This move by Flipkart just reflects the efforts of the management to make a balance between controlling the costs and increasing the rate of growth.
Approximately 2.3-3.3% of the total employees will be affected by this decision, as Flipkart has 30000 employees at present. The percentage of lay-off employees may not be very high but what is making people unhappy is that it is something which was not expected from Flipkart as it used to have more understanding approach towards the employees who didn’t perform well. Earlier in 2016, Flipkart was criticized for delaying the joining of IIM graduates who were recruited from the campus.
However, things are changing as chief executive Binny Bansal is working hard to keep the company on top slot and also to increase the profitability.
Flipkart has said in a statement that those employees who don’t show “progress” despite the fact that they were aligned with performance improvement plan, “they are encouraged to seek opportunities outside the company where their skills can be better utilized.”
Flipkart further said, “This is a fairly common practice across various industries — especially in high-performing internet organizations.”
With the increasing competition, every e-commerce company is working on controlling its cost and increasing its profits. The financial daily, ET reported in April that Flipkart has started reducing discounts and a limit has also been put on salary increments. Flipkart is also aiming to reduce its monthly burn rate to $40 million from $80-100 million in the first six months of 2016.
The arch rival of Flipkart, Snapdeal is also going hard on the underperformers and as per a report published in ET in February, nearly 200 employees of Snapdeal were asked to either improve or leave.
Last time when Flipkart conducted lay-off, it was in May 2013 and nearly 10% of the total employees, i.e., 250 were affected.
An employee who resigned this week told, “I chose to resign and sent a formal mail to my manager, which was immediately accepted.” Employees have been asked to perform in various positions, like this employee who was in the company for three years and worked in different roles, his last one was market place division. He further added, “While the company has been patient with its employees over the last four years, this time it was not.”
The experts also feel that such lay-off keeps the remaining employees focused on their goals and delaying the process will not be good for underperformers as well.
Harish Kumar, Managing Partner at Wenger & Watson said, “Managers should have good facts and data substantiating why a particular person is a non-performer, and base his decision on factual data. There is also a lot of referencing that happens in this space and an organisation should be helping them in that regard as well.”
In simple words, if you don’t share a good bond with your manager, then you are absolutely an underperformer.
This is the response given by the Flipkart spokesperson in reply of questionnaire sent by ET –
“As a performance-oriented organisation, we have a transparent evaluation process in place. Employees are assessed in a fair, simple, transparent and development oriented manner. We use our review process to differentiate performance and maintain a high bar, which is reflected in our total rewards philosophy. The top performers are rewarded highly and promoted to the next growth level. The solid performers are accordingly recognized and groomed for future roles through mentoring, coaching and on-the-job learning opportunities. At times, we have employees who do not meet the performance bar. In those situations we work closely with employees to enable them improve their performance. In due course, if these employees are unable to make the desired progress, they are encouraged to seek opportunities outside the company where their skills can be better utilized.This is a fairly common practice across various industries- especially in high performing internet organizations.”
How will this lay-off affect the mindset of remaining employees? Do let us know your views in the comments section below.
