You’re a Commodity. Accept it!

By now CEOs must have stopped characterizing the company as a ‘family’—it would create bad optics during layoffs. And the hypocrisy would be too much.

The past year has seen big names in all industries embrace layoffs with an open heart (except maybe politics and the military–industrial complex). Since January  1st, 2023,  1321+  companies have announced layoffs, including Amazon, Meta, Disney, Accenture, et al. This phase has bust the myth that only poorly performing and small-name companies fire people. It is clear now that even those with deep pockets shed personnel. They do this in anticipation of falling business—it does not make sense to keep paying salaries when there’s no work … in the future! This is akin to what is called a put option in commodities/derivatives trading.

Human Resources as Commodities

It’s already a shame that humans are called a ‘resource’. But to be called a commodity? What gives? In a sense, human resources are like commodities on which organizations speculate. Like in the case of iron ore or coffee beans, organizations speculate on future demand/supply. They buy or sell a commodity based on how good or bad they think the market will be in 30/90/120 days. That’s the kind of speculation organizations also do on humans—they hire based on the projected need for staff. However, unlike commodity traders, organizations are unable to easily unburden themselves of the human commodity when the need diminishes. At least that’s how it used to be.

Normalizing Layoffs

In the past decade or so, the mass shedding (and hiring) of human resources has been normalized. According to one school of thought, it’s good for business and the economy because labor as a factor of input should be as mobile as capital. But that’s easier said than done—getting fired is a matter of a meeting; getting hired is more often than not a matter of hours of heartbreaking grunt work.

So what should you do as a salaried person?

Accept the Fact

First of all, accept that you’re a commodity! Accept that layoffs may happen at any time and be prepared for them—psychologically and financially. The trauma of an unfortunate event would be much less if it’s not a surprise. I feel it is important to look at the shape of employment systems more pragmatically and a bit less idealistically—companies gotta do what they gotta do. Love your job, but know that you could lose it suddenly and for no fault of yours. Build mental and operational moats to protect you during joblessness. It’s like going on a trip and carrying an extra pair of underwear—accidents may or may not happen, but it’s better to have it and not need it than need it and not have it.

Keep an Eye on the Bottom Line

Keep an eye on your company’s bottom line. If it’s a publicly listed company, and if your division’s bottom line has been in the red for more than three quarters, then it is likely that in the fourth quarter, they’ll do a cost cutting. Layoffs are the easiest way to do big-number cost cutting.

Keep an Ear to the Ground

Is it better to jump ship before layoffs are announced? I’m not sure. Sometimes the severance package is too good to miss. But let’s admit that the stress of being out of a job is also too much, especially if you have big recurring expenditures (school fees, EMIs, etc.). But what’s the guarantee that the new place won’t also lay you off soon? From what we’ve seen in the tech sector recently, there’s no guarantee. You’ll just have to take your chances. Check how the hiring division is doing. Listen to the whispers in the streets.

Of course, layoffs can happen even if your company is minting money. They just want to ensure that they continue to mint money. So if they anticipate inclement business weather in the future, they’ll shed weight now. In the past, they’ve also been hiring in anticipation of increasing demand. (This is what looks to me like call/put options in derivatives trading.)

Build a Financial Safety Net

Needless to say, you should follow the age-old advice of keeping 3-6 months of expenses as an emergency fund. I would say increase it to 12 months. It could take that long.

The other thing I would advise is saving aggressively, as per your risk profile, in all asset classes, especially stocks. That would give you a strong psychological safety net as well as an additional, growing income stream in the form of dividends and interest. Your emergency fund should include your investment outlays. In fact, when you’re in a job and if you get a windfall, immediately plow it into investments. Compounding is a powerful thing!

Embrace Networking

Do not shy away from networking! How quickly you bounce back from a layoff depends hugely on how well you know people in the industry. Try not to burn bridges; work hard but also work nice. Stay in touch with fellow professionals and friends from school/college/previous jobs. Set out a few hours every week for networking activities. Become a pro at using LinkedIn—post, like, comment intelligently. Join Facebook groups of fellow professionals.

Get an Edge

Keep learning new things and developing new competencies; get an edge. Read, read, read! Do courses. How are you different/better than the next person in the line? What about you gives the hiring manager an ‘Aha!’ feel? Do you look like a huge bang for their buck?

And what should you do if you’re the CEO/owner?

Drop the Pretense

Let’s drop the ‘we are family’ pretense once and for all. Just be honest and tell the employees, ‘This is a business, and you’re a factor input.’ Tell them that their jobs are not permanent, that longevity in it is conditional, and that a layoff is a regular business move, just like a price change or marketing push—it’ll be done when it needs to be done.

Provision for Layoffs

If you really care about your employees, then provision for layoffs. Set aside some portion of your profits as a layoff fund to be able to give a really good severance package. Regularly train employees with the clear goal of skilling them for the post-layoff job hunt. Have a proper, permanent transition team. Most of all, try everything else before you try layoffs. Jobs are still one of our biggest identities.

It is lies and hypocrisy that hurt employees the most. I feel that being open about the chances of layoffs is a fair thing to do. In this generation, it might be demoralizing to learn that layoffs could happen anytime. But I feel in a generation or two, people will integrate that eventuality into their mental, social, and financial models.

Published by Anupam Choudhury

I'm a writer, editor, and blogger from New Delhi, India.

4 thoughts on “You’re a Commodity. Accept it!

  1. Anupam, I must say, your blog post on normalizing layoffs is incredibly insightful and thought-provoking. You have brought to light an issue that affects both employers and employees and have provided some refreshing and practical advice on how to navigate through such a tough situation.

    I particularly appreciated your suggestion that employers offer generous severance packages in case of layoffs, which not only provide a cushion for affected employees but also demonstrate a level of empathy and compassion on the part of the employer. On the other hand, your advice for employees to remain mentally and financially prepared for the possibility of layoffs is something that should be taken to heart by everyone. Being proactive about saving money, developing new skills and maintaining a positive attitude in the face of uncertainty can go a long way in helping one prepare for the worst-case scenario.

    Overall, I believe that your blog post offers valuable insights and practical advice that will be helpful to both employers and employees facing the challenges of layoffs. Thank you for sharing your thoughts on this difficult but necessary topic.

    Liked by 1 person

  2. Thanks for the excellent points, Anupam.
    A caveat, though. While building a financial safety net is a must, and stocks are a good idea, we must really learn something about equity, investing etc rather than blindly following ‘tips’ about which stock to buy. We could lose a lot, or even get into debt. ‘Investing’ is definitely an important skill we need to pick up.

    Earning money is one thing, learning to manage it is another. We can find good books and courses on the topic, though there are far too many podcasters and ‘experts’ on the internet today. Be wary!

    Liked by 1 person

    1. Thanks for the comment, @zsarya! It’s a necessary caveat. Financial management can be quite technical, and hence, once must take the help of qualified experts whenever possible. But it’s a skill worth learning, at least for oneself, and at least the basics.

      Liked by 1 person

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