Management, boards shouldn't go for low-hanging fruit of layoffs

THE Covid-19 pandemic has put a brake on global economies, including Singapore, where total employment saw its worst quarterly contraction on record in the second quarter of 2020, according to preliminary data.

The total number of people working in the city-state between April and June - when most of the economy was shut during the circuit breaker to stem the virus spread - shrank by 121,800, almost five times the 25,700 seen in Q1, according to the Ministry of Manpower (MOM). Retrenchments more than doubled in Q2 to 6,700, surpassing the quarterly peak of 5,510 seen during the severe acute respiratory syndrome (Sars) outbreak in 2003. Economists are warning of more pain in store as many companies are considering layoffs to ensure they survive the crisis.

To be sure, a cost-cutting reflex is understandable. Corporate honchos are obligated to take decisive action, do what they must, to keep their companies afloat. But those who manage this crisis in a clear and compassionate way create more value for their companies and will emerge stronger than ever before. The world's top asset managers like BlackRock are focusing on human capital management and sustainable social practices, and will vote against management should the companies fail to appropriately balance the needs of stakeholders.