Pandemic and Lay off: Putting People over Business

Before the first business quarter of the year 2020 was completed, millions of people lost their jobs. As soon as the WHO declared CoVid 19 as a pandemic, which spurred layoffs across industries, amongst them the worst hit were the airlines and the service sector. Scandinavian Airlines had to let go 90% of its workforce, Marriott furloughed thousands of employees and the senior executives took hefty pay cuts while the CEO suspended his salary for the rest of the year. New York’s Metropolitan Opera laid off every one of the Union Employee on it’s roll for the duration of the pandemic. Even the Tech industry succumbed to the need for mass layoffs across board to survive.

These decisions were called tough but necessary steps taken to streamline the operations, manage and allocate resources better and to optimize the organization. However, business decisions have implication on the people who build and work for these businesses. Very few leaders made any attempt to address these decisions with the empathy and understanding it required except the Tata Group patriarch Ratan Tata. Without mincing his words he pointed out that the layoffs were a knee jerk reaction taken by companies without extending any empathy to the ones at the receiving end of such decisions. Another Indian organization Wipro, an IT service provider enabled work from home for 93% of its employees and managed to keep them all.

While sustainability still drives such decisions sometimes it also becomes a question about intention. Businesses which are not sensitive to the people in the time of need and deny ethical responsibilities to chase financial profits cannot consider themselves immune to the ramifications of such approach. So, was there really no option? For some perhaps, but for most, it was just the matter of trying.

There is a consensus amongst industry experts that retaining employees and cutting cost innovatively can be the way forward. Strategic resource allocation and rationalization of expenses like travel, variable pay and training costs, optimizing working hours and using technology effectively, hiring only for essential positions are the options that can be considered.

Layoffs have pushed back economic recovery while adding additional burden on the Government and eventually the taxpayers to sustain people who lost their jobs. It appears like a vicious circle and though only normalcy can ensure that things are back on track again, little efforts from corporate and companies can go a long way.

Let’s put this in perspective and also discuss the fact that 45 out of the 50 biggest companies in USA have grown and performed exponentially well during the pandemic and yet chose to furlough, terminate and lay off its employees. What is disturbing of this scenario is the other part of the information. While the workers were laid off, the stake holders rejoiced as the bulk of profits were shared with them.

Author and former Social Ethics Professor at Stanford Business School, Kirk Hanson, called out the American corporate to shoulder the responsibility of pulling the country out of the worst economic crisis in its history. He called them out for shying away from their obligations during a human crisis of this magnitude and putting shareholder interests above the workers even in these difficult times.

It is difficult to believe that every organization was in the same boat during the pandemic. The pharma companies, the health care service and products industry, the entertainment giants like Netflix and online shopping titan like Amazon, the gaming business leader like Nvidia, flourished during the pandemic, leaving aside Amazon, most of the other organizations laid off employees in thousands.

Unlike small businesses struggling to remain afloat, the industry leaders were making profits while enjoying the competition wax away on its own. Despite having enough resources to wade through the year, the large corporations used pandemic as an excuse to lay off employees.

Apple bought back its shares worth fifty billion dollars, the other fortune five hundred companies did the same over the quarters, but the benefits largely went to the already strong shareholders. It is hard to overlook the fact that this financial resource could have been used to provide relief to their employees.

While businesses need to be driven by profits and not ethics, a whole absence of it may lead to financial implications too, loss of goodwill and in the worst-case scenarios even lawsuits.

However, the dreadful 2020 ends on a positive note. European Union targets to vaccinate about 450 million people and millions of dosages of the vaccine has been shipped across USA in an attempt to start a systematic vaccination program. Things are moving in the positive directions despite threats like new variants of the virus and reactions to the vaccines. But, what does this new development means for businesses?

The arrival of vaccines is an opportunity for the organizations to reassure their employees by providing them free vaccinations or extending the health benefits to cover the cost of vaccination. Several Indian companies have sought permission from the government to allow them to use their CSR funds to buy vaccines for their employees. Such measures would have a positive effect both on the economy and workforce.

The pandemic has caused a series of changes at the workplace and how organizations will function in future but that should not become an excuse to exclude people and deny the workers their rights.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


Human Resource Management