does not help the situation beyond a point. While it is a feel good for the balance sheet but given the rather long tunnel we are looking into, the shaved bottom line will be hungry for some more trimming after a while. Soon it becomes a vicious cycle. With every 10 exited employees at least 2 high performing employees also leave to make hay while their skills are still in demand elsewhere. Gradually the business suffers due to a dearth of talent and lack of historical knowledge left in the organization. It gets crippled in its ability to serve customers effectively and when the market does rebound it is a recipe made for disaster. The few good overworked employees under stress, take the first port out to greener pastures.
It is not very hard to see the economic equation here. More job losses lead to lesser earnings, hence reduced wallet size leading to lower demand of services and products, therefore lower sales. Which equates to further pinks and reds in the business balance sheet leading to further bottom line protection mechanisms with layoffs being one of them, finally resulting in crippling and closure of businesses. So where does it stop? Can a more prudent approach make reduction in workforce as the very last measure. It is not easy to hold against the tide, but business longevity is dependent heavily on the quality of talent riding the bus.
The debate is on.
There is another lateral dimension to this view. And that is to not put the burden of saving jobs on the employers alone. If we can be the white knights, the heroes who can extend a helping hand wherever we can through advise, a real job or even helping others start their own enterprise, we might as well have contributed in this war to bring back the economy. Of the over 300M jobs lost worldwide (ILO), even if we can come together proactively in our own ways to convert 1% of that number to the status of employed or self-employed, we would have not only left our footprint in the sands of economic revival but in turn helped ourselves in the longer run.