Ruthless Layoffs won’t Make Hiring Easy for Startups

Layoffs over emails, town halls or through press releases at short notices before a festival show immaturity, human resources experts say
As startups including Zomato and TinyOwl let go of employees because of changed strategies or shrinking funds, experts warn that the recent rush of layoffs could undermine hiring for India’s emerging businesses.“Startups are a risky business, many of them fail,“ said K Ganesh, founder of entrepreneurship platform Growth Story. But “when a crisis hits, it needs to be handled maturely.“

Indian startups requiring thousands of engineers and other skilled workers now compete with large technology companies for talent. But as online social media forums become venting grounds for laid-off employees and draw wide attention, startups face reputation risk that can cause serious damage to future hiring plans, experts warned.

“Decisions about layoffs should be conveyed in a cascading manner,“ said Hema Ravichandar, independent human resources adviser and former global HR head at Infosys. “Such decisions at the time of festivities may have a lasting impact on future hiring.“

At TinyOwl, two cofounders were held hostage by employees last week after they sprung a surprise second round of layoffs a week ahead of Diwali -ridding more than 300 personnel in about two months. Zomato in October laid off about 300 employees, many of them in the US, and Housing has sent away about 600 people this year.HelpChat is laying off about 150 employees, and online grocery retailer LocalBanya is also asking people to leave.

“I was asked to submit my access card when I arrived at the office,“ said an employee of a Gurgaon based startup. “The CEO did not even bother to offer an explanation.“

Layoffs over emails, town halls or through press releases at short no tices before a festival betray immaturity, human resources experts said.

“India’s culture is yet to adapt to the hire-and-fire mentality as there is no social security like in the West,“ said Ravichandar. “Startups should learn to do more with less.“

Experts advised setting expectations at the time of recruitment at a startup.

“Even before you hand over an offer letter… ask if the person is open to such risk,“ said Harish Kumar, CEO at human resource consultancy Wenger and Watson that counts Flipkart and Amazon among clients.

Startups often also lack the expertise to handle layoffs as do large companies. “In big companies, we have outplacement strategies and experts to blunt the impact of a layoff,“ said Ramgopal Rao, president at executive search firm Steinbach & Partner. “They would counsel laid-off employees and help them polish their CVs.“

Even so, not all startups are resorting to knee-jerk downsizing.Struggling food ordering app SpoonJoy, which in October agreed to be bought by hyperlocal delivery startup Grofers, sent daily updates on its crisis, softening the eventual blow to employees.

“From the data-entry guy to the head of engineering, we were very transparent about our situation,“ said Manish Jethani, cofounder and CEO. “We also got about 200 of our delivery staff placed in other companies such as Roadrunnr, Shadowfax and other agencies.“

Ganesh of Growth Story took a similar approach at an earlier venture, TutorVista.

“When we had to let go of onethird of our staff at Tutorvista (during the global economic crisis) in 2008, I addressed the employees personally. We gave them three months’ notice even though one month was the norm,“ said Ganesh. “A few months later when things got better, we actually hired half of the people back.“

(Nirupama Venkatraman in Bengaluru contributed reporting)

Source: The Economic Times



Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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