Business media has changed a lot over the past decade, but one thing continues to be a common trait across generations, and regional borders. That’s the idea that retrenching staff and reducing headcount can be a traitorous move for an organisation of any significant size.
Retrenchment exercises are, often quite rightly, delivered as grave news, and followed up with weeks of analysis into the employer’s mistakes and failings. But, as HR leaders know well, there is another side to that coin.
Retrenchments; downsizing; workforce optimisation: call it what you like (and I’ve seen some particularly creative euphemisms in my time — how about leveraging synergies?), but these initiatives, while painful, are a wholly necessary tool in any organisation’s workforce strategy matrix.
After all, there is often no other way to correct for a changing market, where demand for a product or service goes against expectations. Likewise, organisations that have over-hired for whatever reason should not have to suffer the expense of that error forever. That would only serve to reduce long-term hiring at every level of the economy.
Where some may see only the immediate impact on the impacted employees, the larger picture of an organisation not performing is often missed. Also left out of the conversation is the HR work involved to analyse the workforce, pinpoint specific issues and implement often emotional solutions in a fair and sensitive manner.
Tech sector upheaval
These issues can expect to have plenty of time in the media spotlight over the coming years, with economic uncertainty set to shake up markets throughout Southeast Asia and the world.
Indeed, the global technology sector has already been through a significant period of upheaval over the last 12 months. Around the world, more than 150,000 roles have been removed from global technology titans, including Amazon, Meta, Google, and Microsoft. Most of these large-scale exercises had the same drivers: the overall difficult macroeconomic environment, pressure to bring about bigger and faster returns on investment, and issues of excess labour, with some people hired for jobs and projects that never got off the ground.
Such was the situation with US-based recruitment specialist Maddie Machado. Earlier this year, she revealed she and her team were being effectively “paid to do nothing” as a talent acquisition unit with Meta. She told social media the team had been expected to start conversations with potential talents who had the right skills and attributes for Meta’s software divisions.
But the pool of viable candidates was far smaller than expected, and the level of actual hiring taking place also much lower, leaving the team with nothing to do. At USD 160,000 per year, this particular retrenchment would have made strong business sense.
What can change the boom-bust cycle of hiring?
While the companies and industries are new, a similar story has been told at the onset of every economic downturn. Optimism and forward-thinking, and therefore hiring and other investments, build up in good times to the point that the pay-offs get ever-more distant, and loaded with conditions and things that have to go right.
At a certain point, an adjustment back to reality is needed.
Can anything be done to change? And can HR lead the way, since it is the function that pays the biggest reputational costs in this boom-bust cycle of hiring and firing? I have to think it can, but it will need to do plenty of outside-the-box thinking.
In the short-term, large-scale firings are quite clearly necessary exercises. And, as the saying goes, necessity is the mother of invention. We know that innovation is what stands organisations apart in the battles for both customers and staff, so it seems plausible that new ideas, strategies, and frameworks will be at the heart of any solution.
Knowing the HR profession, I am confident something new will emerge some day, and perhaps it is already happening. The organisation that finds that golden process will set themselves up for years of success and longevity to come.
About the author
Paul Howell is one of Asia’s most experienced business journalists covering workplaces and the HR profession in the region. With a media career spanning more than 20 years, and bases in Melbourne, Dhaka, Singapore, and Hong Kong, he is adept at building large-scale professional communities and empowering them with news, insights, and relevant analysis.
After leading the US-owned HRM Magazine in Singapore for more than 10 years, he launched Chief of Staff Asia in September 2021. This professional trade media brand for the digital age combines both online (website, socials, video) and offline (printed magazine, awards and live events) platforms to bring all of Southeast Asia’s HR professionals and best practice case studies together in one community.
Paul Howell is a permanent resident of Singapore, where he lives with his wife and two children.
