Deal with it: Both employees and employers have a role to play when it comes to layoffs

Will we still have our jobs? Which company’s work culture should we follow? Will our job profiles change? Will our salaries shrink? These are just a few of the pressing doubts that cloud employees' minds once their companies have announced either a merger with another entity, or an acquisition by a bigger rival. 

Even though mergers and acquisitions (M&As) are perceived by the corporate top brass as the optimum channel to access newer markets, funds and technology; employees are riddled with nagging doubts over job security.

In the first nine months of 2018, India Inc witnessed M&A deals worth $99.7 billion, including cross-border deals like Walmart-Flipkart, shows data by Thomson Reuters.

Experts say dissonance is common in any M&A deal. Dedeepya Ajith John, associate director – Knowledge & Advisory, Society for Human Resource Management (SHRM), said, “The biggest source of dissonance comes with different cultures merging into a new entity, where a totally new culture evolves. What was earlier acceptable may no longer be acceptable now, resulting in confusion for employees. M&As result in disengagement, lack of role clarity, inability to gel with the new culture, internal power struggles, high workload and stress levels and job security issues.’’

Layoffs are a very common side-effect of M&As. While the deals are decided, the leadership teams mainly debate on the synergies the organisations can create, with people issues being relegated to the background, say experts. However, the extent of job losses depends on the business case of an M&A. John said some M&As are done to acquire access to new markets and capabilities, like “IT companies acquiring start-ups with, say, artificial intelligence capabilities.”

Then there are cross-border acquisitions like the $16 billion Walmart-Flipkart deal. “This is simply an overseas entity acquiring a home-grown one to gain access to a new market. In such cases, job losses are seldom. There could in fact be some additional roles that can be created with new growth plans,” said Siddharth Reddy, MD and CEO of BI Worldwide India, a global engagement agency. The Flipkart deal has, however, witnessed job security issues. Recently, 200 employees of Jabong, which Flipkart-owned Myntra acquired in 2016, were asked to go. 

Experts say deals done due to competitive pressures and to drive synergies of cost like the Vodafone-Idea merger often witness layoffs. The Vodafone-Idea merger is speculated to have instigated over 5,000 job losses. John explains that in M&As, there is a standardisation of processes, which result in reducing duplications that exist, and can trigger job losses.

In the M&A scenario, both employees and employers have a role to play, in order to minimise the job damage. 

Paul Dupuis, MD and CEO, Randstad India, said from an employees' perspective, it is important to identify with the role that they play in the organisation. “Employees need to up-skill themselves on a consistent basis to remain relevant and to enhance their productivity.” 

But organisations have a clear role to play when employees get laid off. “Employers, while offering normative severance packages to employees, can look at enlisting outplacement or career transitioning service providers to help employees find new opportunities. There are cases of organisations placing redundant employees within their stakeholder ecosystems, like at client and supplier organisations and other vendors they work with,” adds Dupuis.

MOVERS AND SHAKERS

• $99.7 bn - M&A deals India Inc saw in the first nine months of 2018, including cross-border deals
   
• In the M&A scenario, both employees and employers have a role to play, in order to minimise the job damage, say experts