The Grey Chronicles

2008.December.2

The Pitfalls of Rumours


Dispelling rumors in the frontline is very hard to do, especially if some do not see its detrimental effects to the corporate communication channel. Again and again, during downsizings, front line supervisors are often left in the dark.

When I came in for work after three days [first a non-scheduled word day, second was my rest day and the third was a national holiday], I heard through the grapevines that an impending lockout is being proposed by management. Many of my subordinates were asking pointed questions and begging for answers. As I did not know the answers then, hereunder are some important facts to consider:

40-hour work-week. As many had known, the five-day work was welcomed by most without question. Although some hesitated at first, but once the reasons were explained, most of the rank-and-file understood that it was economical to the company’s financial resources to reduce the paid six-working day work amisdt an economic slowdown, bear steel market and intermittent production run. This rumor died a natural death when the 40-hour work-week was implemented during the first week of November. The effect was felt only later this month. The following is from DOLE’s Handbook on Workers’ Statutory Monetary Benefits:

I. Effect of Reduction of Workdays on Wages
“In situations where the reduction in the number of regular working days is resorted to by the employer to prevent serious losses such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials, the employer may deduct the wages corresponding to the days taken off from the workweek, consistent with the principle of ‘no work, no pay’. This is, of course, without prejudice to an agreement or policy which provides otherwise.”

Retrenchment. As early as the first week of October, news about retrenchment was initially brushed off by top management with a note that the Owner himself would not hear off any plan to let go people out of work. The Owner was sensitive to idea based on the previous retrenchment experience of most of the company’s local hirees who were selected from the remnants of a liquidated company, which closed nine years earlier. Moreover, because of the slump in steel demand for this last quarter, retrenchment was chosen as the drastic but necessary path. By the end of October, a forced-ranking of all personnel was made, and the company decided to schedule letting go 20 per cent of the workforce. A list of the 60 least-performing individuals based on a four-criteria ranking was submitted but remained a inactive. Most of the workforce believed that the retrenchment plan was shelved because the company was can’t even ill-afford to fullfill the recent payroll. Retrenchment meant a cash payout, or an expense, thus not necessarily a cost reduction! A good observation, but still a probability

Lockout. Most personnel had an inkling that if the company cannot even afford the payroll, and in the same manner the retrenchment expense, the next best thing is to declare a lockout! With this management action; all personnel would be forbidden to enter the plant premises for a certain duration and once the steel market picks up again, the company would have the option to recall the remaining 80 percent of the work force, without the burden of paying for the retrenched 20 per cent. According to Guidelines Governing Labor Relations:

Legal Requirements
“2. The exercise of the right to strike or lockout shall be subject to the following requirements:
a) a . . . lockout notice shall be filed with the labor department . . . at least 30 days if the issue involves bargaining deadlock.
b). the . . . lockout shall be supported by a majority vote . . .of the board or directors of corproation, . . . , obtained by secret ballot in a meeting called for the purpose; and
c) . . . lockout vote shall be reported to the labor department at least 7 days before the intended . . . lockout

There were no reported news in the local newspapers on this management lockout, neither was there a legal brief brought before the labor department and there is no issue involving a bargaing deadlock. Although the cited information seemed dated, it still applies to the present scenario. Thus, the rumored lockout is not true, but rather it’s a form of downsizing which followed.

Downsizing. From the start of the century, especially during times of economic crisis, several manpower cost reduction methods have been done by various companies. A reduction in manpower count or wages are the most popular. Reduction in manpower count can be done through retrenchment, a drastic move, or by free-hiring, a slow yet effective method. Reduction in wages can also be in any form: reduction in the number of days worked or the outright reduction in pay scale.

Factual information being passed on by credible sources, such as front line supervisors, will usually defeat the potentially destructive and debilitating rumor mill and the organization will function more effectively and more efficiently through whatever crisis or upheaval the company is currently weathering.


Notes:

Bureau of Working Conditions (2000). Handbook on Workers’ Statutory Monetary Benefits. Republic of the Philippines. Department of Labor and Employment, p. 18 back to text

Ministry of Labor and Employment (1987). Guidelines Governing Labor Relations. Republic of the Philippines. Department of Labor and Employment. 19 October 1987. back to text

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