Intro: Are you aiming at a job cut in your organisation for better profits? Do you know how to avoid it and stride ahead by empowering your employees? Are you aware of the proven benefits of implementing an effective HR value chain in your organization towards enhancing productivity, revenue, customer satisfaction, and profitability in your organization? Or as an employee are you aware of your rights? Do you know which path to take towards retaining your job and becoming a more valued employee? All these and more such stinging questions answered by Dr Vikas Vats, Founder and President HR Association of India in an exclusive interaction with Senior Journalist Mahima Sharma only at Socio-Economic Voices. Take a read...
MS: What is going wrong with big organisations in the first place where such a large number is being sacked? Where could have the business gone wrong? What better HR policies could have evaded the crisis?
Dr Vats: There are several factors that could be contributing to the large-scale layoffs in big organizations in India (such as BYJUs and recently Accenture). Some of the major reasons in my vision could be…
Poor Business Strategies: I think some companies may have made poor business decisions, such as expanding too quickly or entering into unprofitable markets, which could have led to financial losses and the need for cost-cutting measures.
Economic Downturn: You can observe that economic downturn caused by the COVID-19 pandemic has hit many businesses so hard that they are still recovering especially in India. Many companies have seen a drop in revenue, which has led to cost-cutting measures like layoffs.
Automation and Digitization: Another trend is that with the increasing focus on automation and digitization, many companies are replacing human workers with machines and software to cut down on costs and improve efficiency.
Restructuring: And last but not the least some companies are restructuring their operations to streamline processes and reduce costs, which could result in layoffs.
I would suggest , to avoid such crises, companies need to implement better HR policies that prioritize their employees' welfare while still maintaining the company's financial stability. Some of the ways in which companies can do this include:
Regular Communication: Companies should maintain regular communication with their employees to ensure that they are aware of the company's goals, plans, and strategies. This will help build trust and ensure that employees are aligned with the company's vision.
Skill Development: Not only to thrive but even to survive, companies should invest in their employees' skill development by providing training and development opportunities. This will not only help employees grow professionally but also increase their value to the company.
Employee Engagement: Employee engagement can come very handy. By creating a positive work environment and recognizing employee contributions. This will improve employee morale and reduce turnover.
Performance Management: And final push can come from effective performance management systems that provide feedback and support to employees to help them improve their performance.
In nutshell I believe to avoid crises like the large-scale layoffs happening in India, companies need to prioritize their employees' welfare and implement better HR policies. By doing so, companies can create a positive work environment that benefits both employees and the company.
MS: What role does HR play in managing the financial health of the organization during economic challenges?
Dr Vats: Thanks for asking this, Sans any doubt I reckon during times of economic challenges, the role of Human Resources (HR) in managing the financial health of an organization is crucial. There are several strategies that HR can implement to support the organization's financial health, including cost-cutting measures, talent management, and health and wellness programs.
The masses need to understand that one critical aspect of HR's role in managing the financial health of an organisation is cost-cutting in a financial emergency. I would like to refer a study by the Society for Human Resource Management, the most common cost-cutting measures implemented by organizations during the 2020 pandemic included reducing employee hours, implementing hiring freezes, and reducing benefits. Also, during the 2008 financial crisis, Ford Motor Company implemented cost-cutting measures such as reducing its workforce, renegotiating vendor contracts, and suspending employee bonuses to mitigate the impact of the crisis on the organization's financial health.
I see another important role of HR in managing financial health is by talent management.
This might surprise you but employee turnover rates can cost organizations up to 200% of an employee's salary in recruiting and training costs. HR can implement strategies to reduce turnover rates, such as offering competitive compensation packages, providing training and development opportunities, and creating a positive work culture. I remember McDonald's Corporation during the 2008 financial crisis, implementing talent management strategies such as offering employees training and development opportunities and competitive compensation packages to retain top talent.
HR can also support the financial health of the organization by implementing health and wellness programs. A study by the International Foundation of Employee Benefit Plans found that 94% of employers offer wellness programs to employees. These programs can help reduce healthcare costs and improve employee productivity. For example, during the pandemic, many organizations implemented virtual wellness programs to help employees cope with stress and anxiety caused by the pandemic.
MS: What are some of the key skills and competencies that employees should focus on developing, in order to remain competitive in the current volatile job market, especially with AI digging its heels deeper into the corporate ecosystems?
Dr. Vats: As the job market evolves and AI continues to gain momentum, it's crucial for employees to develop new skills to stay competitive. According to the World Economic Forum, top skills for the future of work include complex problem-solving, critical thinking, creativity, emotional intelligence, and cognitive flexibility. Technical skills are also important, with data analysis, coding, and digital literacy gaining prominence due to the rise of AI and automation.
In my opinion adaptability is a key skill for employees to cultivate, as highlighted by a Deloitte study that found 90% of executives consider it essential for the future of work. Being able to adapt to changes in the workplace, such as new technologies or remote work, is critical.
I find Emotional intelligence skills also highly valued by employers. Even LinkedIn's study identifies it as one of the top soft skills sought after in candidates. I have found that Employees with emotional intelligence can effectively navigate complex interpersonal relationships, communicate well, and thrive in team environments.
MS: You are an HR expert as well as a qualified psychologist. How can HR professionals better support employees who are struggling with mental health during job loss or uncertainty?
Dr. Vats: As an HR expert and qualified Psychologist, I believe that HR professionals have a critical role in supporting employees who are struggling with mental health during job loss or uncertainty. I would like to share some measures taking which HR professionals can better support these employees:
Unfortunately, I remember many real-life examples where individuals have taken their lives due to financial stress resulting from job loss or uncertainty. In these situations, HR professionals can play a critical role in preventing such tragedies by being vigilant about the mental health of their employees and providing them with the necessary support and resources.
Severe incidents of employees ending their lives after job loss or due to financial stress, in a thankless job, highlight the importance of HR professionals in India being proactive in supporting employees who are struggling with mental health issues. Providing access to mental health resources, financial support, and job training and reskilling opportunities can help employees cope with the challenges of job loss and reduce their stress levels.
MS: Maximizing internal hiring and retraining to retain valuable employees and build future-ready skills. Leveraging internal talent and maintaining a positive employer brand during economic challenges - the winning strategy. Details on the process?
Dr. Vats: Let me assure you that internal hiring and retraining programs are powerful tools for companies to retain valuable employees and ensure they have the skills needed for the future. It shows a commitment to the workforce and fosters a culture of learning and development. Here I would like to share a step by step process how this can be done:
As the first step, identify the skills needed in the future and assess the current skill sets of the workforce through surveys, interviews, and assessments.
In step 2, create a training and development plan: Based on the skill gaps identified, create a plan outlining the skills employees need to acquire and how the company will provide the necessary training.
Step 3 means, promoting internal job postings: Encourage employees to apply for new roles within the organization through internal job boards, newsletters, and communication channels.
Step 4 should focus on providing mentoring and coaching to help employees develop the skills needed for their current and future roles through formal mentoring programs, informal coaching, or on-the-job training.
And in the 5th and final step, the HR must evaluate and reward success: Value the employees who acquire new skills or take on new roles within the organization.
One example of a successful implementation of internal hiring and retraining programs is by Titan Company Limited, a company in India. Titan has a talent management program called "Udaan" that focuses on identifying and developing talent within the organization through mentoring, coaching, on-the-job training, and leadership development programs. Through "Udaan", Titan has filled 65% of its leadership positions through internal promotions, reducing dependency on external hiring. It has also built a strong employer brand and reputation, as employees are more likely to stay with a company that invests in their growth and development.
Another example is Infosys, also a company in India that has successfully leveraged internal hiring and retraining programs through its program called "Bridge". "Bridge" provides employees with opportunities to acquire new skills and move into different roles within the company. Through "Bridge", Infosys has re-skilled and up-skilled over 200,000 employees and filled over 50% of its leadership positions through internal promotions. This has helped Infosys build a strong culture of learning and development, where employees are encouraged to take ownership of their own growth and development. Investing in its employees' growth and development has enabled Infosys to retain valuable talent and maintain a positive employer brand and reputation, even during challenging economic times.
MS: What role can HR professionals play in promoting a culture of resilience and adaptability within organizations towards better employee engagement and retention during times of economic uncertainty?
Dr. Vats: I strongly believe that HR professionals play a crucial role in fostering resilience and adaptability in organizations, particularly in times of economic uncertainty like the COVID-19 pandemic. A Deloitte survey reveals that 94% of companies have adjusted their business strategies due to the pandemic, with 70% prioritizing resilience-building for the future.
In my experience over the years, I believe that every organisations’ HR must promote a culture of resilience and adaptability. HR professionals need to take some necessary steps. I am sharing a few…
For example, Amazon has been successful in creating a culture of resilience and adaptability by investing in its employees' skills and well-being. Amazon's Upskilling 2025 program aims to provide training to 100,000 employees in high-demand fields. During the pandemic, Amazon implemented measures to support its employees' well-being, such as increased sick leave and mental health support.
Likewise, Salesforce has been recognized for its culture of resilience and adaptability. During the pandemic, Salesforce offered its employees the option to work from home indefinitely, provided mental health support, and prioritized employee well-being. As a result, Salesforce has been named one of the best places to work during the pandemic.
It’s amply clear that HR professionals can play a copious role in promoting a culture of resilience and adaptability within organizations.
MS: How HR professionals can make a business impact by creating an HR value chain? How can this contribute to long-term success of India Inc in the current economic climate?
Dr. Vats: First fo all let me explain what exactly is HR Value Chain, The HR value chain is a strategic approach that links HR processes to the overall business strategy, creating value for the organization. By building an effective HR value chain, HR professionals can make a measurable impact on the organization's bottom line, contributing to long-term success.
India has a strong pool of professionals with digital skills, making it an ideal market for digital talent acquisition. By attracting and retaining the best talent, HR can play a crucial role in the organization's long-term success.
Creating HR Value Chain can pave a CHROs way to becoming CEO
Performance management can align employee goals with business objectives through feedback, coaching, and development opportunities. A strengths-based approach to performance management can result in a 14-29% increase in employee engagement, leading to a 10% increase in customer satisfaction and a 20% increase in sales, according to a study by Gallup.
Next I suggest areLearning and development programs, which can build a skilled workforce that can adapt to changing business needs. This is interesting to see that companies that invest in such programs see a 10% increase in productivity, resulting in a 2-3% increase in revenue, as per a study by IBM.
Another important area is Employee engagement strategies, which can create a positive work culture that fosters collaboration, innovation, and high performance. Engaged employees lead to reduced turnover and absenteeism, improved customer satisfaction, and increased profitability. Companies with engaged employees see a 17% increase in productivity, a 41% reduction in absenteeism, and a 24% decrease in turnover, according to Gallup.
And finally inclusive work culture can increase innovation, creativity, and problem-solving. Companies with diverse workforces are 35% more likely to outperform their competitors, leading to long-term success, as per a study by McKinsey.
By creating an effective HR value chain that aligns HR processes with business strategy, HR professionals can make a significant impact on the success of India Inc in the current economic climate.
MS: Do you think diversity and inclusion in the workplace during economic hardship can help the Indian Economy make its HAPPINESS INDEX at work scale high? If so, how?
Dr. Vats: Let me assure you that the Diversity and inclusion in the workplace are proven drivers of employee satisfaction and productivity, with direct implications for better economic performance in the Indian economy. Numerous studies highlight that diverse and inclusive workplaces foster innovation, creativity, and adaptability, enabling companies to effectively navigate economic challenges.
McKinsey & Company's research revealed that companies with ethnic and racial diversity in the top quartile of their workforce were 36% more likely to achieve above-average financial returns compared to those in the bottom quartile. Additionally, the Boston Consulting Group found that diverse management teams were associated with higher innovation revenue.
Furthermore, when employees feel valued and included, they are more engaged, committed, and productive, resulting in increased job satisfaction, reduced turnover, and better retention of skilled employees. This not only saves recruitment and training costs but also contributes to overall happiness at work, which impacts employee mental health, productivity, and well-being, as shown in studies by Glassdoor.
In times of economic hardship, promoting diversity and inclusion in the workplace is crucial for driving innovation, productivity, and engagement among employees, leading to long-term benefits for the Indian economy.
MS: What additional steps need to be taken to further advance the National Education Policy (NEP) after the renaming of the HRD Ministry to Education Ministry in 2020? As an HR expert, what specific areas within the school system should be addressed to cultivate productive mindsets and prevent brain drain?
Dr Vats: You see, the rebranding of the HRD Ministry to the Education Ministry in 2020 marks a shift in focus towards enhancing the overall quality of education in India. However, there's still much to be done to achieve this objective. As an HR expert, I believe that there are several crucial areas that need attention at the school level to foster productive mindsets and prevent brain drain.
By providing students with a holistic education that prioritizes both knowledge and skills, we can cultivate a generation of productive individuals who can contribute to the country's growth and development.
MS: As per the Indian laws, what support and resources are available to employees who may be affected by a job loss or pay cut? What is the policy change that is needed?
Dr Vats: In India, there are various support and resources available for employees who may be affected by job loss or pay cut. I would like to detail a bit for the knowledge of all, because not everyone is aware of these…
Severance pay: If an employee is laid off or terminated, they are entitled to receive severance pay as per the law, which is usually a certain number of days of pay for every year of service. However, this rule applies only to establishments that have 100 or more employees.
Unemployment benefits: There is no formal unemployment insurance scheme in India. However, some state governments have announced schemes to provide financial assistance to unemployed persons.
Retrenchment compensation: If an employee is retrenched due to closure or restructuring of the company, they are entitled to receive retrenchment compensation as per the law.
Notice period: If an employee is terminated, they are entitled to receive a notice period or salary in lieu of notice, depending on their contract terms.
However, I also see some flaws in the current Indian laws related to job loss and pay cut. For instance, the severance pay rule only applies to establishments that have 100 or more employees, which means that many small and medium-sized enterprises (SMEs) are exempt from this rule. Additionally, there is no formal unemployment insurance scheme, which means that unemployed persons may face financial hardship until they find another job.
In comparison, many developed countries have comprehensive support systems for employees facing job loss or pay cuts. For instance, in the United States, employees may be eligible for unemployment insurance, providing temporary financial assistance. Some European countries offer wage subsidies to prevent layoffs during economic downturns. To improve support, India could implement unemployment insurance, extend severance pay to all establishments, and provide more financial assistance to the unemployed. Wage subsidies for SMEs during economic downturns could also be considered.
MS: What strategies can be adopted to identify, develop and retain high potential employees to keep the organisation agile and at the top of the ladder?
Dr. Vats: Identifying, developing, and retaining high-potential employees is crucial for any organization to maintain its competitive edge and ensure long-term success. Some strategies that can be adopted to achieve this goal might be…
The first step in identifying high-potential employees is to have a clear definition of what high potential means in your organization. This definition should be based on the unique needs and values of your organization.
By adopting these strategies, organizations can identify, develop, and retain high-potential employees to keep the organization agile
MS: WFH is slowly being done away with. The Female workforce may not be able to make it. How about better and more inclusive policies- What's your future take on this and what all HR policy changes India needs?
Dr. Vats: You are right, as the COVID-19 pandemic eases, companies are shifting away from remote work policies. In India, women face barriers to employment due to cultural norms and lack of flexibility. Remote work has helped some women balance work and caregiving, but as WFH ends, women may leave the workforce.
HR policy changes are needed for sustainable remote work for women, including flexible work arrangements, technology support, inclusive communication, family-friendly policies, and addressing bias, salary inequality and harassment.
The recent Amazon case in India, where allegations of discrimination and harassment were made against the company, underscores the need for stronger policies and procedures to protect employees from discrimination and harassment, whether they are working remotely or in the office. It is crucial to create a more inclusive and supportive work environment for all employees, which requires a holistic approach encompassing changes in policy, culture, and management practices. By addressing these issues, companies can attract and retain a diverse workforce and create a more sustainable and successful business model in the long run.
MS: Lastly, POSH LAWS at work. There is a wide divide between the law being there and it being implemented the way it should have been. What kind of organisational and HR teeth are needed to make the law implementation sharper? Does the law in itself need more teeth?
Dr. Vats: The POSH (Prevention of Sexual Harassment) laws in India aim to ensure workplace safety, especially for women. However, implementation gaps exist, as you pointed out. To improve implementation, I recommend organizations to adopt a multi-pronged approach:
Additionally, the law itself could have harsher penalties for non-compliant employers or those who retaliate against reporting employees. A streamlined complaint redressal mechanism can also be established.
If I compare with other countries, many developed nations have well-structured laws and regulations related to sexual harassment in the workplace. For example, in the United States, the Equal Employment Opportunity Commission (EEOC) enforces federal laws prohibiting sex-based discrimination, including sexual harassment. The EEOC investigates complaints and takes legal action against violators. In Sweden, the Discrimination Act prohibits all forms of discrimination, including sexual harassment, and provides strong legal protections for employees.
About Dr. Vikas Vats
Besides being the Founder and President of HR Association of India and the Founder of Vats Consulting, Dr Vikas Vats is also a qualified Organizational Psychologist. He claims to have helped 100s of organizations in optimizing their People, Processes and Technology.
As a HR Consultant, Coach and Trainer, he has a proven track record of delivering high-impact coaching, training, and developmental interventions. Using principles of Neuroplasticity and Andragogy he creates L&D Programs which have ever lasting and measurable impact. Leadership Development, Emotional Intelligence and Selling Skills are among his strong suits. He shares that data driven approach helps him create result oriented HR Interventions for the Organizations. Currently he has shares to be doing lots of work on HR Analytics and is also writing a book on the same.
About the Interviewer
Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at media@indiastat.com
Disclaimer : The opinions expressed within this interview are the personal opinions of the interviewed protagonist. The facts & statistics, the work profile details of the protagonist and the opinions appearing in the answers do not reflect the views of Indiastat or the Journalist. Indiastat or the Journalist do not hold any responsibility or liability for the same.
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