Released by: Manager@Work, The Edge
Date: 23 March 2009
While stimulus packages are being negotiated at the highest levels and business columns are swamped with articles presenting various interpretations of the financial morass all around us, what can we, as proactive Malaysian managers, do within our own scope of responsibility and conscientiousness to make the best out of this current trough while we await the crest at the end of the wave?
Although there is no magic formula, the fundamentals of right remedial action hold true for a typical organisation: Trim off excesses; streamline operations and processes, improve effciency and productivity, preserve liquidity and cash flow; shut down or divest non-profitable businesses; consider a partnership or merger; or if all else fails, then close down the business appropriately in the least
painful and fair manner. (Note: A more comprehensive article on this subject titled "Managing in a Slowdown" was featured in this column in the 24 November 2008 edition of Manager@Work.)
The Six "Sick-Ma" for Ailing Companies
Employees need to be aware of what companies would do in time of distress. Where the organisation still runs after having painstakingly reduce operating costs, and the costs of human capital has become a concern, there are six basic management actions or initiatives that a a socially responsible company would likely take and carry out in the following order of priority:
The underlying tenet of the six actions is that retrenchment must be the last resort. As far as possible, preserve your headcount - remember, when good times rebound, the staff that you have sustained throughout the storm will be the same ones who will rise to the occasion to return the favour.
So rather than letting go a crucial human store of tacit and expert knowledge, you should instead pare down perks such as overtime claims, entertainment benefits and bonuses. The second preliminary lifeline measure would be to reduce your organisation's work week or operating hours, for instance making Saturday an off-day, doing away with 24-hour work shifts or closing the plant on weekends,
reducing to four days working week, implementing job sharing and letting employees go for training or clear off their accumulated leave. Thirdly, offer employees the opportunity to redeploy - instead of hiring a new employee for an understaffed unit, transfer an existing employee over.
The fourth step would be to take a pay cut, but this has to be communicated appropriately to the staff concerned in order to solicit their understanding and collective agreement. This is a sensitive matter especially with previous reported incidences of top executives retaining their salaries while subordinates had to reduce theirs.
To be fair, the salary cut should be enforced across the board or start with the top or highest paying executives first, so as not to impose unnecessary strain on the already-burdened lower wage earners. It is also crucial not to rattle the fragile morale among staff who would be disillusioned with what they perceive to be a discriminatory austerity drive. Why not take a cue from Dr Vikram Pandit,
the CEO of the troubled Citigroup who voluntarily accepted a substanstial paycut until the organisation returns to profitability?
The fifth and sixth steps are more delicate with the latter especially traumatic for some. Even the conscientious executive, who is charged with identifying who goes and who stays, is anticipated to have sleepless nights contemplating the implications of his decision making. On the other hand, an employee who has been deliberating whether or not to leave the company might find the voluntary
separation scheme (VSS) Fate's way of showing him the way. Again, compensation should be fair to the lower wage workers and not excessive for senior executives. The ex-CEO of Merrill Lynch, Stanley O'Neal was given a package of US$160 million despite exiting in 2007 with near-record losses to show for. Furthermore, the 2008 Wall Street payout of bonuses worth US$18.4 billion despite a bad year
drew public flak, not least of which came from President Barack Obama who labelled it "the height of irresponsibility" and urged for more restraint, discipline and responsibility, amid future plans by the US government to introduce
legislation that puts a cap on compensation.
Life after Layoff
In the event that you are among the retrenched, don't be surprised or feel downcast. There is still life after layoff! There are six specific positive steps you can do to self-manage in such a situation.
THE SIX SCHEMA OF SELF-MANAGEMENTTM IN TROUBLED TIMES
REVIEW & REDUCTION - Manage and reduce your personal expenditure to conserve cash.
Do an honest review of your personal monthly expenditure and budget. Tempted to overspend with your multiple credit cards? Cancel all your cards except the one or two you really need. Got an idle second car at home? Dispose it, together with other idle assets. Tighten your belt and conserve cash resources.
RE-EVALUATION & RATIONALISATION - Know your survival or time to live period.
With your steady source of income severed upon retrenchment, you need to re-evaluate and rationalise your needs and wants priority, and determine your personal net worth. Based on your net worth, ascertain how long will your available financial resources last you until, without the benefit of the income source you have just lost? This will give you a realistic perspective of your survival capacity
and financial durability.
REJUVENATION & REVITALISATION - Reorientate and re-energise yourself.
Allow yourself some slack time to recuperate after years of continuous service. Take an inexpensive retreat at a local destination. Spend time catching up with your loved ones, friends, associates and execute the fitness regime you had previously neglected in the name of work. Above all, endeavour to keep and maintain a positive attitude and outlook. Don't stew in your own juice.
REINVENTION & RECONSTRUCTION - Enhance your personal brand and marketability.
Make full use of the additional time you now have at your disposal to enhance your core competencies while acquiring new skills and interests, through continuous education or training. Be proactive. Just as you have reached the end of your working phase with your former organisation, you are also on the threshold of another phase of change. This time, make it a mental quantum leap change. Reinvent
yourself. Update your resume. Sharpen your soft skills - speech, presentation, writing and networking, to name a few. Don't drop out of the social radar. Ever since the recessions of the 80s, 90s and today, losing one's job is no longer a social stigma. So don't hesitate informing your friends about your situation; seek their help and references.
REENGAGEMENT & RECOMMITMENT - Re-enter the job market and experiment with your talents
Be humble and prepared to accept a job that may be below your level of competence, status and remuneration. The situation is only transient, so be patient and if you are worth your salt you will eventually find what you seek. You may even wish to try different employment that you may not have worked in before but can apply yourself or have an interest. Many people find new lucrative careers during
tough times. Don't be choosy. Take action to register yourself with employment agencies. If you are not out there in the job market, people cannot find you.
RESILIENCE & REALISATION - Have faith, remain optimistic, maintain self- confidence and self-esteem.
Rather than being a victim of circumstances, take charge and take control. Note the examples of successful captains of industries such as Tan Sri Azman Hashim of Ambank, Tan Sri Jeffrey Cheah of the Sunway Group and many others not so prominent who have the resilience to bounce back and become stronger. Though they suffered setbacks during the recession of the nineties, they have successfully
rebounded after that. Most importantly, maintain your self confidence and self esteem in troubled times. As the saying goes, "it's when the goings get tough, the tough gets going"
For "Gooder or for Badder"?
During challenging times, the innate "goodness" or "badness" of certain parties will emerge. Some bosses or organisations will demonstrate compassion and go the extra mile to take care of their people, i.e. they become "gooder" under the extraordinary circumstances. On the contrary, some employers use the economic recession as an excuse to lay off people, especially staff whom these bosses dislike
for personal rather than professional reasons. Some employers might conduct their retrenchment exercise to the letter of the law but wash their hands off their social or moral obligation to needy redundant workers, while others go to the extent of being downright unethical, i.e. they turn "badder". Tough times really draw out the true nature of your employer!
On the other hand, if you have been consistently a good worker, you need not worry as your skills and dedication will always be valued and there will be a niche that you can find or carve out. However, if you are not a good performer, then beware, whether in good times or in bad times!
Dr Wilson Tay, MMIM, MIM-CPT is CEO of the Malaysian Institute of Management, the national management organisation of Malaysia. MIM invites companies and professional managers to be members. Contact MIM Membership Support and Outreach at (603) 2164 5255; fax (603) 2165 4681; e-mail: enquiries@mim.org.my or visit www.mim.org.my.
