Social Cause Marketing - The Regis Group Inc

INTERVIEW
to shorten the work week in coming
months. What are the merits
and demerits of this job saving
scheme?
This is the best way forward. Layoffs
do not always work in a companyís
favor. It might seem easy to ask
people to leave but even that has a
short term cost in terms of financial
outgo. Also, often in the process of
layoffs, a certain number of the best
performers tend to depart which is
not desirable. Also, remember bad
times are not going to last forever. So
when the economy begins to pick-up,
we will all need those who left. At
that point to get back the trained
manpower, who had been aligned
with company goals and philosophy
is difficult. There is then a high cost
that we would need to pay for hiring
and training. Job saving schemes, like
what we did at Apollo Tyres, is the
best way forward, wherever possible.
Two countries standout as having
the most developed and systematic
approach: Japan and Germany,
which both provide government
subsidies to companies
who keep on workers even though
thereís little or no work for them
to do. Both have recently extended
their schemes. What is your assessment
of such a tacit support
from government? Do you see
merit in this approach or do you
think this would end up doing
more damage (in the long term)
than the short-term good?
Of course this is good. If governments
can do this, it is favorable for the
workforce. And we have to remember
that both Japan and Germany have
very high quality and efficient companies.
They have trained, high-value
workforces. As long as such systems
do not encourage the unfit and inefficient
to become part of the systems ñ
which both Japan and Germany do ñ
then this is good. However, not all governments
are able to do this. Nor is it
desirable or feasible across the board.
We all need to work with the constraints
and the positives of our own
situations.
Should every other country emulate
these two countriesí practices?
In fact, OECD expects unemployment
in Germany to rise
from its current 8.6% to 11.5% by
the end of 2010 ñ higher than
many of its European neighbors.
Japanís unemployment rate is expected
to rise, although less dramatically,
to above 5.5% next year
from 4% in 2008.
As I have mentioned above, each
governmentís response will be shaped
by two things. One, the crisis and its
potential fallout. And two, governance
policies and needs of the situation.
Given the diverse countries across the
world, there really cannot be a single
formula which everyone can follow.
OECDís chief economist, Klaus
Schmidt-Hebbel argues forcefully
that governments should do more
to retrain workers and overhaul
their labor-market policies to ensure
that once recovery comes,
new jobs are created in sufficient
numbers to swiftly bring the jobless
rate back down again.
I agree. Actually all parties have a role
to play in situations like this ñ the government,
companies, unions, employees
and even the financial or banking
system. How effective the impact will
eventually be is a direct fallout of coordinated
action amongst all these diverse
groups of people and systems,
swiftness of action and proactive play.
Even though it is one of the possible
solutions, it is surely not an easy one to
implement with success.
Thereís immense political pressure
on authorities to do something
to slow growing joblessness.
For instance, when Jet Airways (in
India) laid off 1900 employees, the
Civil Aviation Minister, Mr. Praful
Patel said that ìministry would
certainly not be very happy with
the approach of Jet Airways.î
Similarly when the French oil
company, Total announced the
closure of two refineries and the
consequent loss of 550 jobs, it attracted
a furious public outcry including
denunciations from two
government ministers. In both the
cases, the companies had to withdraw
their decisions. Do you
think it is right to force the companies
to continue to save jobs even
when they are bleeding from the
downturn bruises?
I agree with your argument, however
in any nation jobs are a very sensitive
issue and needs to be handled with a
lot of sensitivity. I will not be right on
my part to comment on either of these
two cases since I am not familiar with
exactly how they were handled internally,
what was said, how it was undertaken,
what the individual and
community level communication
was, were all the regulatory authorities
and the unions taken into account,
etc., ñ all these play a role. At the end
of the day, two parties need to find
ways to work towards a solution
which minimises the pain across the
board. We have seen across history
that unilateral decisions favoring only
a single party do not have a high shelf
life.
What do you think should be the
greater and broader role of governments
in such situations?
Should they adopt job-preservation-schemes
or should they concentrate
more on job-creationschemes?
As you have seen with the Indian government,
our focus has always been
on job creation. These have come in
many ways, rural schemes, incentives
to industries to move to backward areas,
state incentives to invest in a particular
state of industry, softer loan
agreement and others. For the longer
term this is the way to go. However, at
certain points in time there is merit in
undertaking limited job preservation
schemes also, for a certain period of
time to enable job seekers to find new
avenues. This need not mean that
people get paid to do no work ñ that
really never works since it ends up
impact the longer term work culture
and morale of people. What works is
redeployment. Moving people from
non or low productive areas to higher
impact, high productive areas, sectors,
regions.
However, all said and done, I
would reiterate that none of this is
easy to implement, especially in a government
context where the
governmentís focus should be on good
governance.
SEPTEMBER 2009
70
EFFECTIVE EXECUTIVE