By Johnson Babawale
I know we are all inundated with the reports of mass layoffs in the private sector as reported by online media and also some print media. This indeed should send jitters to the spines of all of us who already are devastated by the socio-economic damage caused by COVID-19 already and wondering what this portends for Nigeria post COVID-19.
I write this article as a human resource professional and a close watcher of recent spate of terminations of employments or mass layoffs. I therefore offer my enlightened opinion on the recent announcement by a first tier Nigerian Bank CEO and its possible backlash.
Without any attempt to downplay the daunting challenges confronting businesses and their owners, I will only advise on the procedure to be followed and how the painful effect on the affected employees is minimized.
I will therefore attempt to briefly discuss this development from the perspective of HR. The companies announcing these layoffs are declaring redundancy; redundancy will then be discussed as a topic and how it applies to the current methods adopted by some CEOs:
Redundancy means an involuntary and permanent loss of employment caused by an excess of manpower or when certain jobs are no longer needed in an organization. It can also be caused by a change in technology, government policies and or unforeseen (uncontrollable) developments such as the one posed by the COVID-19 Pandemic.
Other circumstances that can result in redundancy of an employee are:
• New technology has made his/her current job unnecessary.
• The job he/she was hired to do no longer exists.
• The employer needs to cut costs by reducing staff numbers.
• Natural disasters or extraordinary developments.
• Business is closing down or merging with another company.
REDMEDY FOR REDUNDANCY AND MITIGATION OF ITS EFFECT:
• Employees should regularly update their skills.
• Employees should embrace new technology.
• Employees should be dynamic.
• Employees should be prudent with company’s resources.
• Employers should follow procedure before carrying it out.
• Employers to put human face in carrying out redundancy.
PROCEDURAL REQUIREMENTS FOR REDUNDANCY: This is as contained in the Nigeria Labour Law and as practiced in well-structured firms.
• The employer must inform the entire members of staff of the reasons for the anticipated redundancy with respect to the private companies.
• The principle of “last in first out” (LIFO) is applied when selecting the workers to be affected by redundancy.
• However, an employee’s merit (including skill, ability and reliability) must also be taken into account.
• Employers are meant to develop a detailed staff matrix to determine the weak-links in the system.
• Redundancy Pay: For workers who are not covered by regulations issued by the Minister of Labour relating to redundancy; mostly employees in the private sector, the employer must negotiate redundancy payments with the affected employee(s) or apply relevant redundancy policy as contained in their staff handbook if any.
It must be noted that it is illegal for an employer to wake up one day and declare redundancy without following the due process.
Now coming back to the flurry of termination notices served by different organizations, it should be noted that some of them have not adopted the right procedure and it is display of crass insensitivity to the well-being of their employees and the Nigerian economy.
A case in point is the method adopted by a CEO of a first Tier Bank in Nigeria; A video surfaced last week where he announced to his employees of the impending job-cuts and at the same time salary cuts.
Much as it is agreeable that the CEO has the responsibility to ensure that his company remains a going concern, he is also expected to follow due-process and gives its decisions a human face.
1. He needed to notify all employees before he took the action because I understand they have already advised the affected staff- I know they did not as a case emerged online of a pregnant woman who collapsed on receipt of her termination letter
2. I would not know if the bank has any provision for Redundancy in the staff policy otherwise he needed to have negotiated with the affected staff for a proper and softer landing- I am also not sure that was done.
Except for a company that is winding down, combining job cuts (75%) and salary cuts (Up to 40%) are signs of a company in comatose which I know the Bank in question is not. It is illogical that a company which donated N1 billion to support the Federal Government efforts towards provision of palliatives to poor/vulnerable people affected by the fallouts of the COVID-19 Pandemic a few weeks ago cannot claim to be distressed overnight.
MY PROFESSIONAL ADVICE:
THE BANK IN REFERENCE AND OTHERS WHO WOULD DO SAME
• Notify all employees duly before redundancy declaration which is only possible when work fully resumes.
• Develop a proper redundancy policy if none is existent in the company before embarking on redundancy.
• For outsourced services such as Security, Janitorial services and logistics, the company should renegotiate with the contractors. I am still surprised why sacking of tea girls and cleaners became an issue for the said CEO when he could just have negotiated quietly with their employers.
• Be sensitive to the possible backlash as well as the socio-economic implications of a mass sack of employees to the nation.
• Even with due procedure, you are better negotiating down the staff salaries rather than mass retrenchment and at the same time cutting salaries. The referenced Bank as we know, pays decent salaries to its employees, so further downward review of salaries to retain more employees will not hurt
• Any CEO who has carried excess load of employees before now has not done well in STAFFING and needs to check the competence of his human resources department.
• Failure to follow the due process will most likely lead to chaos and a spate of undesirable legal actions which become a major public relations problem for the bank and a distraction
• There is urgent need for the Minister of Labour to intervene and stem the tide of mass sack in the private sector.
1. There must be a deliberate policy that would give additional incentives to companies who are able to retain at least 90% of its workforce in this season in addition to the existing tax rebate.
2. The Federal Government should advise the Central Bank of Nigeria to issue soft caution to Banks from engaging in mass layoff of employees at this time and can also offer incentives to Banks who do not engage in mass layoff.
In conclusion, a patriotic CEO should not consider the profit margin of his business alone at this crucial time but also the well-being of the economy in which the business operates. If CEOs take narrow minded decisions that result in the increase of crimes, the Nigerian business environment would become much more challenging and therefore negatively affect the profitability of companies operating in Nigeria including its own.
The Managing Consultant of Team Affairs Limited
An HR consultancy firm based in Lagos
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