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Cutting wages, reducing personnel - The painful feeling not belonging to anyone

The on-going complicated evolution of the Covid-19 epidemic have seriously affected to businesses. According to VCCI's rapid survey results, the Covid-19 epidemic has seriously impacted on enterprises' production and business activities. Nearly 85% of businesses said that the epidemic had narrowed their consumption markets, nearly 60% lacked capital and broken cash flow. 40% of enterprises said that there was a shortage of raw materials and 43% had to narrow the labor scale due to lack of jobs. 82% think their 2020 revenue will decrease compared to 2019, 30% of which forecast a reduction of 30-50% and 22% of which forecast a reduction of 50%.

Cutting wages, reducing personnel is considered as undesirable decisions of every business owner. In the context of the current epidemic impact, this decision has been much more difficult. So how did the leaders make such pressure decisions?

Leaders sent out letters from the bottom of heart, got back deeply sympathy from staff

Recently, the president of one of top 3 mechatronics groups in Vietnam have written a kind letter to all employees.

Here is a quotation from that letter: "The corporation may choose to fire employees in projects that have temporarily closed, even had closed 6 months ago; Or we could choose dismissing positions that are really unnecessary for the corporation in 2020 ... We have more than a way to dismiss staff than choose to cut the salary of the entire organization. However, I wonder when we dismiss the staff who have been attached to the organization, in the current epidemic context, who knowing where they will go, what they will do to find new jobs and to take care of their families. So, in the current period, as a leader, I decided to reduce 50% of the salary of the project manager and supervisor positions; Reduce 30% of salary for technical staff. This decision will be valid for 3 months until the next decisions.”

Immediately, the above lines have created an effect, spreading encouragement to the employees. Talking about the decision to cut wages, a technical staff of this group said: “Nobody wants that happen, but in the context of common difficulties, I really do not know the life of the co-workers what will happen if my colleague are dismissed after a long time having been with the company ...”

Set the word "Human" on the 1st priority when making decisions

In order to survive, many businesses had to make decisions to cut staff, reduce wages, despite knowing that the decision will put employees' lives in difficult circumstances, especially in the context that the disease is still not completely under control. More than ever, businesses need to be flexible in making human resource decisions and set the word "Human" on the 1st priority as one HR director said before: “Under normal circumstances, businesses will have more time to prepare and make decision about HR plan. However, in the current period, it is necessary to have high to meet the requirements of optimizing the size and salary fund. If corporations, large-scale enterprises, salary funds can be enough to cope in case of sudden reduction of revenue from 2-3 months, small and medium enterprises are under a lot of pressure, so HR decisions must be made very quickly in a day, even in an hour.”

For the time being, there is no solution fit to all HR problems, depending on each situation we can decide to dismiss personnel, reduce wages or change services accordingly. However, any decision will have to face with the choice of an option that causes the least negative impact on the psychology and life of employee.

“We cannot simply meet our employees to inform that they are leaving their jobs due to financial difficulties. Instead, choose to be able to talk to staff, to be open to what we are thinking and worrying about. When the mind of the leader is given away, he will receive sympathy from the employee. In addition, in case the salary fund is still possible, it is advisable to provide some support for fired employees so that they can overcome the difficult period and look for other jobs”, said the HR director.

Reducing personnel is undesirable for any business but in necessary situations it must happen. And when it happens, how we face it is the most important thing. Preparing the mind to face and choose most positive handling plans is something that not every business can do well.


  • Let's look forward to the next newsletter of Faro Vietnam with the subject "Problems that businesses may encounter when reducing personnel" to have the answers for these concerns.


Contact Faro Vietnam to share the HR burdens you are facing to:

Email: service.vn@farorecruitment.com

Tel: + 84 24 3974 3091 (Hanoi Office) / + 84 28 3821 4654 (HCMC office)



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