Caught between Ice and Fire

The Bangalore Police has said that in the first 7 months of this year, 1444 people in the city have committed suicide. Of these more than 655 people belong to the IT and ITES sector.

I am no conspiracy theorist but I felt some merit in analyzing what is happening around the world and its impact on team performance, team morale, employee well-being, talent retention and maybe suicides in the Silicon Valley of India. The way in which an organisation handles such change will dictate the impact of this economic downturn. Now, more so than ever, it is critical that the tough decisions made by an organisation are seen as fair.

These are extraordinary times, not just for India but the whole world. At no time in world history has inflation and economic downturn combined to produce what the IMF Managing Director, Dominique Strauss Khan, recently described as being “caught between ice and fire”. The world economy in the last 6 months has behaved between two risks – too cold and too big a slowdown in growth; too hot and the risk of inflation.

Confidence in the money markets is at its lowest for nearly twenty years. It is also feasible to say that the confidence felt by employees in riding out the storm is also severely shaken. Employees too are literally “caught between ice and fire”. “Ice” and “Fire” depicts – death, the end and destruction according to Indian mythology.

Over the coming months, several organisations are going to find themselves either with too many employees because of the need to downsize to ensure survival and/or a take-over or merger. Either way, tough decisions will be made over who is to stay and who, unfortunately, is to go. And the process by which these decisions are made can have significant impact on a company’s continued survival.

Now, more than ever in recent memory, it is also critical that organizations are seen as fair, transparent and objective in their people decisions. Bungling like what happened after “meeting of minds” between Kingfisher and Jet and overnight retrenchment of 700 probationers should not happen.

For long (late 1980s onwards), psychologists were playing around with the idea of equity and justice. More specifically, they made a distinction between distributive justice and procedural justice. Distributive justice concerns whether people believe they have received (or will receive) fair rewards. Procedural justice concerns whether people believe the procedures for allocating rewards are fair.

For example, if a person perceives their pay to be less than other individuals in similar positions in other organizations, then they are likely to perceive distributive injustice. However, if they believe that their own employer is allocating the organization’s limited funds fairly within the organization, then they will likely perceive procedural justice. In real terms, the employee is likely to be dissatisfied with their pay, but highly committed to their organization. That is to say, fairness is of critical importance.

Now let’s consider this information in light of the current economic situation. In terms of distributive justice, a drop in salary may leave many dissatisfied. However, the process by which this decision is made (i.e. procedural justice) can go a long way in mitigating these feelings of dissatisfaction and enhancing feelings of commitment. In turn, employees tend to demonstrate more of what are known as organisational citizenship behaviours (such as helping others, going beyond the call of duty, participation and engagement) and less counterproductive behaviours (such as unauthorized absenteeism, workplace theft, bullying and suicides).

So, where does this leave us?

Employee’s perceptions of fairness at the current time will be particularly important. As company’s look to reduce headcount, the process by which decisions are made over an individual’s future with the business will have a significant impact on the subsequent performance of such individuals.

It is critical that organizations employ objective, valid, fair, inclusive and most importantly transparent selection procedures when looking at who will stay and who will go. Whether the approach is based on appraisal data, assessment centres, competency-based interviewing or the like, organisations are morally obliged to ensure the process is:

• Based on clear, observable and justifiable criteria critical to the role in question
• Built on a foundation of accurate, objective and behaviourally – anchored evidence collection
• Realistic, robust and acceptable to participants
• Inclusive, transparent and avoids any adverse impact to different groups
• And finally, cost effective.

In the current climate, fear of the unknown will be rife. People will be looking for security and a feeling that all is fundamentally fair in the world. Employees on their part should be willing to tighten their purses and take salary cuts. Organisations going through major change, on their part, will play a big part in driving this fairness. If you treat those around you with justice and equity, you ensure a committed and motivated workforce to help weather the current financial storm and sail on into calmer waters and may be reduce the suicide rates.

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