There is a great deal of ongoing analysis on the current state of the glocal economy. To borrow the quote, ‘it was the best of times, it was the worst of times’ pretty much explains what the current situation is. However irrespective of how companies are reacting, the sign of the times is just plain bleak and dull. People being laid off and companies tightening their belts to, at times, an unimaginable extent just to get through the trough the global economy seems to be stuck in.
As the leader in the organization, how does the CEO deal with the situation? Do the smaller organizations get impacted the same way the larger ones do? If we hear about so many people being let go, were the organizations inefficient to begin with?
Khalid Rahman, part of the CIO Pakistan group on Facebook, voice the most ideal behavior for a responsible CEO: prioritize expenses and cut them accordingly. “Keep ‘people’ above all other assets because they are irreplaceable.” And while this might be a little easier said than done, we can’t ignore the number of people that are being laid-off due to organizations downsizing on their manpower. If I were to be the CEO of any such venture, the first thing I’d make sure of is that “I don’t let anyone go”, instead I would find and harness alternative potential just waiting to be discovered around the bend, around that alley of yours, all around Pakistan or any other part of the world where the desire to move on, and to push it through, is considered a virtue.”
Easier said than done isn’t it? He continues to explain that the advancements in alternative means and strategic placements are shaping the way we do business today. “Good CEO’s work with what they got, Great CEO’s push the envelope, they re-create. For them, every upside or a slump presents a fantastic opportunity to think, re-think, research, work the strategy, plan, reconnaissance, working around the odds, applying the basic power of reason and execute.”
Imtiaz Noor who works at Crosby explains that his company manages funds. “At this point of time there is no investor activity going on in equity funds and we are using this time to improve ourselves.” The upside of the company is that they are using the downtime to rework strategies for everything from power conservation plans to optimizing systems and adding on training modules for their distribution partners. “We’re a small team and we see this “less revenue” time as an advantage where we can improve ourselves and aim to plan better business more coherently.” But Crosby might be one of very few such companies.
Few companies see low activity as an opportunity.
Fakeha Rashid, for example, shares an insight she has gathered. “I’ve been conducting market research for an upcoming training program for the past few weeks. The most common reason I found, across industries, for companies not sending people to the program was the fact that they are cutting on training budgets for current year! The need for this behavior is an obvious sign of the economic upheaval being faced here locally. Training budgets are one of the first things to go when an organization attempts to cut costs to maintain profits.”
Mohammad Nadeem Iqbal becomes quite vocal in his determination to hold onto his HR asset. “I would never downsizing. That just means that I am an incompetent leader. Extraordinary circumstances call for extraordinary measures. Be innovative during times of crisis instead of contributing to the crisis to further impact the economy rather than helping to revive it.”
But can you really blame the organization?
Khalid retorts and adds, “Facts have shown over and over again that big corporations are the first ones to lay off their employees in troubled times, but the smart middle class entrepreneur manages to survive. As long as there are billions of people on this planet, there is an opportunity. Human entrepreneurship, and thinking beyond the possible is what has been riding the world and thus will drive the 22nd century, as economic elements break through our racial and inner divides. No sensible company should be wiling to loose, in high times or low, it’s most valuable asset, the worker or the executor. Professionals say, if only you can thoroughly grasp a serious skill, then money is all around you, you just got to learn how to get it.” Wise words obviously spoken from a great deal of experience. Arsalan Nazir adds that he would try to expand his business horizontally but never downsize his team. “The HR is the only asset one can have.”
Mustafa Syed also talks strategy by talking about the long term and short term gain. “As a short term solution, I think the companies as well the employees should be open to venture into alternate areas. Bottom line is that we all work to earn a living with variations in lifestyle adding to the diversification. I have noticed that some of the IT guys now are doing successful cooking shows on television and there are some guys I know who started as professionals with MBA are now doing far better as fashion designers and I believe it is also true for other industries.”
This isn’t something happening just in Pakistan. Companies around the globe are downsizing their operations. So with massive job cuts, is it a fair assessment to have and say that the companies lacked focus and engaged in poor planning when the economy was doing well? The fact that a lot of companies had a lot of poor planning and strategies in place, could that be part of the reason why things are as bad as they are right now? Amir Jehangir, CEO of Samaa Television explains, “Diversify and reinvent your business strategy” though for all those people who are running their businesses or working in a crisis mode (which includes a LOT of companies right now), it would seem a little difficult to make this happen. Perhaps strategy is the missing link for most businesses.
Addressing the question as to why companies are cutting down on size, Mustafa Syed offers several reasons. “The reasons are many but inefficient hiring and slow down take the lead. In last few years you may have notice lot lateral moves in financial industry which resulted in lots of highly paid individuals. Historically in Pakistan I have never seen a standard in pay scales or responsibilities attached to job position, they vary depending on how badly one was needed or how well an industry sector was doing.”
And speaking of strategies, a publicist named Hasan Zuberi says, “I would have had put a control to my advertising budget and invested more wisely in PR, especially with Government CSR initiatives what they are today. I think this would enable me, as a company, to spend less and get better mileage even in times like these.”
Fahmina Butt says, “I would cut on my debts and as oppose to cutting on my assets people are assets they bring in business, to do business efficiently one should reduce on debts and liabilities. Hence to maintain a profitable balance sheet I would make my business processes more cost efficient.”
Economic Perspectives
Adeel Esbhani, an IBA grad, offers his two cents and says “A thorough macro level analyses will suggest how long the situation will last – if it were to last for a longer time, a cost benefit analyses will determine what is better; either retain the surplus strength and/or layoff with gratuity and golden handshake. In every likelihood, I see sanity prevailing post US elections, knowing in retrospect situation always makes a u-turn pre-election era.”
Mustafa continues on to say that, “Pakistan traditionally is an agricultural country and for this reasons you will also find a very strong feudal culture in the country and many of these feudal lords also involved in the governance. On the other side the force that from time to time takes over governance is our military that also has strong links to the land and agriculture. For these reasons the industry and the middle (consumer) class in Pakistan will remain small compared to other countries we take as examples. Gurus worldwide also think that there will be food shortages worldwide and agriculture based economies will boom in foreseeable future.”
With these factors taking effect, he continues, we may see a different type of middle class assuming that Pakistan will plan now to move in this direction and investors will also take the initiative of investing in agro infrastructure and industry “Technology must also find its niche in this area. Beware that even in this area we will face a lot of competition from countries like China, India which border us and countries in South America and Africa that currently face political challenges.”
Solutions
So more than 75% of the responses gathered through this question on our group stick to their position that they would not downsize, 12% of the respondents have addressed the need to help the situation by introducing greater innovation in the workplace, and approximately 18% of the respondents have addressed one cost cutting method or another.
Khalid Muhammad, CEO at Emagine-Group thinks that Tele-Commuting is the need of the hour. “When you allow your critical team members to work from their homes via a secure server, it increases productivity while decreasing overall costs. Granted, the downside to the Tele-Commuting model is that the team member will receive less benefits because the standard packages that would be provided to staff members would be decreased to meet the requirement of the time. In this case, keeping key team members on staff without carrying large operational and salary expenses.”
This model does require that the team member have a computer at their home, but this can also be solved if the person is a requirement to the team. The only cost that the company takes on monthly for the employee, outside of salary, is the connectivity charges for the internet.
Khalid explains the model a bit further by saying that, “We do still keep a rack of 5 computers at the main office for people that have to come in to work on projects, but overall this approach decreases our initial outlay to hire a qualified staff members, track their performance and deliveries through the online server and reduce our overall monthly operational and salary expenses dramatically.”
Sure there is a lot to be done and regardless of all the role playing in the world, unless you get into the shoes of a CEO in the real life situation that we’re all going through, there is no way we’ll know what it takes to make that final decision to downsize or introduce innovation.
