Several misconceptions exist in our society about why businesses exist. There are no two opinions about the fact that businesses exist for satisfying customer needs first and foremost. How might these needs be served best is a subject of discussion later in this write-up. First, it is important to ascertain if customer needs are best satisfied by creating by laying off the staff at the very first opportunity available.

If an organisation is profitable, there is no justification whatsoever for slashing the workforce. Good managements aim at fulfilling their reason for being by exploiting all the resources that they have at their disposal. Human resource is one crucial resource without which no organisational mission can be accomplished. A wise management would want to retain their skilled and experienced workforce to grow and fulfill their reason for being. There are organisations that retain their workforce even during recessions as valuable human resource is not easy to get.

Organisations that treat their human resource as asset and not as expense item or liability are poised for continued growth and reversal of organisational life cycle. PTCL for one did not have a workforce that was a liability. Not only was PTCL profitable but its salary expenditure declined by five per cent over the year. Also, as a percentage of total operating cost, salary bill is comparable to depreciation and amortisation which cost actually increased by six per cent during the same year. While regard is shown for physical capital, not much consideration is given to human capital that is emphasised in business administration and management. Organisations must continue to grow and generate more business to fully utilise the human resource they have.

If the labour has grown confident and vocal about their rights, the management needs to display skills and style in labour-management relations. Job destruction out of a sheer inability to work with an aware workforce is a bad reflection on the ability of the management that should be able to work with ease with all the stakeholders in general and with employees in particular. The need for “rationalisation” of labour strength and “restructuring” the human resource will, therefore, not arise. For, reorganisation is not just about “restructuring” or “rightsizing.” Taking a lead from McKinsey’s, reorganisation is to change as many Ss as the need be according to the situation on the ground. Beginning with shared values, these Ss include strategy, staff, structure, systems, style, and skills.

In Pakistan, taking a jab at only the structure and staff is called “right-sizing” when even the style, skills, strategy, and shared values need to be hammered out as a part of right-sizing exercises. This is done the world over and could be emulated.

The reason why a well-rounded view is not taken is because, in this country, prime pre-occupation is with wealth generation through profitability in the near-term. That is, to take care of only the interest of majority shareholders. Mostly, this is done at the expense of the interest of other stakeholders. Organisations as open systems cannot get the best inputs unless they give the best output to each one of the stakeholders who are also input providers. Quality of inputs is, therefore, as good or as bad as the output that an organisation gives to its various stakeholders. So, if it is only the shareholders that are aimed at, then neither will the customer needs be served like they should be to fulfill organisation’s reason for being nor will the organisation be able to continue to mop the best profits that it wants.

Businesses need to appreciate that profits are not the reason for being. Rather, profit is a result or a financial target. This financial target cannot be met not until other functional level goals are attained. Those with a profitability block fail to take a horizontal cross-sectional view of the organisation and cannot make a balanced scorecard. Hinging efforts only to the financial resource that is just one of the various resources may lead businesses into a blind alley at the end of which they might not be able to even maximise their profits. This is why Peter Drucker says that businessmen and economists who view profits as the reason for being of organisations are “average” businessmen and economists. Since our country is full of average or below average approach to business management, we have a huge micro-organisational problem on our hands.

So, none of the above can be dismissed as bookish by the ones in the field out there to make a fast buck either through short-cuts or by pandering to the wealthy elite for petty gains. First, the theory is no fiction or imagination because business theory explains the successful practice on the ground. It is a pity that we have to learn it from the West and not from the Holy Quran that emphasizes “due measure and due weight.” This should be extrapolated from trading to all aspects of business and stakeholder relationships and we have the Holy Quran encapsulating all of modern and strategic management in this one conceptual emphasis. Now, this is not bookish. Muslims must try to close this Quran-practice gap in the business world. They cannot call it impracticable as God revealed his guidance for practice and not for shelving. This is tradition that must be brought into action.

To say that PTCL employees will find jobs in mobile phone companies again begs the question that why must they be displaced in the first place. To say that there are lot many more jobs in banking now is not because of privatisation but because of reform that allowed new banks to come up not all of which were privatised. The current state of the banking sector can perhaps create more jobs than they are currently offering only if they cease to be lean and mean in the literal sense of the term. It is poor HR management to keep the organisation under-staffed and exploit the work force through work overload. Pak Steel Mills was once turned around with its existing staff without any layoff. So, why can’t Pak Steel, PIA, PTCL, and KESC be turned around without human injury that some support as essential for surgery.

Why can’t heads be put together to rightsize through asset and cost reduction minus the workforce? Because, the new managers’ interests remain at odds with the workers’ as the former focus primarily on quick financial gains which interest needs to be shielded from the workers. Labour and management cannot, therefore, team up. Instead, they enter into adversarial relationship. Inept managements now have no solution but to hack the workforce.

Nationalised organisations were also mismanaged thoroughly and could not enter into a win-win relationship with the employees. Whether nationalisation was good or bad may remain moot. But, the idea was poorly implemented when the situation could have been capitalised upon for mutual gain of the managements, employees, and customers alike through good management practices that should generate business and utilise the available resources in general and human resource in particular.

It is bad management to focus primarily on profits and benefits for the rest later. Pakistani businesses must graduate from this obsolete view that has proved to be self-defeating and counter-productive in public and private sectors alike.