Managing Staff Morale Amid Layoffs in India

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HR should stop feeling guilty and be honest, empathetic and engaged with high-performers

By Shefali Anand

As India's economic growth slows, some companies are trimming staff to cut costs.

Carmaker Maruti Suzuki India Ltd., whose sales have been falling, reported recently that it didn't renew contracts for around 3,000 workers, while snack maker Parle Products Pvt. Ltd. told reporters, in interviews, that it might lay off up to 10,000 employees if demand doesn't improve.

In such an environment, HR teams must act quickly to quell the anxieties of remaining staff and maintain morale. Layoffs remain a relatively new concept in India, partly because historically, Indian firms, many of which are family-owned, held on to staff even during slowdowns.

"Overseas, people are more matter-of-fact about these things. In India, my experience is we need to provide more support," said Archana Bhaskar, chief human resource officer at Dr. Reddy's Laboratories Ltd., based in Hyderabad, south India.

Here are six steps, suggested by senior HR professionals, to help ease the process on both employees and remaining staff.

1. Be guilt-free.

To manage staff morale, handle layoffs with care. If they are done openly, fairly and respectfully, employees who remain gain confidence that management has a plan and that they will not be targeted randomly.

To get this right, HR professionals should first understand that job cuts are driven by a business rationale and are not something to feel guilty about.

"A lot of bad practices occur because HR professionals think that it is a wrong thing to lay off [employees]. And then to cover that 'wrong thing,' they… make it less transparent and less candid," said Chandrasekhar Sripada, Hyderabad-based former India HR head for IBM and a professor at the Indian School of Business.

2. Be open and fair.

Once managers understand the business need for job cuts, they must share it with employees. Not sharing information leads to rumors, which can hurt staff productivity.

Communication should be done via multiple channels, including companywide, in small groups and one-on-one.

For instance, the company could inform all employees that a certain division is being shut down because revenues are suffering, and so all staff in that division will be let go. Or, if the layoffs are within a department, the company could share the broad criteria that would be used to decide who would be laid off, such as performance, the type of business and who joined the company more recently. HR should be at the forefront in identifying the employees to be laid off and ensure they are adequately compensated.

"You can't make a bad outcome look good. But you can be honest in the way you communicate it and the way you execute it," said Richard Lobo, head of HR at information technology services firm Infosys Ltd. in Bengaluru.

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3. Be empathetic.

Managers should talk to affected employees in person, but they should not make the discussion personal or castigate the employee.

"In a given context, at a given point of time, somebody could have failed. It doesn't mean that forever that person will fail," Sripada said.

HR should guide the managers who have to give the bad news to employees. Managers can be trained on potential questions the employee might ask, what could be construed as disrespectful and how to help the employee cope with the news.

When Dr. Reddy's laid off employees last year to cut costs, the HR team conducted workshops for the line managers. "We even had them role-play the conversation," Bhaskar said.

Her team also helped the laid-off employees find new jobs by tapping their networks and giving referrals. Many companies also work with outplacement agencies to enable this transition.

4. Be ready with an action plan.

In case of a business downturn or layoffs, company management should be proactively communicating with employees about its strategy to get through the downturn.

"Share… what you are going to do so that these things don't happen again," said Supratik Bhattacharyya, chief talent officer at Mumbai-based conglomerate RPG Enterprises.

At the same time, managers should recognize that plans and strategies are not static given that the business environment is constantly changing. "HR people need to really create an environment, a culture, where every employee becomes a lot more agile" and adaptable to change, Bhattacharyya said.

5. Be engaged with unaffected employees.

In tough times, HR teams should step up engagement with employees who remain.

Bhattacharyya advises conducting what he calls "employee insighting"-similar to how companies measure customer experience. "You need to figure out what your employees are thinking," he said.

At RPG, he said, a trained specialist collects this kind of insight using several tools, including surveys and individual meetings. Once HR understands employees' key concerns, those concerns can be addressed via appropriate platforms.

To get employees engaged on a companywide level, HR can also organize more interdivision team gatherings. This way, employees of a division that has been particularly affected by the layoffs would get to meet people from other divisions that may be doing well, giving hope that all isn't bad at the company.

In tough times, HR should be paying extra attention to high-performers with more one-on-one communication to check how they are doing-because the company doesn't want to lose them at all.

6. Be quick to move on.

Layoffs should be announced and executed quickly so that life can start getting back to normal for the remaining employees. Lobo suggested getting the employees actively involved in developing solutions for how the business can improve productivity and reduce costs despite the reduction in staff.

"Get everybody focused on that problem-how we reinvent ourselves or redo things so that we become relevant to customers-and we can bring back the numbers to where we were," he said. This not only keeps employees productively occupied, but makes them "feel they belong."

Shefali Anand is a New Delhi-based journalist and former correspondent for The Wall Street Journal. You can follow her on Twitter.