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De-Employment as The Alternative to Layoffs

De-Employment as The Alternative to Layoffs

Is Deployment a better solution than Layoff?

Site Assistant
Site Assistant

by Michael Heng

A New Talent Solution as the Recession Looms

Few companies will miss the obvious signs of impending business doom. Declining orders, falling sales, narrowing profit margins, increasing relative costs, inventory build-up, fewer competitors, fewer customers and increasing difficulties in accounts receivables.

Layoffs in Singapore reached a 5-year high with weakening job vacancies since the 2009 global recession triggered then by the banking and currency crisis.  Nearly 16,000 lost their jobs in 2015; mostly middle-aged executives with degrees and higher-skilled workers.  Most of them also did not find a job within 6 months from their layoff.

A careful analysis revealed that about 71% of the layoffs were skilled and experienced professionals, managers, executives and technicians (PMETs), ages from 40-49 years old, up from 66% in 2014, even though PMETs made up only 54% in the workforce.  Also, an increasing number (44%) of the higher educated – degree-holders – lost their jobs when compared to just 41% in 2014.

Embracing De-Employment as the New Normal

Given the demo-psychographics of the talents most susceptible and vulnerable to layoffs, de-employment becomes an innovative, empowering and integrative human resource management (HRM) solution best suited to manage talents long before their layoffs are deemed necessary.

The steady 2015 unemployment rate in Singapore last year at 2.9% for Singaporeans, and 2.8% (2.4% in 2014) when included Permanent Residents (PR) belie the looming onslaught of layoffs expected in 2016 given the weakening global economic conditions and persistent low oil prices.

A company facing high risks of layoffs to happen sometime in the next 6-9 months can manage the risks by adopting a strategy of de-employment. Embarking on the de-employment journey, the company prepares its employees as it enters into a joint-employment relationship with a “Surrogate Employer”.

A Surrogate Employer (SE) reinforces the corporate culture concurrently as the company engages the competitive forces that are affecting the business. On the one hand, the SE empowers the company’s recovery strategy by focusing on its core competencies to restore and grow their bottom line whilst pursuing vigorous costs reduction. On the other, the SE augments the company’s talent management team by assuming responsibilities for the strategic re-configuration of its talent pool leading to whatever necessary re-calibration and re-sizing in order to service the increasingly difficult marketplace more successfully.

The goal of de-employment is business recovery with a particular emphasis on key talent retention, redevelopment and excess talent deployment. Strategy and talent management are the twin challenge of the de-employment strategy.  Strategy focuses largely on the external competitive space, and talent management in de-employment involves radical and fundamental internal organizational re-structuring.

Organisational re-structuring aims at reducing layers and widening job scope through job re-design, job merging, job sharing and jobs elimination. This deploys a lean thinking approach to eliminate wasteful cost drivers and, more importantly, the retooling of talent through re-skilling, redevelopment and redeployment for and in anticipation of business recovery.

Important HR tools like shorter work week, wage/benefit cuts, working online/off-office, mandated vacation and outsourcing workers to other companies can be attempted, but recognize that these are merely short-term measures that merely postpone the inevitable.

What is crucial in a de-employment strategy is to assure continual smooth business operations without the often disruptive effects and morale-depressing sentiments from layoff exercises. This means the transfer of the entire (or most of the) workforce – including a large number of prospective redundant and excess workers – to the SE, who is now tasked with the mission to assure continuous income flows, not necessarily at their previous levels, to those workers who are not needed by the company either on a full-time or part-time basis.  This way, the company can reduce its labour-related costs immediately paying only for talents that it actually needs. The other redundant and excess talents are engaged by the SE to work in other companies.

The de-employment strategy promotes income assurance in the participating workers, instead of job security. Layoffs would be a thing of the past.  They will be continually engaged rather than occasionally employed.  Their works are assignments as they perform them not always at physical workplaces but at designated service-hubs or centres, which may be virtual or through social media cyberspace or on the internet. They are not controlled through adherence to some fixed reporting times but managed through agreed performance milestones or indicators.  They also commit to at least 100 hours of continuous learning and development per year, so as to be empowered and eventually become truly independent to pursue their desired career experiences.

Companies participating in de-employment no longer worry about layoffs as bad times loomed. They retain their relevant key talent on a full-time or part-time basis as mutually agreed with the SE.  Talents with flexible skills are able to work at more than 2 service-hubs or centres to multiply their income streams.  And they can work at their own pace and place without infringing the legal restrictions on working hours or working during holidays and rest days.

The SE is essentially a community of talents who are well educated, skillful and experienced (like PMETs, for example).  Their SE provides such portable benefits as CPF, medical, dental, vacation leave and various other welfare benefits usually enjoyed by regular employed workers. They can seize available opportunities for multiple enhanced income streams from assignments to various SE clients.  Their skill-sets are continuously revised, upgraded and re-calibrated to ready them for future jobs which are yet unknown.

The crucial difference between de-employment and HR out-sourcing is that the SE is contractually part of the company, instead of its outsourced labour contractor. The SE and the company have joint coaching and mentoring responsibilities for their talents. Their relationship entails regular feedback and communications with each other and with their talents. In this manner, de-employment assures the sustainable relevance of talents to the companies. They are also co-decision makers with regard to talent engagement, deployment and redistribution. Talents can be converted from de-employment status to direct employment status in accordance with agreed conditions.

De-employment is the best alternative to layoffs by maximizing returns on human capital and talent. Workers should not simply be discarded in layoffs as some useless garbage in a business downturn. For sure, surviving soldiers are not killed when battles are lost. Instead, they are systematically collected, re-organised, retrained, re-equipped and re-motivated to await mobilization for the next battle that would hopefully bring forth eventual victories and success.

Corporate sustainability and business success depend on the strategic leverage of the human talent. Leaders know that the human talent is the highest and most decisive form of technology that makes the key difference in successful strategy.