Sri Lanka as a small economy, where the economic backbone is made up of micro, small and medium sized enterprises and dependent on export revenue for foreign currency generation is facing a vulnerable situation. The country is enduring a challenging period in terms of healthcare and an economic upheaval. It is obvious that businesses are struggling to maintain the normalcy but to no avail, the National Chamber of Exporters (NCE) said in a media release.
“Exporters are experiencing dual supply chain shocks, where some cannot receive raw materials and some cannot secure orders from clients due to the lockdown in other countries. This has resulted in Halt Production, with many businesses reaching a critical junction. Some of the exporters are facing issues with cancelled pre-orders on already manufactured batches of products in terms of the economic slowdown around the world. In this light, many organisations have reported to downsizing the employees to stay afloat.
“However, it should be highlighted with concern that laying off employees at a time like this will have detrimental effects, since redundancy is the last thing one would expect during a calamity.
“On a separate note, an organisation may feel that dismissal of certain number of employees would be a short term solution to address the current business turmoil, yet when the world recovers and recuperates, the business venture will need to grow creating a vacuum of experienced and skillful employees.
“In such a situation recruitment of new workforce and training will come with its own cost, exponentially increasing the operational cost of the organisation.
“While businesses are focusing on scaling down activities to a more realistic and manageable size under the circumstances, they also have a legal as well as a moral obligation towards their long standing employees who have contributed to the success of the organization. Human Capital, the most valuable resource in the organization ensures that business enterprises sustain its activities profitably in the longer term due to high performing and effective workforce. Hence downscaling such employees may also have a negative impact on the goodwill of the enterprise with a negative public reception and loss of credibility.
“Even as the businesses are struggling to keep their head above water, they also have to resort to any alternative methods in sustaining their business than moving towards drastic measures such as pay cuts and layoffs which impact the Human Capital of an organization. When downsizing is a knee-jerk reaction, it has long-term costs. A best laid HR policy should be in place with the consultation of all other departments of the organization in resolving the issues at hand. “The authorities ought to monitor and control how the concessions are granted in terms of debt moratorium as some corporates may take undue advantage by utilizing the grants given by the government and will not pass the benefit to their employees.
“Businesses can adopt best practices by business process re-engineering, involvement of employees in search for ways to reduce costs, waste and inefficiencies, diversification of business into related or non-related areas and encouraging employees to be innovative.
“Businesses cannot perform employee redundancy in a haphazard manner as there are regulations laid by the Labour Department of Sri Lanka to protect labour rights. Business enterprises must stay apprised of the current legal landscape.
“With every region at risk of natural and man-made disasters and supply chains and markets increasingly globally connected, it is becoming ever more important for businesses to develop robust disaster plans to reduce the potential impact. But to work out disaster plans, the starting point is to understand what that impact could be – and how events far from your core operations could hit your business,” the statement added.