Retrenchment: what it is, why it happens, and how to deal with it

Retrenchment. A word so heavy, professionals out there are #shook.

You’ve probably heard it from your parents or older folks around you – especially during tough times and market crises. Even now, retrenchment still happens for a multitude of reasons (StarHub recently retrenched its people earlier this month) and as young professionals, we can’t let it catch us off guard.

So what exactly is retrenchment?

Business Dictionary clearly defines retrenchment as a “forced lay-off of employees, usually to cut down its payroll.”

In other words, companies retrench employees to save costs from salary and remuneration. You might think it cruel or even unreasonable, but business is business, at the end of the day. And from a strictly business POV, laying off employees means money saved – and that money can be used to invest in new initiatives, training programmes, all in the name of moving towards a new direction and, hopefully, more revenue.

Reasons retrenchment happens no matter where you go

The same way you might bid your shiny gym membership goodbye when your finances take a nosedive, companies retrench their employees to stay afloat in tough times. Retrenchment never occurs because employees fail to deliver, but because several crappy financial years have caused the possibility of bankruptcy to surface.

In sum, retrenchment happens for a variety of reasons. They include:

  • Intense and fierce competition in the market. This is especially so in evergreen industries like telecommunications, internet, and generally anything that is widely used and consumed across the world.
  • Failing to keep up or adapt to big industry trends and changes.
  • Less-than-stellar financial years and progressive dips in revenue. This could be attributed to a great number of reasons, whether it’s unreliable leadership, questionable business decisions, or just the emergence of a strong, young competitor with more radical and popular products that shake things up.
  • Tighter, strained budgets due to all of the above. When companies see a downward trend in revenue, it makes sense that they would think about how to cut costs and reduce losses while they still have a fighting chance.

What will happen in a retrenchment exercise, and what you can do afterwards

Whenever a company is about to enter into a period of retrenchment, employees will generally be informed of this way in advance. Meaning to say that you won’t ever be caught off guard by a retrenchment exercise that’s starting tomorrow.

Often retrenchment happens at random – especially since these exercises aren’t due to any fault of the employees – and no one will actually be targeted or specifically chosen to get the boot.

Companies will make moves to help retrenched employees in these transition periods, including providing severance packages for that added financial support over the next few months. Job searches, after all, don’t often turn up results within the first two weeks of scouting and sending out applications!

An employee that’s been retrenched will ideally have to take some time off to deal with the loss of a job. It’s unfortunate, but it’s time to accept it. It’s just as important that a retrenched employee makes plans to tie up loose ends and be accountable towards the rest of his team – inform whoever you must, and make sure your job isn’t left to collect dust.

The next things to do would be to update your resume, kickstart the job search, and pace out the severance package in anticipation of a longer job search than necessary. So if you’ve been retrenched, prepare to tighten your budget just a little bit unless you’re 200% confident you’ll acquire a new job within the next month or so.

To recap, in the event of retrenchment:

  • Spread out your severance package to ensure you don’t end up eating grass midway through your job search
  • Update your resume and start going through job boards like Glints for new opportunities
  • Tie up loose ends with respect to your duties and do proper handovers if there’s time
  • Remember to take some time off to recover emotionally

Strategies to deal with the fear of retrenchment at your company

If you have reason to believe that retrenchment is close at hand at your company, no matter which industry you’re populating, then you’re probably spending quite a bit of time worrying and fretting about the future.

There’s no way to know for sure that you’ll be retrenched, but that also means you won’t know that you won’t be given the boot. Even with a severance package, losing a job in this economy is terrible. You wouldn’t wish it on your enemies (or would you?).

Here are some strategies to deal with that fear and anxiety:

  1. Voice your fears and eliminate overthinking

Grab your office best friend or even a trusted manager to openly talk about your fears. You might find the assurance you need – and it’s crucial that you don’t let your overthinking get the better of you.

If you don’t like the idea of speaking to people at work about it, confide in your friends and loved ones. Find the support you need if you’re feeling like you’re in a precarious/ambiguous position at work – and let people help you to find the self-esteem to stand on your own two feet even in the face of losing your job.

  1. Remember that there’s always something out there

Fact: retrenchment exercises lay off employees at random. It’s out of your control, no matter how anxious you are about it.

Another fact: there’s always jobs in the market waiting for you. Even if it feels like the end is near (doomsayers, where you at), always remember to be rational. If you get retrenched one day (touch wood), know that it doesn’t mean you’ve come to a dead end. You’ve been through the job search before – and you can do it again.

  1. Be mindful and focus on the present, and keep doing your best at work

Ultimately, projecting your fears on a future that might not even happen is unproductive. Try these three anxiety exercises to calm yourself – because you still have a job to do, at the end of the day. Power through it, be mindful, and put your best in everything you do. That’s the mark of a valuable, good employee – and you’ll be able to extract meaningful reference letters from your boss when the time comes, too.

Now that you know how to prepare for possible retrenchment (and we pray it never happens to you!), you’re one step closer to navigating the working world confidently.

And if you’re still looking for a job, hop on our platform and explore thousands of job opportunities today!

Sophia Lee

I used to freelance exclusively for Glints - now I'm a content marketing intern working furiously in the backdrop. Talk to me about writing any time! (Or we could have a serious discussion about video games and e-sports... that's cool too.) Find me on Instagram (@pxtrx)!

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