Is this the beginning of the end?
Not of incredible India or even shiny India, for that matter. Not of favourable export-import ratios or affordable food prices. After all, in an interview with The Wall Street Journal earlier this week, finance minister P. Chidambaram already read his prescient tea leaves and broke the bad news: The party is winding down.
He braced Indians for slower growth—and the flurry of earnings out this week point toward the same downward trend.
But, what I really wonder about is the future of another imbalance that has come to define this economy of recent good tides and fortune: between employer and employee.
For too long, Indian companies have engaged in a game where employers— strapped for great talent and strong mid-level managers—are held hostage by their workers, tiptoeing around them, resorting to better canteen food and themed office parties to impress, essentially living in fear that employees will leave and take all the pricey training and precious time invested with them. Over the last few months, that feeling has intensified as workers hold out for their year-end bonuses and increments to give notice or even make decisions about leaving.
Yet this season, unlike recent years past, is seeing a new entrant to workplace woe: layoffs.
It all started back in February when Tata Consultancy Services (TCS), the country’s largest services provider, announced that it had asked 500 underperforming staffers to leave. Through reviews and performance evaluations, employees are ranked from a scale of 1 to 5. Those who score a 2 or less are put on a plan to help them improve— and if there’s no sign of improvement, TCS “disengages” with them.
The move is not entirely new at TCS, which let 500 people go in all of the last fiscal year and already has “disengaged” 500 in the first three quarters of this year—sending a stark message to its more than 100,000 employees and the rest of the tech sector. Given weaker-than-anticipated results reported earlier this week, more such pink slips might be on the way.
On Monday, Mint reported the news of Yes Bank letting go of nearly 400 employees in the first quarter of the year, also for non-performance.
“Individuals who do not fit into the service culture and performance parameters of the bank mutually go their own ways in order to sustain the highly motivated business environment of the bank,” Deodutta Kurane, president of human capital, which is to say human resources, at Yes Bank, told Mint in an email.
Likely, a lot of young Indians have been reading the headlines and feeling panic over layoffs. In reality, though, the panic should be setting in over another word: non-performance.
That is the one thing there is no place for in a slowing economy. We who thought we were working harder than ever to keep up with the pace of double-digit growth—and triple digit in the case of many of our employers —have not seen anything yet.
The only comparison I can make is when I visited India just around the time of the dot-com bubble bursting in 2001 and a human resources manager in Chennai bluntly described the sentiment of his office: “You need to constantly run to stand where you are. Every day is a day where you deliver.”
Seven years later, the workplace is not that different—but India is. Even as the talent crunch grew more acute and workers more valued, attitudes towards layoffs have changed—everyone, after all, is dispensable; high attrition rates have taught us that much. In the rush to hire freshers, companies made offers and promises years ahead of schedule—which many are surely going to have to rethink, as TCS’ move has shown.
In the next few months, Indians will discover they will have to work doubly hard to fight from losing all they have built. They will need to prove worth and value to their employers. And, unlike the boom times, mediocrity and slack work ethic cannot be masked by growth. In many sectors of the last few years, we have moved from zero to acceleration. That is the easy part.
Now comes the hard part: to innovate, hang on to clients and customers to tap new markets. The exuberance and overconfidence of recent times will be knocked down, making way for good old-fashioned sweat equity.
Call me sadistic, but I welcome the reality check—at least when it comes to the new equilibrium it might bring about between employers and employees.
Despite the dire projections of many companies this week, a study carried out by industry chamber, the Associated Chambers of Commerce and Industry, said foreign information technology firms plan to proceed with hiring 40,000 people in India by 2010.
No need to complacently cheer or gloat yet. The recent spate of layoffs and warnings to non-performers still send an important message.
It’s time to get cracking—or else.
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