Why Layoffs? “To cheer Share Markets” say CEOs

Pay cut or layoff? A look at what India Inc CEOs think is better

Infosys co-founder N R Narayana Murthy said senior leaders in IT companies should consider taking salary cuts instead of laying off youngsters, and encourage these employees to reskill so that companies can take advantage of new opportunities emerging in the industry.

But India Inc CEOs believe that laying off is a business contingency and the easiest way to shore up share price.

View : CEOs and companies are solely driven by stock market and investors. Every quarter they have to play to the share market.

If you lay off share market will cheer it. It’s a topsy turvey world where the share market drives the company, not the company’s performance driving the share market.

Thetefore Layoffs are not driven by business case, but by financial case.

Even the government plays to the share markets. Farmers’ loan waiver will be frowned upon by share markets, but tax concessions and debt restructuring to corporates are welcome policies.

Then what’s the right answer in tough times – pay cut or layoffs?

Hold discussion between management and employees represented by Employees Union.

Put all relevant information on the table. Is the company losing money? If yes, who should take pay cut and how much?

The discussions may even decide on VRS scheme to employees with suitable package.

Decide based on consultation. Not by unilateral, dictatorial top down decision making.

And follow the law, treat employees with respect. Don’t insult and humiliate, branding long serving employees as non-performers.