As the crisis recedes, many businesses that have experienced turbulence in 2020 now face the difficult decision to restructure. The great skills mismatch that is going to define Singapore and the larger APAC job market for some time will force many leaders to decide on whether redundancy or reskilling and retention is the right move to survive.
Amidst all this talk of ‘future-proofing’ and ‘resiliency,’ this week we’re diving into how reducing headcount isn’t always the most cost-effective route, and how scalability will ultimately rely on a strong talent strategy.
Why Layoffs Aren’t Always Best
The journey of downsizing and possibly rehiring later is fraught with hidden as well as visible costs. Despite what seems like saturated news feeds on massive layoffs and hiring freezes to stay afloat, a recent study by Deutsche Bank demonstrated that letting staff go might actually adversely affect a company’s recovery. Analysing data from the 2008 financial crisis, Deutsche Bank’s researchers found that companies in the US and Europe who let the least amount of people go during the financial crisis saw their profits grow by nearly double the rate compared to businesses who let large amounts of employees go.
Ultimately, our knowledge economy - where a firm’s operations and revenues are more and more dependent on the knowledge of talent, and quite simply, that employees now make a lot more profit for their companies than before - means that the firing of staff can be increasingly disruptive.
This isn’t to say that redundancy is the wrong way to go, but it is a strategy that requires much more forethought and collaboration within the organisation than people think. Both leaders of an organisation and their HR team must really analyse the short and long-term needs of their business and take a holistic approach at the necessary components required to meet those needs, not just a reactive cut across the board.
Questions to ask:
What are the gaps in skills that are making me consider retrenchment? Can these be filled?
What plans does your company have in place to make sure the mindset and psychology of your people are positioned for a growth mindset?
How much could be saved by reskilling, rather than a round of lay-offs and subsequently rehiring when things are better?
A Better Strategy to Restructuring
To emerge stronger from the pandemic, leaders have to take the time to actually address the root problem of skill gaps. Like maximising your hiring strategy, it is about the proactive decisions to reskill and upskill a workforce that will ensure businesses bounce back, get stronger, and prepare themselves for other future disruptions. While not every company can have ‘Chief Learning Officers’ or even dedicated L&D teams to jumpstart this strategy, here are some tips to get started:
Build learning journeys that leverage on broader employee skills
McKinsey suggests companies craft a talent strategy that develops employees’ critical digital and cognitive capabilities, their social and emotional skills, and their adaptability and resilience, and we wholeheartedly agree! What is important here isn’t necessarily that each program is tailored to every employee, but that the ecosystem of learning is produced and delivered effectively to a broad base of talent where they can adapt the lessons to their own use, personal capabilities, and your new business model. Not only do programs like this provide excessive value, but they are often easily accessible and digestible for talent.
At 33 Talent, we offer exactly this -- with digital sessions from ‘Thriving in Turbulent Times’ to engage the team to ‘Managing Positively’ for being effective remote managers, our Lunch & Learn strives to ensure teams are learning and adapting to a different working environment - and quickly.
Offer a personal development budget
Do regular checks with your team and ask them to set the training agenda from time to time -- create a culture of open communication and learning where talent can identify and speak out on their own needs and learning opportunities they desire. By providing your team members with an annual training budget they can use for personal development and skills training, people feel actively listened to and accountable for their growth, and this method is especially effective when employing millennials and Gen-Zers. At your end, it is the senior leadership’s responsibility to tie the overall company objectives to each department’s goals and responsibilities with those learning programs.
Don’t forget yourself
Research shows that leaders have a potent impact on the ‘weather’ of their organisation. When they are calm, emotionally regulated, thoughtful, and patient, those around them feel more able to respond in the same ways as well. Whether it’s making sure leaders buy-in for training initiatives as well, or get access to coaching, investing in stress management strategies for leaders is a key tool that will have a positive ripple effect during workforce restructuring and reskilling.