Lay-Off Fires Get Them Hired

In the super-slippery job market, headhunters find a new avenue for their expertise — exit management

Illustration by Sajith Kumar

On the day of the union budget 2017-18, editorial staff of a leading newspaper group was preparing reports and analyses on how it would impact their beats for the rest of the year. At the end of the work day, several employees were told to go to the group’s headquarters in Calcutta for a meeting. Those working in the Ranchi bureau were given an air ticket and checked in at the airport early next morning, wondering what it was about. Was it an appraisal meeting or a strategy meet? They made mental notes on what to say in either case.

A few hours later, they were ushered into a waiting room, where many other nervous employees sat. It slowly dawned upon them that this was an ‘outplacement’ meeting, as, one by one, other employees entered and left the conference room displaying a variety of emotions. One woman reporter refused to leave the office and threatened to call the police immediately, another cried and gasped for air, someone refused to go in. Those in the waiting room searched for some sign that their turn would not necessarily mean a pink slip.

Inside the room sat the editor-in-chief, the resident editor and a representative of the company’s human resources department. It was their job to tell their colleagues that it was the end of their career with the group. It is believed the company was in the red and the new management decided to cut the proverbial flab from the editorial department.

After that meeting, the laid-off employees were shepherded into a session with a psychologist, who offered a glass of water and a conversation, beginning with a “how are you feeling?” and generally trying to calm them down. Next came an interaction with a financial consultant who offered advice on how to budget the severance pay.

The most important meeting was probably the next, with the outplacement consultants, a new name for people who get paid to deal with the employees fired by the company. Their job is to guide the former employees on how to write their professional resume and help with the job hunt.

“Media houses are either honourable or fear intense public scrutiny, which comes anyway, so the internal HR staff and management make it a point to meet the employees and inform them of the decision. In other sectors, they are not that kind. HR consulting firms are brought in to do the dirty work and have to face the ire of employees they do not know,” says a senior managerial consultant, who was fired by a large IT company last year along with scores of other employees.

From the company’s point of view, according to insiders, lay-offs can be triggered by multiple factors. It could be a new CEO, a global restructuring policy for MNCs, piled-up debts, “right-sizing” to reduce costs in the face of a sluggish economy and so on. Experts say it may not be an indicator of the job market, but of how slow the economy is.

“Many would like you to believe this is in the company’s interests and that is the picture presented to both the shareholders and the public at large,” says a top executive of a leading headhunter. “But, the reality is that either the economy or the specific sector or the company is not doing well. The company doesn’t want us to go on record about how badly they are doing,”

In the case of a certain large power company, it was a mix of the infrastructure sector’s decline a few years ago, coupled with accumulating debts of nearly Rs.40,000 crore. The power company’s plants were already in the thick of insolvency proceedings. “The promoters decided to add many more to the list and liquidate them,” says an HR consultant, who was hired to deal with fired employees, “As a result, around 600-700 people were to be laid off in one go. In any case, the power company had been unable to pay salaries for quite some time and even the HR head had walked away.”

This was only part of a reported 3,000 jobs that the power company made redundant. Such big lay-offs often start with a scrutiny by a business consultancy firm. These consulting firms can recommend that an entire department or a part be made redundant, usually based on the kind of business that has recently been lost and not likely to be regained in the near future. The final lists are usually prepared by the internal HR department, after which departmental heads and the top bosses have to inform the chosen employees one by one. Sometimes, it is done through an impersonal email.

In the West, they even outsource this part of the work to consultants. In the 2009 George Clooney-starrer Up in the Air, Clooney plays a character who hops around the country until Artificial Intelligence eventually makes him redundant. Real life is less glossy, and headhunters often have to deal with torrid emotions.

Some companies even set aside a room with computers and basic furniture, for around three months, for employees to hunt for jobs. And when they offer contracts to HR firms, the companies expect them to get new jobs for the employees they are letting go. “We do not, however, guarantee that any of the laid-off employees will find jobs. We only commit to a maximum of three meetings with them to help them look for jobs.” So, while the company gets to write itself a glowing exit programme review, it all boils down to a glorified hand-holding period when the employee is busy looking for jobs instead of planning how to get back at the company.

“Handling exit management has been the internal HR department’s traditional role, but now corporates hire a consultant after the exit,” says Tanuja Sharma, professor of human resources at Management Development Institute, Gurgaon. Earlier, performance used to be mapped through the bell curve appraisal system developed by General Electric. Based on comparative assessment and considered Darwinian by critics, the system is retained only by certain large MNCs, that too only for top posts. It was eased out for larger employee pools over the past two years, with most companies having shifted to objectively assessing individual employees based on 360-degree analytics since all the relevant data is easily available.

“There is a definite lack of talent and a major leadership crunch, hence the method for appraisals has changed,” says Sharma. “So, after the analytics, employees are either given incentivised or ‘benched’. But since recruitment is also expensive, many companies prefer to spend on redeploying their employees in other departments after skill training.” The consultants help prepare the resume, send it to their clients, post in job portals and generally counsel the former employee on where to look for potential openings. There is a list of 10-15 activities to be done over a pre-defined time period, which is what the company pays the headhunters for. Over the sessions, the consultants try to help them look at jobs within their own sector or counsel them to accept cross-sector employment in a sector where their skillset can come in handy. Some even opt for mid-career education programmes such as MBAs. 

One HR consultancy advertises its outplacement skill on the website as “supports clients with smooth transition management of employees to other suitable employers seeking candidates with similar skills and experience”. The process may be anything but smooth because nobody wants to hear they are being laid off. But, once that is accepted and some find the chance of employment, the outplacement consultant helps draft letters, prepare for interviews, offers, negotiations and so forth.

“Outplacement is a form of window-dressing for the client,” says the director of a leading HR consultancy firm. For the employees, it acts as a sort of balm to soothe the bruises of job loss as there is no official data to map the efficacy of outplacement and show if it actually helps to get jobs for the retrenched employees. What the headhunter is still selling is his database of potential employers, for which the client pays a hefty fee of Rs.18-20 lakh per 100 employees who need to be placed elsewhere.

Sharma agrees there is lack of data to map the efficacy of outplacement. “Many tech companies officially disclosed how many employees they were letting go, but there is no data to show if hiring through outplacement is actually helping get jobs,” she says. “Many startups would be absorbing the laid-off employees and many even float their own startups. Some opt for mid-career MBAs. The reach of recruitment vendors is much stronger now and I have even observed headhunting and placements through social media, including WhatsApp groups.”

A fast-food delivery chain dropped a number of its employees, but new ventures in this industry keep coming up and old chains keep expanding. So, it wasn’t difficult to place nearly all of them within a few months, with a few tweaks here and there in the salary and designation. Well, it may not be a perfect system, but it may be an improvement from when a factory shut down and an entire town became jobless in a single stroke.