Monday, May 28, 2018

The Looming Dark Side of Retrenchment

My company had recently announced an undertaking restructuring exercise which would impact a few functions and one of the functions would be in my department.

As a shareholder and someone who's been investing for some time, I didn't see this much as a surprise.

Companies have the tendency to exercise their restructuring plan every once in a while. The idea is to identify productivity savings and reduce manpower costs and above all increase shareholder's value by delivering a higher earnings per share.

My company tends to have this exercise roughly once in every 4 years, so long timers would have seen this coming. It feels sort of like a correction in the stock market that comes once in a while, and all as part of a company's life cycle.

The good thing about the company policy is it pays out a package equivalent of 1 month for every 1 year of service, up to the maximum of 12 months. So if you have been serving in the company for 10 years, you'll get a 10 month package.

The other good thing about the company is they will extort every measures to ensure they will find a role for the employee until the last stance, as part of the Group's mission and goodwill towards their employees as well as to avoid the third camper scenario I would talk below.




In the normal stench of scenario, there are usually 3 campers.

The first camper belongs to the majority who are worried about the loss of their income that might disrupt their lifestyle, especially those with high mortgage loan, other debts and children who are young.

The second camper belongs to the minority who are actually looking forward to receiving the package because they are at the near end of their working life. These are usually those that are typically range in between 55 to 60 years old and have worked in the company for donkey years. The severance package will serve a good sayonara figures to tie down the rest of their retirement lives. Hopefully, together with the savings they have, they are able to retire earlier than expected and enjoy the rest of their retirement lives.

The third camper belongs to even the lesser minority who are actually also looking forward to receiving the package either because they are financially stable, have own outside ambition or a housewife. These are the group which typically "doesn't mind" if they receive the package because they can either take a break, reshuffle or have plenty of other options that are flexible.

I've seen a few of my colleagues who are under this third category and it is easy to identify them as they looked calm yet eager to find out the circumstances.

My boss had a talk with me a few times and had assured me that my job is safe, though he is unable to confirm the role which might change and evolve. He can't say the same for my other colleagues though who are in the first camper scenario, sadly.

The irony about this whole thing is I had actually preferred to be in the third camper and it would mathematically benefit my financial situation had I been offered the package instead. I have been in the company for 7 years, so that would entitled me 7 months package.

I had subtly and intentionally hinted to my boss but this exercise does not allow voluntarily redundancy so it doesn't work in this manner.

Still, nothing is confirmed yet so it'll be plenty of assessment and transition between now till the end of the year until things are clearer.

I'll have plenty of direct influence because of the contribution of the assessment from my part but it'll be nothing more than a task which every company has to go through.

This is probably the real truth about working in a company as an employee.

The looming dark side of retrenchment will always be there.

You just have to be prepared when it comes your way.


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30 comments:

  1. I belong to 2/3 camper but my cpy have no such plan yet....just waiting.

    ReplyDelete
    Replies
    1. Hi iwimsasl

      You are in a good stead position either it comes or it doesnt come to you. You took care of what you can control.

      Delete
  2. Hi B,

    Restructuring efforts seem to be the in thing at the moment, I went through a rather drastic restructuring myself recently. Given the continued rapid disruption of technology and intense competition, it's very much evolve or die. Reminds me to constantly upgrade myself to stay relevant.

    Sounds like you have half a mind at moving on. Hope it turns out well for you.

    Regards,
    KK

    ReplyDelete
    Replies
    1. Hi KK

      Oh no sorry to hear that... hopefully everything turnd out to be rather well for you.

      Indeed in this era and times we can’t say for sure what is guaranteed. It’s better that we take care of what we can offer to ourselves and let nature takes care of the rest.

      Delete
    2. Thanks for the concern, I survived, but the bloodbath in my department was pretty severe. Sad about the people who had to leave, uncertain yet hopeful about the direction of the department going forward.

      Delete
  3. Even being a humble salaried employee runs the risk of retrenchment. The need to have multiple income sources has never been more pronounced in this technological era.

    ReplyDelete
    Replies
    1. Indeed, in this era of fast moving technology, even a Mcd employee also is obsolete to a machine with better productivity.

      Delete
  4. Good luck. Jia You

    ReplyDelete
  5. Similar situation happened in my workplace few months back. Those that were let go based on my observation belong to the first camper, I hope I would be in the third camp the next next time it happen. Hmm...

    ReplyDelete
    Replies
    1. Hi KPO

      Wow seems like its a common phenomenon across companies. Hope everything goes well :)

      Delete
  6. Sorry B, Small boy here gonna make some comments hehe :p

    I believe that for humans, it is important to have plans. If we are consistently trying to control uncontrollable factors, soon we will lose control of factors that are controllable :)

    I do know another company that has recently embarked on this project as well.. to retrench people. Haha. Guess it's a trend recently?

    ReplyDelete
    Replies
    1. Hi Sleepydevil

      I hope all this trend are not scaring you off... hehehe after all when your generation comes I’m sure old timers like us have become obsolete and new younger generations like you will come in together with automation.

      Delete
  7. Hi B,

    The potential possibility of retrenchment is another reminder to all that it can happen to anyone. The best approach is to be prepared for it and have as many options if the inevitable occurs.

    WTK

    ReplyDelete
    Replies
    1. Hi WTK

      Very well said and indeed it is up to us to control the factors that we have an influence on.

      Delete
  8. Hi B,

    I am sure the company will also look at the month salary of you and your direct colleagues too. If you are not affected, it could also mean that you are getting lesser salary compared to your peers?

    You are so financially savvy and aware, I am sure you already have plans for either of the scenarios.

    ReplyDelete
    Replies
    1. Hi MIM

      I asked abou that and apparently the answer is no. Cutting pay is not an option in the company and they dont look at those factors... i must say the policy is very well taken from that aspect :)

      Delete
  9. I am unable to convert to perm despite working for more than 10 years, if i am ask to go there will not be any compensation at all. Furthermore, my manager already hint to me to get a new job, I have try to find internally & externally but unsuccessful. I am screwed.... :(

    ReplyDelete
    Replies
    1. Hi JC

      Sorry to hear that...

      There are roles that are easily more replacable because they are contract role to begin with... plus if they are not under the mom regulation then all the more companies are not obliged to pay, unless they really treasure and treat their employees well being well enough.

      Delete
  10. Hi B,

    Natural attrition and non replacement of headcount can be more damaging to employees as they are stuck at the same wage but with more responsibilities. For those whom cannot cope, it will be a sort of forced obsoletion, with increased hours, less work life balance and do or die scenario.

    It is always good to have a second source of income or personal avenues outside of your main job that can be monetised. It is great that your company pays attention to employee retention and engagement and bottom up feedback rather than top down heavy handed approach.

    Hope everything goes well at your end!

    ReplyDelete
    Replies
    1. Hi INTJ

      It is uncertain times but I find it rather interesting.

      I have a suspicion that things would turn out to be better at the end of all this exercise but I am keeping my finger cross... I’d rather look at this positively than keep thinking why is it unfair.

      Delete
  11. I love the sound of a 7 month package in theory - although I also really enjoy my job so would rather not have to be searching for another one....

    Just goes to show how important it is to be financially stable, as well as understanding the world of money.

    Hope it all works out for the best either way!

    Cheers, Frankie

    ReplyDelete
    Replies
    1. Hi Frankie

      Thanks for concern.

      I guess when we love our job then money becomes a secondary matter and is fifficult to find another company with a good culture and colleagues. You are really lucky to have one right now ;)

      Delete
  12. My company use to have such exercise EVERY QUARTERs ... many years ago. Now it has been quite stable for quite some time due to better competitive condition in the market.

    I am in the 2nd Camp as the package is quite attractive but having said that I do not think one should ask to be retrenched as at this category is hard to find job that you like for the level of salary you will be getting today. Even with 7 months of salary compensation is not worth it because time flies. 7 months is very short. Furthermore some companies give good bonuses which easily cover half of your retrench amount easily. If the surfing is smooth, continue surfing man, dun jump into the sea just to for the sake of getting out of it. Just enjoy the ride of collecting monthly pay. My 2 cents. :)

    ReplyDelete
    Replies
    1. Hi Cory,

      I am in the third camp. I am not sure whether you agree with me. I feel that it is better to receive the salary compensation and venture out to find new opportunities which are likely to broaden one's horizon and knowledge. The constant is change and one needs to adopt open-minded approach to learn new things and adapt to the challenging environment. It does not matter if one fail as long as one does not give up trying.

      My two cents worth of views.

      WTK

      Delete
  13. Hi bro,

    What is your strategy or game plan?
    From what I gather, the ball is not in your court. Hope you are ready for the ride.

    Regards,
    Gerald
    www.sgwealthbuilder.com

    ReplyDelete
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