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'Delayering can give SMEs better edge during recession'
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Saurabh Gupta | 25 May, 2009
During this time of recession and slump in demand, and when corporates particularly Small and Medium Enterprises (SMEs) are looking at ways to reduce costs and induce efficiency to their operations, "delayering comes across as a win-win situation for the management especially as it cuts down on some personnel in middle management giving the corporate a better edge in terms of cost savings, more grass-root contact development and enhancing and generating accountability of lower middle management."
Shedding light on the concept of delayering, Lt. Col.(Retd) Nageshwant Roy Vaid, CEO, NGA Consultancy Services and Consultant, Business Development (International Marketing) Orbit Industries Limited, told SME Times, "Delayering implies reducing the size of business hierarchy especially in terms of reduction in management. This will lead to a flatter (less layered) organisational structure."
"This (delayering) will entail quicker reflexes of lower middle management and will diametrically improve professional communication levels of lower middle management."
 | "Elimination of a stated middle management rung will lead to a
direct dialogue between lower management cadre and promoters/ owners.
At times professional complexes do not allow middle management to
project outstanding lower management cadre as they feel that their
limelight will be lost. Delayering can also be a double edged weapon if
the stated intention is only cost saving," Vaid said.
On SMEs'
perspective vis-a-vis delayering, Vaid said, "In SMEs, observation of
professional standards of middle management cadre by promoters/ owners
is not a problem. Most owners are hands on with their business
activities and monitoring on practically a daily basis of operational
parameters and performance parameters of all employees is generally not
a problem."
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"It is only when the employers are convinced that delayering will
create a more effective operational machine should they resort to these
measures. The cardinal requirement is that both profitability and
psychological environment of the company should not be compromised.
Unilateral, thoughtless delayering will cripple both mind and spirit in
SMEs. Continued motivation drive is key to business success and
delayering must be explained and not used as a draconian weapon," he
added.
However Vaid cautioned: "...delayering is recommended as an exercise to improve finances and performance and must be carried out after both pros and cons have been examined by the employers."
"Professional middle management will have its own merits and in my considered opinion delayering must only be resorted to when apart from cost savings as the factor the lower management cadre is seen to be responsive, professionally reactive and showcases talent which the promoters/owners must be very careful to observe," Vaid added.
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blackops
ruckhsar | Thu Nov 11 13:53:08 2010
i find it rather difficult to explain how i have fallen in love with blackops
We must do delayering
Pradeep | Thu Jun 11 09:41:58 2009
It is important to do delayering because it substantially adds to greater involvement of the lower rung management with top management. It will enhance accountability as also generate responsiveness of the lower management cadre.As has been suggested by COL Vaid it must be on merits of the case and must not a unilateral swipe to reduce numbers.
Is delayering a credible exercise?
Rajneesh | Fri Jun 5 08:19:01 2009
SMEs delayering has credibility or does not have credibility is a million dollar question.What has to be advocated is that it must specifically understand ground realities. In my opinion it must not be a rule but an exeption and as suggested by Col Vaid must take all circumstances and ground factors into consideration.
Small and medium enterprises will prefer delayering
Vijay | Thu Jun 4 11:40:01 2009
Delayering is not a cunning ploy to keep costs down but could create a mechanism wherein it becomes a well structured personnel strategy.Small and medium enterprises will not always have a huge scalar chain of command and may well opt for a delayered structure.
Delayering--corporate advantage?
Rajat | Mon Jun 1 05:42:13 2009
Is delayering like a effective HR concept to be utilised in future,recession or no recession or is it a recessionary corporate advantage game plan? Answer lies in understanding the rationale and utility which the comments have articulated with purpose.I think somehere along the line apart from cost savings as one of the important reasons the logic should also be professional grooming and decentralisation of work.
Delayering to set it right
Ashwani | Fri May 29 10:12:44 2009
Economic imbalances require correction and so does a curtailment of personnel if the margins in a recessionary environment are likely to get impacted when the fat salary bills are not supported by utilisation of staff gainfully and meaningfully.In a world peopled by some oppurtunists this may well be a golden oppurtunity to axe the undesirable.
Delayering in practice
Sneh | Thu May 28 09:35:22 2009
Is there delayering in practice or not? I think there is delayering across the world. Market recession leaves little options for those whoe are fighting a losing battle to save their corporate wealth.A mercenary approach is on the cards for those who may use the market recession to create a favourable employee base and remove the undesirables.I only hope this not create a situation where the mercenary in the service provider and the merchandiser takes undue advantage of a worsening labour market.
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Re: Delayering in practice
Dilip Jhaveri | Fri May 29 01:47:41 2009
Coming from Chicago I sense lack of empowerment the biggest issue at the SME level. Cashing check requires 4 separate reviews and actions. Can we trust our employees and let them do their job efficiently? And. most do not know about the internet. The management does not know how to send email. Much valuable information is lost.
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Delayering-A thought provoking exercise
Kamal | Thu May 28 04:23:49 2009
I perused the article with great interest to find out if the write up offered a solution package to mounting international recession statistics.I was pleased by opinions given and by advice offered.No reactive measures were recommended nor stated. Instead a balanced, considered and well evaluated approach was recommended considering the present ground realities.We can examine the proposal based on ground merits and already companies have given it serious consideration. Whether the flak comes on upper management as their packages are in terms of CTC exceedingly exorbitant or on the middle management where again CTC may also be a factor are aspects we have to understand and then take decisions.Numders employed are a issue and for obvious reasons will be both a HR consideration as also the employer's concern as on date. In an recessionary environment this would be a obvious deduction.
Productivty, CTC & Cost Cutting!
Mansi | Tue May 26 05:26:00 2009
Delayering is one of the most cost-efficient measures that a corporate can think of when it comes to cost cutting. The productivity analysis is a yardstick to evaluate the CTC versus gains to the company which helps in understanding the need of person. When people are hired, there is a vision for a project but once the implementation bit begins, the need is clearer. Depending on the budgets and the ultimate vision of the company, it can sustain recession by delayering.
Delayering by Employers
Ashish | Tue May 26 03:25:12 2009
To me delayering makes little meaning as it affects livelihood of people being shown the door.Incompetence has no place, recession or no recession but to cut down numbers to guard the bottom line by SME's is questionable.Both prosperity and adversity must be shared equally.Do delayering by all means but justify and explain and use it when there is no solution package in sight.
Delayering
Gaytri | Tue May 26 03:09:42 2009
I read the article with trepidation as no one wants to be part of the pink slip brigade in the name of delayering.Will it be a market ruse by unscruplous elements to retain profit margins by making one do the work of two but draw one salary and all this in the name of delayering or will justification be apparent to those affected. It is a difficult point to ponder on, leave alone decide.I am glad that the industry has not reacted in a manner which has negative shades. Vaid in his observations is spot on.
Delayering????
Dolly | Tue May 26 02:48:39 2009
A hornet's nest has been stirred by COL Vaid.The issue has unsavoury connotations and requires not only professional deliberations by the top management but also requires restraint, tact and above all transparency.The effort must not be seen as witch hunting else the lower management cadre may well feel that the axe may fall on them in case the recessionary cycle hits them a few years down the line.Markets are fickle and while market realism today will dictate market viability this should not become a bench mark practice.COL Vaid is right as regards market advice which is well taken.
Delayering and Mid Cap
PROF DEEPAK TANDON | Mon May 25 14:44:37 2009
I fully agree sir delayering can even being seen from fancy of trading in Mid and small Cap SMEs Middle managers are more professional and productive I agree with Col Vaid views Hats Off to him for enriching us
FROM PROF DEEPAK TANDON 9811688833
Delayering in current recessionary environment
Kailash | Mon May 25 12:08:28 2009
Col Vaid has logically arrayed his thoughts.Recession has a negative fallout. Employers are often tempted to resort to drastic mesures to safeguard both their interests and profit margins.Desperate measures could have results which may be detrimental to overall organisational interests.As rightly stated these decisions must be tempered with realism. Should experience be sacrificed at the altar of cost saving drive or employees be offered a no salary hike situation and the employers let both experience and youth face the recessionary onslaught together, is a question which must be answered by employers alone.No common template as rightly outlined is possible nor must a uniform yardstick for SME's to consider delayering as a industry measure be advocated.
Delayering
Ramesh | Mon May 25 11:06:01 2009
I agree to comments of the industry expert.There are social, economic and psychological reasons why delayering must be considered twice over before being actioned.Col Vaid has given seasoned and matured observations without any emotional connotations.Delayering will have to be surgical in nature without visible trauma and scars.
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