Friday, November 21, 2008
DBS retrenchments – Broken social contract or misplaced loyalty?
The media is awash with reports and commentary on the recent retrenchment of 500 DBS staff in Singapore, and the blogosphere/grapevine is that other local banks are similarly wielding the axe, albeit more discreetly.
DBS’ management has attracted criticism from many quarters, including a Minister, no less, for their approach. (Some have pointed that that as advisor to the DBS staff union, the Minister Lim had a vested interest/obligation to do so, but that’s a separate story).
Few cried foul when Lehman Brothers, Merrill Lynch and Citibank announced their cuts – people understand that foreign banks have to meet their bottom lines and consequently, it is almost expected that jobs in those establishments will come and go. On the other hand, local banks – and DBS in particular – appear to be bound by an unwritten social contract.
This “social contract” implies there should be some degree of loyalty between employee and employer. Companies are expected to look after their employees’ interests, and in this environment, job security probably tops the list.
In any contract, there is quid pro quo, and employees are likewise expected to return that loyalty and consider the company’s interests i.e. not simply jump ship any time a better offer comes along.
In reality, however, employer/employee loyalties are guided not by social contract but driven by dollars and cents, and people in the finance industry should be particularly enabled to make such distinction. Many had jumped ship/ changed employers (to and from local banks as well) in the preceding bull run. I think it safe to assume that most enjoyed higher salaries with each move. Little mention was made of this social contract then.
Logically, therefore, employers – including the local banks – are likewise not obliged to adhere to this “contract”.
IMO, by offering one month salary for every year of service, DBS has actually reinforced the concept of the social contract. Long-serving (and therefore by definition, loyal) DBS staff who got retrenched get a golden handshake (some of whom I understand were quite happy with their retirement package). However, those who had joined DBS mid-career (hence breaking their social contracts with their previous employers?) would be short-changed.