Flipkart in a bid to have a leaner organisation structure, and make better utilisation of its cash resources has
now started with mass layoffs based on employee performance decided to let go underperforming employees. The company has given 700-1000 of its employees an option to either resign or be sent off with severance pay.
The step was taken after the company faced valuation slash down by Morgan Stanley and a trouble in gaining more funds from the investors. Also, Flipkart came in for some criticism earlier this year after it deferred the joining dates for campus recruits from the Indian Institutes of Management.
In a statement, Flipkart said that in situations where employees do not make “progress” despite being put on a performance improvement plan, “they are encouraged to seek opportunities outside the company where their skills can be better utilised.”
At present, Flipkart has around 30,000 employees and it aims to strive profitability. While online retail industry turns towards more shutdowns and consolidations, Flipkart’s attempt to gain a balance between saving costs and chasing growth is quite obvious.
Earlier, in April this year, Flipkart also curbed its discount pricing and placed a cap on salary increments. It is also aiming to cut its monthly burn rate to $40 million from the about $ 80-100 million in the first half of 2016.
Other major layoffs have been seen this year at Grofers which fired 10% of its employees in June. In April, where InMobi fired close to 100 employees, Hiree fired 80% of its workforce. CarDekho.com, Gaadi.com and Zigwheels.com had fired 60 employees in a bid to realign its management and resources to focus on its core areas. More than 150 employees of CommonFloor were fired by Quikr after the latter bought out the former, this January.
Update: Flipkart’s spokesperson said,
As a performance oriented organisation, 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. The top performers are rewarded highly and promoted to the next growth level. The solid performers are accordingly recognized and groomed for future roles through mentoring, coaching and on-the-job learning opportunities. At times, we have employees who do not meet the performance bar. In those situations, we work closely with employees to enable them to improve their performance. In due course, if these employees are unable to make the desired progress, they are encouraged to seek opportunities outside the company where their skills can be better utilized. This is a fairly common practice across various industries- especially in high-performing internet organizations.
Editor’s Note: The earlier version of the story mentioned “Plans Massive Layoff” in the headline, we have removed that part based on interaction with Flipkart spokesperson who stated that they have not layoff and they will just let underperforming staff go off.