In a major lay off, Flipkart is set to sack over 700 to 1000 employees in a bit to cut costs.
In a bid to cut management costs and to gain in against its competitors Amazon and Snapdeal, Flipkart has come up with the decision to cut off nearly 3 percent of ‘under-performing’ staff out of its total 30,000. The personnel have been told either to resign voluntarily or be ready to be sacked. One of the internal sources said, “impact 1—2 per cent of the employee base” as the company intends to be a “lean organization”.
The Indian e-commerce firm has been facing tough completion has been having difficulties with the falling valuations. To combat this it had made many changes in its business structure such as increasing the margins which it charges from the sellers. The latest layoffs too seem to be the part of the combat plan. According to the sources one of the officials said, “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,” the spokesperson said, adding that if employees are unable to make the desired progress, they are asked to “seek opportunities outside the company”.
Defending its move, the officials at Flipkart said that laying off the personnel at difficult times is a common practice in business, especially in IT sector. They said, “As a performance oriented organization, 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.”
Explaining the procedure the spokesperson of the Bengaluru based firm said that traditionally the company follows the policy of giving high rewards to the exceptional performers and they are promoted to the next level of management, while the ‘solid performers with good potentials are groomed for the future opportunities with mentoring, coaching and on-the-job learning opportunities.’ And the employees whom the company does not find at the par “despite being on a performance improvement plan, they are encouraged to seek opportunities outside the company where their skills can be better utilised.”
This is not the first time that Flipkart has been on lay off mode. In 2007, the company had ‘let go’ nearly 10 percent of their employees for under performance. Speaking about it the Harish Kumar, Managing Partner at Wenger & Watson told media, “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 organization should be helping them in that regard as well.” Apart from this, the company had faced raps in the first half of the year for procrastinating the joining dates of the campus recruits from Indian Institutes of Management and Indian Institute of Technology.
Flipkart is not alone to adopt this kind of sacking method to do away with extra baggage; last February saw Snapdeal sacking 200 personnel in cost cut move. Microsoft with 2,850 employees too had followed the same suit.
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