Work It Podcast: Early signs your company is retrenching

Dyson employees were recently “surprised” by a layoff announcement. But are there visible signals that a retrenchment exercise is coming? How can you tell if your name is next on the chopping block?

Francis Chan, employment lawyer and executive director at Titanium Law Chambers, lets us in on the signs to watch out for. 

Here's an excerpt from the conversation: 

Tiffany Ang:
I remember during the Lehman Brothers crisis, a few companies froze salary increments. They also told their employees, "Okay, we're going to do no pay, block leave."

Francis Chan:

So when you see companies starting to do things that may be out of character, not in line with what they usually do, of course, it may not always result in a retrenchment.

All these are out-of-character behaviour, which, again, companies are doing because of an unprecedented situation they may not have faced before.

And I think something employees need to also know is that when a company is going through a financial crisis, it may be their first, so there may not be a playbook for it, right? Management may be trying to build a plane as they fall down the cliff, and eventually, some companies get it right, some companies don't get it so. In that sense, employees only see the endpoint of it, which is the decision communicated to them. But along the way, yes, there will be all these signs.

And I think this is where employees (should) not react immediately and instinctively but try and get more information from the company as well. 

Gerald Tan:
You mentioned the point, "Why me?" So, from your experience working with companies, when the company has decided to go for the retrenchment exercise, how do they usually decide who to cut first?

Francis:
So usually, what companies will do is they will look at the functions that may not be necessary or essential for them to move on. But of course, they will always inevitably come to a point where, within the team, (they) need to pick two out of five to cut.

So how do (they) pick the two out of five? As a lawyer, I always refer my clients to what the tripartite advisory on managing access manpower says, which is to rely on objective criteria. 

The easiest one to rely on is actually based on performance, because if out of the five, you randomly pick two, any arbitrary decision usually does not sit well with employees, because it's a "Why me?" sort of thing. It's like (when) people feel emotional (when), in a whole long line of cars, only (their) car got summoned but the other cars didn't ... 

Tiffany:
Yes, or (when) only your car gets stopped at the roadblock. 

Francis: 
Yeah, correct. Then you (would) be like, "Why me? This is discrimination." So, to avoid these kinds of things, I always tell my clients, "Okay, if you need to pick people, pick based on performance and based on objective metrics."

So, for example, based on their last two performance appraisals, based on their own supervisors' assessment, basically, something that you can justify, because the employee will always ask, "Why me?", and you should have an answer to that.