Beware the hidden cost of downsizing

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“As a result, we are now regularly seeing mid-to-senior executives being expected to take on extraordinary workloads due to much leaner management structures than ever before. It is therefore no surprise that they are straining as a result of fatigue and burnout. And the impact of this on companies comes in the form of disengagement - a benign-enough sounding term - but one which has real and potentially devastating commercial consequences for an organisation,” says Goodman-Bhyat.

“The ones left behind still need to take care of the same amount of work but with fewer hands on deck, being milked for all they are worth, resulting in them suffering from burnout, fatigue, resentment, reduced engagement, and reduced productivity.

“What we’re seeing is a global repositioning and drive for cost-cutting – we are not just talking about the South African market and its unique challenges. Businesses are looking at different ways of managing operations, they are moving offshore or outsourcing to low-cost markets, and then there are the not-insignificant pressures introduced by robotics and AI.”

So with this trend set to continue, companies need to take a more holistic view of the impact of downsizing and reducing their workforces. While a significantly lower salary bill may please shareholders, the long-term effect on productivity will undoubtedly have a negative impact on the bottom line in due course, says Goodman-Bhyat.

“What we’re also seeing is that the up-and-coming millennial managers are unwilling to tolerate work environments that are so under-resourced that burnout, stress and depression are commonplace. As a result, top millennial professionals are just opting out, and making alternative career choices.

“If you are going to look only at the bottom line, without looking at how you can nurture and keep your remaining workforce engaged, you are most likely to see an impact on your topline.

“Retrenchments may be a necessary measure for a company to take – and we are not saying they should not go down this road if it is warranted – but it is crucial that companies then take care to focus on those who are left behind, because not doing so may have far-reaching and long-term consequences on the health and prosperity of the organisation as a whole.”

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