Yes, it’s in the news again. Yet another bank has shut down an entire division and will retrench a large number of Senior Executives. Through no fault of theirs, these employees will find themselves out of a job in a climate where jobs are scarce.
In the old days, blue-chip companies used to be ‘iron ricebowls’ for their employees – my dad worked over two decades in Standard Chartered Bank – I remember him getting his ‘long-service award’, a pair of gold cufflinks, with such pride. However, today, nothing is quite stable anymore. Why?
1. Mergers & Acquisitions – in today’s economy that is flush with cash from private equity firms and large corporations, many companies have inadvertently become targets for acquisition. Even huge companies like Nokia have been acquired by even larger companies like Microsoft. Especially common in the Technology and Pharmaceutical industries, these M&As have been seen as a norm these days as companies prefer to ‘buy’ existing businesses, clients and IP rights than to ‘build’ them from scratch. (eg, Lenovo acquiring Motorola Mobility). What happens to the staff when this happens? Often, there is an overlap in function and one party has to go. The scary part is that it isn’t always the ‘acquired’ company staff that is let go – even if your company is the one doing the buying, your job may be at risk if the other team has a younger, cheaper, smarter or better-looking staff!
2. Increasing competition. Let’s face it – there’s competition everywhere. Whatever your company does, there is someone out there fighting to take that business away from you. In the old days, “me-too” imitators were had inferior quality products – but today, rivals from China can probably build your products cheaper and of equal (if not better) quality. This results in margin erosion and lowered profits. Faced with a double-whammy of ‘lower sales’ and ‘lower margins’, the bottom line is affected. And what do companies do when the company income is lowered? They start saving costs by reducing the headcount – hiring is frozen and open positions aren’t backfilled. Then, if things don’t improve, they start firing people – not just the under-performers – but usually, the more expensive employees (ie, VPs, Directors, Managers). No one is spared.
3. Improving Technology. I am not just talking about machines that can do the manual labour of twenty men, like tractors or steam engines. I am referring to new disruptive technologies like cloud computing or big data that could permanently put you out of business forever. I met a candidate who was a Risk Manager for an Oil Trading Company – he measures risk and advises his company how to mitigate against credit over-exposure. However, there are Real-time Analytic software solutions out there that can do his job, better, faster, and error free. We see this type of ‘disruptive’ technologies killing jobs and even business. Can you name a disruptive technology that almost killed an age-old business model? (Hint – how the internet killed the Yellow Pages). The worst thing is that when this happens, your job goes away permanently, and is never coming back.
4. Competition by foreign labour. In today’s globalised world, labour forces move freely. In countries like Singapore which welcome foreigners with open arms, the competition for your job becomes more acute. Better educated but not always lower paid, these candidates are hungrier and more aggressive than you are and will fight tooth-and-nail for your job. Some feel this is unfair and that the government should protect them, but I feel that this is the new reality every country faces, so we need to know our strengths and bring more value than the competition.
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