Companies in Oman are making the mistake of cutting staff, instead of retaining them to counter the economic situation with innovation, speakers said at the Finance and HR Summit held at the Sheraton Oman on Wednesday.

“The classic mistake companies make is cut staffing costs during a recession. This is rather a time of opportunities that would’ve never been available during a time of continuous economic growth,” Khalid Ansari, from KPMG Oman said during his speech at the conference. 

“This is a time to renew a sense of urgency to be more productive and to make fundamental changes. A lay-off strategy is counterproductive. It decreases trust in employees when it is paramount to keeping the company up in difficult times. Looking for opportunities and eliminating waste that you were producing than cutting staff.”

Oman, along with other oil dependent Gulf Cooperation Council economies has been hit by a downturn due to low oil prices since 2015. Government projects that were a major economy and job driver fell, while payments stalled and in a direct response; companies froze recruitment that was followed by restructuring in companies and staff numbers declining significantly.

Economic diversification

However, the government had proactively issued diversification plans last November, where more than 120 projects in the non-oil and gas sector were highlighted by Tanfeedh, the National Plan for Economic Diversification.

Ansari further advised that companies focus on cash flow and cost management, use lean techniques and their existing staff to help them diversify and innovate.

Experts suggested that the focus must be on productivity and companies must launch productivity management programmes that access employee productivity and give them the right incentives for their performance.

“We need to make use of the staff we currently have. They have been in the business for a long time and know it well. If we sack them in a rush, we may find ourselves left with a void that will be hard to fill by a new staff later. They would be expensive to bring and will take time to reach optimal performance. We need to manage our existing employees effectively and create a good work culture,” Venkatesh P.V., principal consultant and business head at Reem Al Rawadi, said.

“A tough economic situation calls for leaders to take up challenges and move forward instead of sitting back and waiting for good times,” Raj Kumar Iqbal Ahmed, chief executive officer of Al Khalij, said.

“We need to start looking at changing the mindset. Look at opportunities, which we would never have if times didn’t go bad. The government is pushing to diversify and so must companies and individuals. It is time to change things now. I like to deal with challenges. I have been in different places doing different things. The only thing I did that was common is take up challenges and everywhere the companies have grown due to these initiatives,” he said.

Steep decline

Recent data from the National Centre for Statistical Information showed that there has been a steep decline in the number of small enterprises—31.2 per cent—in the first quarter of this year. The number of educated expats has also declined from the workforce in the country. Ahmed said companies need to take risks and diversify as there are still a lot of opportunities available in the country.

“It is all about taking on challenges. We need to stop fearing taking risks and failing. Most companies today are living with that fear and are unable to develop in such an economic scenario. They are just waiting for good times to be back. What they fail to see are the opportunities that are present. Anyone can run a profitable business when the economy is booming, but only a person with a well-planned strategy and willing to take risks can prosper in tough times,” Ahmed explained.

Source: Timesofoman