Hiring freezes and mass retrenchments? Blame the leaders

“Oh noooo!” A mournful gasp echoed through the stadium. Welsh captain Sam Warburton had just spear-tackled French winger Vincent Clerc in the semi-final of the 2011 Rugby World Cup in Auckland. The referee immediately reached for his book, banishing Warburton from the field for the rest of the game.

It was a key moment in the match. Despite being reduced to 14 men for most of the game, the Welsh fought bravely, but it wasn’t enough. Wales went down 9-8 to France in an agonizing defeat.

Welsh coach Warren Gatland was philosophical about the result: "When you get two quality teams and one team goes down to 14 men then the other team should win the game comfortably … It was absolutely courageous what [our guys] did to push France that close and nearly win the game."

In the competitive world of rugby, each player has a specific job to do on the field. If a player is sent off, then that job doesn’t get done and the whole team feels the impact. In the competitive world of business, the same logic should hold. In theory, every employee should be responsible for certain tasks and duties which are important to the business. If those tasks and duties are not being done, then the broader organization should feel the impact.

So what does this imply for companies that institute mass retrenchment programs in an effort to control costs? The underlying premise of such a decision is that the business employs a large number of people whose tasks and duties are not sufficiently important to the business to justify their salaries. If that’s the case, then why were these people employed in the first place? And if the business environment has changed over time so that their jobs are no longer relevant, then why weren’t their tasks and duties updated to reflect the new business conditions? It’s a clear failure of leadership.

Some managers might argue that the tasks and duties of the retrenched employees are still important, but can easily be carried out by other employees. This too is a failure of leadership since it implies mass excess capacity in the employee base before the retrenchment program.
In most cases, leaders will admit that there is actually very little excess capacity in the employee base. They will also admit that there are many tasks and duties which still need to be done even though the responsible employees have been retrenched. They simply assume that these tasks and duties will be taken over by an already stretched work-force. This can have disastrous consequences. Employee stress skyrockets while morale declines. Inevitably, the best people leave – because they can. Whichever way you look at it, it’s a massive failure of leadership.
What about hiring freezes? Some leaders don’t go to the extreme of a mass retrenchment program, but put a stop to any new appointments in the organization.

Taking a step back, the reason why a company hires a new employee is because there are certain tasks and duties which are important to the business and which need to be done. The amount paid to the employee in terms of salary and benefits should be less than the value this person adds to the business – else it wouldn’t make sense to hire him or her. A hiring freeze implies that there is no amount – no matter how low – which reflects the value of the important tasks and duties which this person would carry out. This is ludicrous.

A hiring freeze also means that when people voluntarily leave the organization, their direct managers are prevented from replacing them. The implicit assumption is that these people’s tasks and duties magically disappear when they leave. Leaders might argue that they won’t disappear, but they can easily be absorbed by the remaining work-force. Tell that to the remaining forward pack after Sam Warburton was banished from the rugby field. It fundamentally weakened the scrum and put the team at a permanent disadvantage for the rest of the game. Why do leaders think it will be any different in the work-place?

When retrenchment programs or hiring freezes are implemented, it’s the rank-and-file employees who suffer. The need for such a program, however, is a clear indication of leadership failure. We should hold them accountable.

Dr Gavin Symanowitz is the founder of FeedbackRocket.com, an award-winning online innovation that enables anonymous management feedback. He is a regular contributor to Finweek and you can read more of his great content by subscribing to Finweek or downloading the digital version in either English or Afrikaans.


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