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Outlook for Job Growth in Consumer and Service Sectors- Part 2
Impact on Slowdown in different Industries – India (Part 2)
In part one we captured the situation seven industries (retail, FMCG, Fashion, Healthcare, Hospitality, Food Processing and Education) that make up about 51% of India’s GDP and employ almost 62% of its non-farm employment.
In this second part, Tecnopak focuses on providing advice to Employers, Employees and job seekers.
Visit peoplematters.in to read the first part.
The “Jobs Recession”
India’s GDP is not undergoing a recession but a slowdown. However, there is certainly a deep recession as far as jobs for the higher educated is concerned. Ironically, this may be the first time in India’s history when it is more difficult for the professional graduates to find employment or appropriate employment, compared to the less educated millions. Those who are currently struggling to find a decent job include engineers, management graduates, IT sector trained professionals, fashion designers, merchandisers and other retail sector professionals, pilots and other aviation industry staff, and other professionals. The problem is even more acute for those in the middle and senior management functions who have lost their jobs in the last few months.
To compound the misery further for these job seekers, even if the overall business sentiment improves in India during this year sometime, it is very unlikely that prospective employers will go back to aggressive hiring of professional staff anytime during the next 12 - 18 months. In most of the 90’s and early 2000’s, developed countries such as the USA and in the EU shed hundreds of thousands of middle-management jobs. Even in the boom times of the last 5 years, many of those jobs were never really filled up. The job creation actually happened in different sectors e.g. real estate and housing, financial services, travel and hospitality, retail, and healthcare just to list a few. These job seekers will also be facing the adverse fallout of the otherwise much heralded demographic divide of India. In the next 12 months, India will add more than 3 million graduates to the pool of employable. Of these, there will be more than 10,000 engineers from just the top 25 colleges alone (including the IITs), more than 5,000 MBAs from the top 25 Business Schools, more than 500 textile, apparel and accessories designers from the top-10 fashion institutes, more than 2,000 retail sector professionals (corporate staff level) from miscellaneous sub-streams of specialization, and more than 2,500 aviation sector professionals (cockpit and cabin staff level), etc. And finally, a trickle has already begun of the professionals of Indian origin returning to India as job opportunities dry up in USA and other developed economies.
What should Employers, Employees and Job Seekers do?
Till about 12 months ago, it was becoming difficult to spot poor performers for HR Managers, because the growth wave enabled even ordinary efforts and abilities to result in great results. Entire sales teams were beating targets, and it was hard to distinguish between better effort combined with ability, and sheer luck combined with momentum. The opposite has quickly become true now, and it is becoming difficult to spot the good performers, as the slow down takes root. More than ever before, human resource management needs to be looked at as a main line function (with active participation from MDs, CEOs, COOs, and other senior management), as opposed to a support function. Some key points for employers to keep in mind during current market conditions:
Be transparent – Share strategic, financial, operational and HR related updates with employees. Let them know about the health of the firm, and share challenges it faces. Effective, frequent and honest communication to employees and engaging employees more in decision making will help morale. Employees will appreciate this, and even if they leave / are asked to leave a company, transparency will help in establishing long term linkages and stronger alumni relations; an area where most Indian firms fall short.
Use the opportunity to upgrade teams – This is an opportunity to attract the best talent to your firm, even if your firm has not attracted the best of talent during normal years (investment banking, management consulting, some MNCs, etc. have enjoyed this position). This may require substituting average talent for high quality. These are hard decisions, but should be made.
Restructure compensation first, before layoffs – A lower fixed and higher variable compensation structure may yield better results in reduction of fixed costs and higher employee morale. This is especially true for service firms, where employee costs can make up about 33% of all costs.
Keep top performers motivated – These are the resources which companies do not want to de-motivate or lose. Feedback, motivation, monetary and non-monetary incentives, discussions on concerns, etc. are essential.
Provide inputs and suggestions to younger employees, beyond work related issues – In India, most employees with less than 6 years of work experience have only experienced the heady years of 9% GDP growth and don’t really know how to handle a slow down. Suggestions on personal finances and managing during a slow down are essential.
Complementary areas as above, and a few others, are some points for employees to keep in mind:
Be transparent – Share challenges and concerns with seniors, HR and peers. Actively seek support, where required.
Upgrade skills – Improved performance and differentiation are more important than ever before. Acquiring new skills or upgrading current ones through own initiative and in personal time become very important.
Be willing to restructure own compensation – Much preferable to being laid off!
Keep seniors, HR and peers updated – Managing the boss’s expectations and keeping peers updated, along with putting in the right efforts, helps in seeking assistance where and when required.
What should the newly graduating (and their parents) do? They have to start with the acceptance of this new ground reality that merely a professional degree even if it is from a top-10 or a top-25 institute is not enough to guarantee them a job of their choice. In the euphoria of recent years, many of these fresh professionals had started to believe in the illusion that they can have their pick of the industry, the company, the city, the job profile, and the compensation package. Hence, civil and mechanical engineers could decide to sit in swank Bangalore or Hyderabad campuses of the IT companies ensconced in front of a computer screen in an air-conditioned almost 5-star hotel environment rather than being in the field or on the shop floor. It is important for those who are in the job market today to understand that India’s economy is spread across India and not confined to the top 8 or 9 cities only. Hence, jobs are also spread across the entire urban and even rural India and therefore the employees must be willing to work from there. Similarly, the current and future growth of India will actually be driven by agriculture including food processing, manufacturing, and relatively less attractive service areas such as real estate, infrastructure, travel and tourism, transportation etc.
Once this reality is accepted, the next adjustment has to be in the mindset regarding the employers themselves. Most young professionals in India have an extraordinary affection for MNC employers. They should understand that there are just good companies and not-so-good companies. Likewise, small and medium businesses can be as professionally rewarding as those having global or local headcounts of 10,000 or more.
The final reality that the young job seekers must accept is that all professional and financial aspirations cannot be met in their first 5 years of employment. Hence, initially there should be less focus on compensation package and job titles, and more on building a career that is rewarding in many ways over the next 30.
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