Friday, 10th July 2009
Pros and cons of employee retention
The fact that unemployment in Malta did not skyrocket the way it did in other countries meant the island risked losing competitiveness in the recovery process, according to leading economist Gordon Cordina.
Malta was definitely in a recession but, compared to other countries, its impact had been "softened" by a number of factors. But these could end up acting as double-edged swords, he told a business breakfast yesterday.
In other countries, workers were expendable and companies in crisis were downsizing but in Malta, because of a lack of skilled workers, companies were choosing to lose out on profits in order to hold on to their employees.
"If you sack a bunch of workers abroad and your company recovers, you will not have a problem to get them back when you need them again. But here it's harder to do that, so you risk losing your employees for good."
So while companies abroad would have saved money they could later invest once the recovery process began, Maltese companies would not have that competitive edge, he said.
On the plus side, Malta's economy was not suffering from the damaging multiplier effects of unemployment other countries were facing.
Dr Cordina said other countries were passing through a process of "creative destruction" by which companies were streamlined and made more efficient through innovation, research and development. In the long term there had to be fewer operators but these would be leaner and better.
He explained that even the government had to ensure the measures it took in the short term did not hinder the recovery process in the longer term. The size of the deficit was not as important as the way the money was being spent. Investment had to be focused on reducing the need for social services by encouraging employment and education.
Dr Cordina said the business confidence monitor survey, carried out monthly by the Chamber of Commerce, Enterprise and Industry, was showing growth and improvement in the second quarter of this year. But there was no real reason to believe the situation would translate into real growth. He said it was more likely for this to be attributed to psychological reasons. "After six months of shock, when you realise you've survived, you feel more optimistic," he said.
He warned that the upcoming budget would be a very difficult one because there were so many factors that had to be balanced out. While sacrifices should be made, all government measures proposed should ensure everyone could benefit. "We have a long, hot summer ahead of us to discuss what decisions we need to make to prepare ourselves for recovery."
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Comments
Employees have to have a time period to learn their job, recieve costly training as well as fit into teams and settle down in a new workplace. If you sack employees on a large scale perhaps you will save in the short term but you will loose out long term by having to go through the above process again.
Sacking staff, particularly skilled workers should be the last resort
The term RESPECT to talented and motivated employees seems to be long forgotten by GC and that is one of the largest mistakes of all since newly hired people take considerable time to adapt to a new workplace and properly managed businesses take into account this as well. Respect in various ways pays off in the long term in terms of many factors, since company paradigms are formed around this and not 'us and them' cultures. Economists should learn human factors as well in their academic classes.
As an employer, I can confirm that Mr Cordina is correct, and I admit that I do not fire a part of my working force, just because it has been so difficult and expensive to find and train the right people.
I must add that this employment stability is holding thanks to the SME's Sector, which because of their size they cannot just refresh, downsize, or expand their team, whenever there exists the need.
But ofcorse, discussing the available work force on this small island is another issue without ends.
So what’s the problem? Both the employee and the business man still got their jobs, but less money in their pockets?
Exactly! the costs to run businesses is like an inflating bubble which seems to never stops growing, while the sales are facing a severe downfalls.
70% of the crisis we have in Malta has got nothing to do with the recession present in the world.
The truth is that there will be no recovery unless they stop testing our intelligence.
Regards to Mr Cordina...very good point of views
to the above comment by GC,,,, may i add some points:
1. this is ok,,, if workers are treated like objects.
2. the local companies have also reduced costs and expenses, rather than lay off workers.
3. does not GC think that shedding skilled and trained workers is counter productive in the long term?
4. when a worker is laid off, he is psychologically broken. will you motivate him back?
especially if you ruin his life?
5. does not GC think that by keeping their jobs in difficult times, workers are more appreciative and cooperate and make more sacrifices when needed??
of course i am here referring to the private sector workers...
why don't we discuss the monstrous local public sector and discuss lay-offs in this sector, rather than advocate private sector worker lay-offs as a solution??