May 4, 2009

Psychological impact of recession

I just ended a conversation with a friend from one of India's largest private banks. Totally frustrated, yet laughing throughout the conversation in a way of mockery, he gave vent to his frustration about the recent series of decisions announced within his organization and the communication styles adopted by his company. Surprisingly, he has nothing to hold against his managers. "What will the managers do? It's the company management's decision yaar," he says with certainty. His promotion which has been pending over a year was supposedly coming through with this new financial year has got stopped. Well, based on that maybe no increment or a marginal one going by the impact of global financial crisis. But, what he was not ready for, was the company not giving any of those, and on top of it, withholding his bonus as well.

An hour ago, I was at dinner with a manager from a ITeS company. His company is in the business of cost-saving for his clients, which has seen a slowdown but no negative impact. Of course, his company's ambitious targets were underachieved by a marginal percentage. Going by those standards, his org has had a phenomenal growth when compared to the industry standards. Still, there was crib about how erratically the company's management was responding to the 'uncertain future' of the industry by announcing a new decision every fortnight about a change in policy here, and of some new addition there. Companies are protecting their operating margins by ceasing all expenditure and cutting down on other luxuries that they could have afforded earlier, but that's not it.

Another media friend explains to me that as soon as the news of global slowdown was certain his company has gone for pay-cuts in its' employees salaries. Was the company impacted and how? The question remains unanswered.

Yet another friend from a small IT organization tells me about practices in his company - salary increments are happening on discretionary basis. Managers propose who they feel should be rewarded and the company does; end of story. Did they have a proven and reliable yardstick to measure that? Out of question for now.
Internally, within the organization, going by various management decisions it looks the managements and board of directors of various Indian business organizations have perhaps not yet accurately gauged the impact of global slowdown on their respective companies, nor are they even able to foresee the changes expecting ahead of next two quarters. The shadily funny side of it is, even if they're able to, a dim picture is projected most of the time; because of which, corporate decisions are announced in a very unplanned manner every week or fortnight, without assessing the risk of that communication. With another breaking news, there's a new decision - not any good news, of course! No wonder smiles are missing on the floors at workplace!

The decisions which are mostly negative vary from job cuts, employee relocation, pay cuts, to withholding of bonuses, individual incentives, stopping payout of variable compensation, heavy cut-down on employee welfare expenditure which may include benefits like transport allowances to even rewards and recognition budgets. While those form the main content of employee compensation, the other components include cutting down on any company provided benefits like mobile expenses, pick-and-drop facilities, club memberships, even curbing on snacks vending machines and coffee vending machines. The pursuit for cost-cutting doesn't end there. Every new day may throw up a new idea for cost cutting, even a penny, and the company management would announce a 'decision' on it. Is this what's called 'penny-wise, pound foolish'? Time will tell.

Notwithstanding the fact that global recession has hit a few industries real hard even in India, and that companies ought to take measures to sustain and stay ahead of competition, there are a few companies
(which haven't incurred losses, rather have seen growth) which have offered bonuses, given marginal (token) increments among other benefits. Given that an employee sees his growth aligned to that of the company's, expectations from a growing company are similarly calibrated. When those expectations are flushed away by a 'management decision', even though the company's slowed-down yet growing/profit-making the most important partners in the company's growth are disgruntled, and with more events happening around it, they're utterly dismayed.

When companies today want to focus on actively engaging employees with the organization, not disputing the fact that organizations are investing in their employees through training, work environment, resources etc., what they are missing out on is that the contextual elements surrounding the job and the employee at the workplace are getting so disturbed that there's more negativity that's getting into their heads and flowing out of it every day. Talk of positivity, it's almost missing!

From 'big' decisions like laying off employees, salary cuts to the 'small' decisions of not providing transport-reimbursements for business meetings, or removing vending machines in offices etc., employees are much negatively impacted day-in and day-out. With so much of negative mental / psychological impact of recession, it's surely gonna take sometime for impressions to look up! What say guys?
Post a Comment