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Billion dollar profits but still axing jobs

Should companies axe employees the moment dark clouds appear? By Gerald Giam.

Published

16 years ago

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Gerald Giam / Senior Writer

The stunning news blared out on Friday that Singapore‘s largest bank, DBS, will be cutting 900 jobs by the end of this month. (See here). At least half of the job cuts will be from its 7,600 workforce in Singapore.

DBS CEO Richard Stanley said that the cuts will be “across all business units and functions, and at all levels of the organisation”.

When I first informed my editor of the news, his immediate reaction was, “Damn, the retrenchments have started.”

It is natural to assume that retrenchments point to an economy that is hitting the doldrums. After all, won’t companies only start retrenching staff after all other avenues of cost cutting have been exhausted and the company is starting to bleed?

Mr Stanley’s explanation for cutting jobs tells another story: “To be a more streamlined organisation” and to “run a tighter ship”.

Indeed DBS Group Holdings reported that for the first nine months of 2008, net earnings were S$1.67 billion, albeit down 13% from 2007. Profit before allowances was S$2.64 billion, down just 1% from last year. Third quarter earnings stood at S$402 million. The bank’s press statement emphasized that their “balance sheet remains strong”.

Of course, from a profit-driven business standpoint, job cuts make sense to help the company maintain its profitability and obligations to shareholders. In most organisations, employee payroll takes up the biggest chunk of expenses, so cost cutting cannot be complete without job cuts.

This is very much the pure capitalist, hire-and-fire approach, of which banks epitomize. One could argue that in good times, bankers can earn 12, 18 even 24-month bonuses, so why can’t they also suffer the downside of a slowing economy? Working in a bank could be seen as high returns but high risk.

But banks are not the only companies who operate in this fashion. Back in early 2003, PSA Corporation, the port operator, retrenched 800 staff — 14% of its workforce — in its bid to remain competitive after its loss of major shipping firms Maersk and Evergreen. This despite posting a S$559 million net profit in 2002.

I can understand if a small and medium-sized enterprise (SME) has to cut its workforce to remain in the black. But is it ethical for large, profitable companies which have enjoyed years of profits and built up a war chest of reserves, to axe employees the moment dark clouds start to gather?

Shouldn’t layoffs be a tool of last resort? Have these staff been given the option of working with reduced salary in order to keep their job? Or are retrenchment exercises a way of shedding off more expensive older workers, and replacing them with younger — sometimes foreign — talent. Keep in mind we are dealing with people’s lives, not just digits on a spreadsheet.

Obviously I am not in a position to judge whether the DBS management has done their due diligence. Their press statement said that their expenses fell 16% from the previous quarter, due to what they claimed were “proactive management of controllable expenses”. To their credit, they seem to have at least attempted other measures.

Some listed companies are known to conduct manpower reduction exercises to reassure investors that they are doing something to improve profitability. In most cases, the companies’ stock prices rise immediately after the announcement is made. So while the axed employees are thrust into the jobless wilderness, the biggest beneficiaries of job cuts are often the executives who make the retrenchment decisions, as they stand to benefit from rising share prices and bonuses due to increased profitability.

There is a lot of talk about corporate social responsibility (CSR) these days. About how companies should give back to the community they operate in and spruce up their corporate image at the same time. But charity should begin at home. A company’s first social responsibility ought to be to its employees, which depend on it for their living.

A company which retrenches staff when it can afford not to would be hard pressed to earn much loyalty and attachment from them. The net result is that it will find it much harder to attract and retain talented workers in the future, especially when the economy improves. This will force them to offer obscene salaries and bonuses to entice talent, setting themselves up for unsustainable manpower costs later.

Running a listed company is not easy, and it is made harder during lean economic times like these. However as Singapore and the rest of the world heads into recession, company executives will do well to remember that people should come before profits. This would benefit not only employees, but the company as well in the long run.

———-

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Indonesia

Miss Universe cuts ties with Indonesia chapter after harassment allegations

The Miss Universe Organization severs ties with Indonesia franchise due to harassment claims. Malaysia edition canceled.

Women allege body checks before pageant. Investigation launched. Safety prioritized.

Indonesia winner to compete in November finale. Height requirement controversy.

Published

1 year ago

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14 August 2023

By

WASHINGTON, UNITED STATES — The Miss Universe Organization has cut ties with its Indonesia franchise, it announced days after allegations of sexual harassment, and will cancel an upcoming Malaysia edition.

In the complaint, more than a half dozen women said all 30 finalists for Miss Universe Indonesia were unexpectedly asked to strip for a supposed body check for scars and cellulite two days before the pageant’s crowning ceremony in Jakarta.

Their lawyer said Tuesday that five of the women had their pictures taken.

“In light of what we have learned took place at Miss Universe Indonesia, it has become clear that this franchise has not lived up to our brand standards, ethics, or expectations,” the US-based Miss Universe Organization posted Saturday night on social media site X, formerly known as Twitter.

It said that it had “decided to terminate the relationship with its current franchise in Indonesia, PT Capella Swastika Karya, and its National Director, Poppy Capella.”

It thanked the contestants for their bravery in coming forward and added that “providing a safe place for women” was the organization’s priority.

Jakarta police spokesman Trunoyudo Wisnu Andiko said Tuesday that an investigation into the women’s complaint has been launched.

The Indonesia franchise also holds the license for Miss Universe Malaysia, where there will no longer be a competition this year, according to the New York-based parent organizer.

In a lengthy statement posted to Instagram, Indonesia franchise director Capella denied involvement in any body checks.

“I, as the National Director and as the owner of the Miss Universe Indonesia license, was not involved at all and have never known, ordered, requested or allowed anyone who played a role and participated in the process of organizing Miss Universe Indonesia 2023 to commit violence or sexual harassment through body checking,” she wrote.

She added that she is against “any form of violence or sexual harassment.”

The Jakarta competition was held from 29 July to 3 August to choose Indonesia’s representative to the 2023 Miss Universe contest, and was won by Fabienne Nicole Groeneveld.

Miss Universe said it would make arrangements for her to compete in the finale, scheduled for November in El Salvador.

This year’s Indonesia pageant also came under fire for announcing a “significant change in this (year’s) competition guidelines” with the elimination of its minimum height requirement after it had crowned a winner.

In its statement, the Miss Universe Organization said it wanted to “make it extremely clear that there are no measurements such as height, weight, or body dimensions required to join a Miss Universe pageant worldwide.”

— AFP

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Malaysia

A Perodua service centre in Kuantan, Malaysia went viral for its strict dress code, Perodua responds

A dress code for vehicle servicing? A Malaysian car brand’s service centre dress code signage has puzzled netizens, raising queries about the need for attire rules during a routine service.

The manufacturer responded with an official statement after a flurry of comments, seeking to clarify and apologize.

Published

1 year ago

on

10 August 2023

By

MALAYSIA: A dress code signage positioned at a service centre belonging to a prominent Malaysian car brand has sparked bewilderment among Malaysian netizens, who question the necessity of adhering to attire guidelines for a simple vehicle servicing.

The signage explicitly delineates clothing items that are deemed unsuitable, including sleeveless tops, short skirts, abbreviated pants, and distressed jeans.

The car manufacturer swiftly found itself flooded with comments from both inquisitive and irked Malaysian netizens. This surge in online activity prompted the company to issue an official statement aimed at clarifying the situation and extending an apology.

In a post that gained significant traction on the social media platform, politician Quek Tai Seong of Pahang State, Malaysia, shared an image to Facebook on Monday (7 Aug).

The image showcased a dress code sign prominently displayed at a Perodua Service Centre in Kuantan. Within the post, Quek posed the question: “Is this dress code applicable nationwide, or is it specific to this branch?”

The signage reads, “All customers dealing with Perodua Service Kuantan 1, Semambu, are requested to dress modestly and appropriately.”

Adding visual clarity to these guidelines, the sign features illustrative graphics that explicitly outline clothing items deemed unacceptable, including sleeveless tops, short skirts, short pants, and ripped jeans.

Delineating the specifics of the dress code, the signage stipulates that male visitors are expected to don shirts accompanied by neckties, opt for long pants, and wear closed shoes.

Conversely, female visitors are advised to don long-sleeved shirts, full-length skirts, and closed-toe footwear.

Perodua’s dress code sparks online uproar

Following the rapid spread of the post, Perodua’s official Facebook page found itself inundated with comments from both intrigued and frustrated Malaysian netizens, all seeking clarifications about the newly surfaced dress code policy.

Amidst the flurry of comments, numerous incensed netizens posed pointed questions such as, “What is the rationale behind the introduction of such regulations by the management? We demand an explanation.”

Another netizen expressed their dissatisfaction, arguing against the necessity of the rule and urging Perodua to take inspiration from the practices of other 4S (Sales, Service, Spare Parts, and Survey) automotive dealerships.

A concerned Facebook user chimed in, advocating for a more lenient stance, asserting that attempting to dictate customers’ clothing choices might not be in the company’s best interest.

Someone also commented in an angry tone, “Oi what is this? Going there for car service, not interview or working, right.”

As the discourse unfolded, it became evident that while some inquiries carried genuine weight, others chose to inject humor into the situation, playfully remarking, “If I wanted to buy a Myvi, I should buy or rent a formal attire first.”

“I sell economy rice at a hawker centre, I have never worn a long sleeve shirt and a tie… I guess I will not buy a Perodua car then.”

“I guess they will not serve those who wear short pants.”

Perodua addresses dress code controversy

As reported by Chinese media outlet Sin Chew Daily News, the manager of Kuantan’s Perodua Service Centre had acknowledged that the images on the dress code signage were misleading.

In response, the manager divulged that discussions had transpired with the head office, leading to the prompt removal of the signage to prevent any further misconceptions.

The manager clarifies, “We do encourage visitors to adhere to the dress etiquette, but we won’t go to the extent of restricting their choice of attire.”

He also revealed that currently, no complaints have been directly received from the public.

However, feedback from certain customers was relayed through Perodua’s agents.

Perodua also released an official statement by chief operating officer JK Rozman Jaffar on Wednesday (9 Aug) regarding the dress code on their official Facebook page.

The statement stated the dress code etiquette is not aligned with their official guidelines and they are currently conducting an official investigation on the matter followed by corrective measures to avoid the same incident from happening.

Perodua also extends its apologies for any inconvenience caused.

 

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