Re-skilling and counselling are the new norms for retrenchments, writes Charlene Smith
More and more people are facing retrenchment as companies have to let go of the old to make way for the new – take the large corporation that recently retrenched 80 top managers to make way for affirmative action appointees.
Restructuring – and retrenchments – may also come as a consequence of downsizing to boost competitiveness, or as the result of a merger after an acquisition where a company finds itself with two managing directors, two human resource officers, and so forth.
Whatever the reason for retrenchments, it is traumatic for those who have to go, and those who remain employed. Management consultants are advising companies to bring in psychologists to motivate the retrenched to find new employment, rather than the old callous technique of a package and a wave goodbye.
Neil Macdonald of Chart Career Transition says that the employees that remain are often seriously demotivated if those who leave are treated poorly.
Brian Greenstein of labour consultants Andrew Levy and Associates says he was involved with a plant closure in KwaZulu-Natal last year. “We got a psychologist to sit with employees and see where their futures lay and did re-skilling to harmonise with their career aspirations.”
In this instance, 90% of male employees wanted to become taxi drivers – even though the industry is seriously overtraded – and women looked at knitting, sewing and computer skills.
“We counselled people that many of the areas they were looking at were overtraded and had low income potential, but a lot depends on perceptions and the economic situation in an area,” Greenstein says. The company concerned spent R2 000 per person on re-skilling for their new career choices.
Macdonald says the two extremes most difficult to help in a retrenchment process are “the hourly paid worker with no skills, or a 55-year-old executive. Everything depends on skills, age, experience and attitudes.”
He says affirmative action is having a major impact. “Many companies now say to senior managers: ‘Will you go – with a suitable package – to make way for an affirmative action appointment.’
“Often they will ask the top person to go, advance his deputy and place the affirmative action replacement in the second position so he or she can be mentored and supported, and grow into the senior position.
“Training, presentation, human resources, are the soft areas where affirmative action is coming in.”
In situations where there is a merger or downsizing, harder choices may need to be made. Companies often run the risk of losing their best people and may have to provide incentives for them to stay.
Macdonald says retrenchments are accelerating, not only in companies like mining which have been battered by low earnings.
“Pharmaceutical companies are closing factories, because [Minister of Health] Dr [Nkosazana] Zuma has lowered trade barriers. The motor trade and banking sector are facing intense international competition. And many companies are merging to increase competitive advantage.”
Greenstein says outsourcing is seeing new opportunities for retrenched staff, particularly if the company they leave helps with skills training. Many new cleaning and security companies have been formed by previously retrenched personnel and are thriving.
The consultancy industry is booming with outsourced personnel, some of whom take up contracts with their previous companies.
The National Union of Mineworkers has poultry operations with turnovers of R10-million a year and has provided jobs for thousands of retrenched workers.
The South African Clothing and Textile Workers Union, facing a major retrenchment of members, persuaded the employer, Frame Textiles, to give them skills training and factory premises to begin Zenzeleni Clothing, which is turning over more than R1-million a year.
Greenstein says it is important to consult unions: “They often come up with imaginative ideas. In one instance, a company wanted to retrench 22 people because of new technology, the union persuaded them to retrench only 11 and re-skill the other staff to operate that technology, thereby saving the company a considerable amount of money in retrenchment packages.”
He says it is important that companies bring in consultants who can advise workers on what to do with their retrenchment packages: “For many people it is the most money they will receive at a single time. They need to be counselled on how to spend or invest it wisely.
“Companies must not lose sight of the tremendous human impact of retrenchment. It does not impact on the employee alone, it affects his or her family too.
“Employees must be told they are losing their jobs through no fault of their own. Some become tremendously demotivated.
“A person who has worked for a company for 20 or 40 years does not know how to write a curriculum vitae or conduct themselves in a job interview. Part of the retrenchment process must be to help them learn those skills again.”
Macdonald says that when they sit down with a company to assist in planning retrenchments “we always ensure that it is a last resort. There are a number of steps they need to go through before they release people.” These include:
* stop recruiting new people; * allow natural attrition; 10% of people leave anyway; * stop overtime; * invite voluntary retrenchments; * look at early retirement; * and ask employees if they are prepared to hold on to their jobs for lower pay while the company attempts to improve profitability.
Macdonald says they assist staff about to be retrenched to handle the stress and decide on the sort of work they should do after they leave.
“A lot of people want to run a franchise, but they may not have the right profile to do that sort of work. We would explore with the worker what they have enjoyed in their career and where they had achieved.
“We look at motivated skills and transferable skills. Psychologists do a profile analysis which assesses whether the person is better at analytic work or research work, or suited to a large or small organisation.
“A risk-taker is an entrepreneur who can work alone, market and take risks. We help direct them with those results.”
His organisation also teaches people how to network, how to approach employment consultants and how to promote themselves.