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Friday, July 10, 2009

Recession: blessing in disguise for some employers

Not a new post about 'recession'. You must have known quite a lot already what this is, how this is effecting the businesses worldwide and how even the Bangladeshi economy might get (or already is) hit by this global financial meltdown. While the gurus keep crunching theories of finance and attempt post-mortem of the disaster and formulate revival strategies, some employers are surely making the most out of this opportunity in the guise of 'recession'.

It is argued that thanks to internet and the speed of news transfer, recession has hit our minds faster than it has hit the economy. What else can you think of when the first thing you see in the morning newspaper is big headings of how many thousand employees are laid off almost every other day in big companies around the world, how big high street shops are right-sizing their employee base to tackle the crisis etc. Its everywhere, in the internet, print media, electronic media, everyone is talking about it and it has become like an epidemic from which the world economy seems to be suffering from.

Employers are not sitting idle to make merry in this 'recession', they say 'recession' is the best time to do something innovative and turn the business around. So what are they doing? What is their knee-jerk reaction to the financial tsunami? Simple and the easy people. Now the natural excuse is out there. You don't have to cook up any office story, any project failure, behavioral problem, whatever...just say 'due to global financial crisis, we are trying to remain competitive in the market', so the following phrases have become so popular among employers now.

--do double or triple of your job responsibilities
--don't expect any salary raise in foreseeable future, as the 'whole world' is in recession, we are no exception
--don't bother to have complains about management, we are trying our best, if you don't like the job, leave it...people are losing jobs like falling leaves from trees in winter...and thousands are up and ready for your you know what you would do best.
--forget about bonuses, paid holidays, overtimes etc. we cannot afford to spend in useless sectors anymore

The bottomline is that there are many companies still out there who are not affected by the recession disease. Nevertheless, they are pretending that they do have caught the disease or might catch it in near future, so under this pretext they are cutting cost by all means. Just imagine what a great opportunity has arisen for these companies to boost profit figures thanks to reduced salary figures but getting nearly same or more work outputs with fewer employees.

I wonder in a saturated job market like Bangladesh, where getting a job is extremely difficult, how it would be to lose a job under the pretext of 'global recession'. We are quick dancers to the hujoog tunes (downloadable from iTunes?!), so who knows how many bosses of Bangladeshi companies are plotting this evil plan to get rid of some unwanted souls around.


Neo said...

This is nothing strange.Businesses all around the world wait for opportunities and do whatever they need. who can say that this "financial tsunami" is not a planned creation?

There should be ethical practices in business.

the_skywalker said...
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the_skywalker said...
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the_skywalker said...

Recently some interesting facts came out such as EUROPE will recover at a much slower rate than USA and JAPAN. Can we guess-why? It is simply because EUROPE is more protective of employees. On the other hand, USA is aggressive in cutting jobs. This explains to a great extent why job cutting is necessary and effective though it is quite undesired and very painful for the affected ones.

We may also need to understand certain other aspects. In this recession there is reduction in demand across industries, resulting in falling revenue thus lower flow of money. So, if companies can't adjust their fixed cost items such as salary, they would bleed cash and go bankrupt. Now, if companies could reduce the salary of employees in line with low revenue flow then companies do not need to cut people. Unfortunately, wages are not lowered / adjusted quickly. It is called stickiness of wages. Hence, companies cut people simply because out of all fixed components, head count reduction can be done fairly quickly. We may also need to keep in mind that in this recession one big problem for business is to maintain liquidity or positive cash flow. With falling price and demand, and bank's unwillingness to give loans, companies were forced to take proactive action to reduce their cost base so that they can maintain liquidity. It is not the fact that companies have been taking advantage of the situation to cut people and improve profit only.

We also need to understand that many industries are lagging in nature which may get the impact of recession later compared with other companies. So, even though problems are not apparent today those will appear in future because of the nature of the industry structure. And if those companies do not take proactive action, their stock price will be punished by Mr. Market. There are many dominos affect if stock price is falling including higher cost of debt or failing to respect covenants.

Bangladesh Corporate Blog is a good site and this will certainly draw attention of foreign folks willing to know about the quality of management professionals of Bangladesh. So, we may do a better job by presenting more inclusive/comprehensive analysis of issues rather than just posting some simplistic thoughts or just presenting only one dimensional analysis or even citing just one of those popular conspiracy theories.

Shehzaad said...

Thanks skywalker for removing earlier comments and making the conversation more constructive and conducive.

Indeed my views are simplistic and I commend your analysis and perspective on the recession and the associated job cuts. I am trying my level best to encourage experts like you to blog on contemporary business topics, which relate to the Bangladeshi businesses. Sometimes simplistic articles are posted to trigger expert opinions and start a conversational learning for all.

After all this blog is supposed to be the platform to complement each others knowledge, opinions and expertise. Hope to read more from you. Thanks.

the_skywalker said...

Posting , simple(!??) or may be thought provoking ideas to inspire learning through idea exchanges, is indeed a highly appreciable effort. In a free space like this, people will definitely express their opinions however simplistic those could be. But we may also need to remember that this is not a personal blog where we can put anything and everything. It is a common forum and indeed a big representation of Bangladeshi management professionals including their thinking, outlook, aspirations and insights. Hence, it may attract attention of folks who are looking to have an idea about depth and breadth of thinking amongst management talents in Bangladesh. In this scenario, if main write ups (not some comments/post hoc analysis) lack some bit of depth or multi dimensional analysis then those may give wrong signal /bad impression about image of our management professionals. Apart from this write up, I can enumerate another example. In fact I mentioned the same issue in that write up also. Quite sometime back somebody wrote about starting Dragon’s Den type venture competition in Bangladesh and the writer recommended that venture capitalists will act as judge and finance the winners. But venture capital industry is almost non existent in Bangladesh. So, from where those venture capitalists will come to judge and later finance the winners. Was it not logical to think about this type of basic information before making such wishful thinking? This type of write up may give wrong signal. This is just an opinion. And I must admit that at times I have also not been responsible in making my comments that might give bad impression.