Golden Hand Shake – myth or reality | Pakistan Today

Golden Hand Shake – myth or reality

The Voluntary Severance Scheme (VSS), popularly known as Golden Hand Shake has negative effects on both employees and organisations during the downsizing process. In many cases, companies that are slimming down their experienced staff under the scheme, opt to re-employ manpower as replacement whereas redundant individuals are seeking employment elsewhere.

These are the findings of a research scholar Naushad Raza Kazi. “Productivity loss, poor morale, decline in quality, anxiety and low level of loyalty, a sense of job-insecurity, family problems, lack of career opportunities such as a promotion and a pay-rise are some of the lateral aspects of the Golden Hand Shake scheme”, he analysed. It is significant to note that firms that were getting rid of employees, as cost cutting measures are later re-hiring in all departments to sustain their operations.

VSS-What does it entail? Interestingly, the researcher is a former employee of SME Bank who opted to retire under the scheme. But instead of buying a new car or purchasing a new house from the money received, he opted to go abroad for higher studies at University of Sunderland, UK and got a Masters Degree in International Management.

During his final project at the university, he chose his former organisation i.e. SME Bank as the subject of his case study on the socio-economic impact of VSS (golden hand shake) for his dissertation. He is the first Pakistani to obtain a distinction from the University of Sunderland during his academic career.

He has recently joined SAFWCO a progressive NGO working in Sindh, as Manager Research and Development Program. Commenting on the value of his pioneering, comprehensive and ‘Pakistan-specific’ research on the topic he said, “The main objective of my studies was to investigate the institutional losses caused by the VSS in terms of skilled manpower and its impact on socioeconomic conditions of the employees”.

Kazi believes that Voluntary Severance Scheme (VSS) is being used by many national and international organisations as a human resource tool for downsizing. It was previously termed as Golden Hand Shake. “In this approach employees are offered a fair and attractive lump sum compensation package for leaving the organisation”, he explained. After availing this option, an employee who had opted for VSS takes all his service benefits in lump sum with their own consent and without the ability to claim any benefit in the future. He termed the scheme as a soft HR downsizing approach.

The health check: The researcher has conducted a post-operative health check of the SME Bank by reviewing the financial statements of the organisation as the focus of his micro study in which he has successfully proved that institutional losses incurred as a result of downsizing are higher than the profits gained in the process.

“An institutional loss indicates is that which is due to the downsizing of professional and experienced staff through VSS. The bank sustained losses in terms of total income, non-performing loans, lending operations and recoveries”, he said.
He has concluded in his study that the massive redundancy and downsizing always create more complicated problems than solutions and firms rarely achieve their desired financial goals.

The researcher found that the employees, those who availed the VSS from SME Bank were able to improve their financial and social status due to the scheme’s acceptance. But he also believes that the subject needed more research. “This study recommends that organisations should motivate their employees and provide support to those who opt for a VSS”, he emphasised. This would help them in eliminating all kind of fears they could face before opting for a VSS.

He recommended that the government should take measures to re-employ the trained VSS employees in other departments where they could become an asset rather than a liability. “One of the important factors discovered during the course of research is the fear of privatisation among employees,” he remarked. A revelation of statistics with regards to the state of mind of employees shows that 69 per cent employees believe that the VSS is not good for the national economy.

Therefore, the author recommended that Government of Pakistan should work out privatisation plans with a consensus of Employees Union and Officers Association; it could be a better strategy to avoid the negative effects.
Interpretting the rationale of his studies, Qazi says that the development of human capital is considered an essential factor for effectiveness and efficiency of any organisation.

“This can be achieved through employing an appropriate number of workers,” he said. He thinks that in order to reorganise institutions, downsizing of employees has become increasingly important in modern times, especially in developed countries. Citing the case of Pakistan, he says that the policy of Volunteer Severance Scheme was adopted to reduce massive redundancy in financial institutions. “But since the inception of this policy, not enough research has been carried out on this aspect of human resource management,” he argued.

Survey findings: A survey of existing literature on the said topic suggests that study of the VSS in SME bank is unique as no other scholar has conducted research on this vital issue and that too for an emerging economy such as Pakistan. This provides a rationale for current studies to find out factors for ineffectiveness of the VSS scheme. The aim of the research is to find out the social and economic causes and effects of such a scheme on employees who avail this option for early retirement on one hand and institutional losses on the other.

Kazi has revealed interesting details regarding the social status of beneficiaries of the scheme. He found in his research that 84.62 per cent employees were satisfied with their decision of availing the VSS and they believed that VSS has had a positive impact on their social life. In addition, 69.23 per cent of employees accepted that they enjoyed their life in after the VSS and that was reflected in their new way of life.

Most of them were able to buy cars and new houses. This indicates that they were able to improve their social standing in society, where social ranks are judged by materialistic aspects. It is noticed in the research that about 71.79 per cent employees purchased cars from VSS benefits and further that 25.64 per cent of them purchased houses. These numbers depict a positive impact on the lives of those who took the VSS.



Related posts

7 Comments

  1. Anis-Ul-Hassan said:

    I agree with Mr.Kazi that the government should provide the unemployed some sort of jobs in various sectors rather than providing them the opportunity to take golden shakehand/VSS. Futher,the government should try to set policies which ensure the maximum utilization of available resources which would greatly help to increase the profit of important industries. The opportunity of golden shake-hand/VSS brings down the confidence level of indiviuals which is the major reason for braindrain from Pakistan to various other foreign countries (and this reason is adversly affecting the economic growth of Pakistan)

    • Naushad Raza Kazi said:

      Thank you dear Mr. Anis. Of course, I'm as well agree with the comments of Mr. Anis Ul Hassan.

  2. Aijaz Abro said:

    Mr Kazi has pulled out the realities/negative sides of the golden hand shake /VSS. His suggestions for the Govt. are also adoptable. The Govt, should think about his suggestions for recovery of economic conditions.

  3. Farrukh Masood Aarain said:

    Well i agree with Mr.Kazi because there are many types and categories of diffrent thinking peoples who avail this oppertunity but not go more away from cars and houses, i think there is an other oppertunity after VSS a next life oppertunity and chance to win life in second life i.e Mr.Kazi proved and Govt: may also chances to avail the next generation for leavable jobs.
    i appreciate to Mr KAZI for there findings and to win the next life i.e he opted to go abroad for higher studies at University of Sunderland, UK and got a Masters Degree in International Management and now He joined SAFWCO a progressive NGO and prove there as a good observer
    i think Pakistan needd more Noushad Kazi
    Thanks

  4. Zamir Hussain said:

    As a whole it is an eye opener interview for the employee to refrain from distructing the economic life line on the pretext to raise the social standard . If it is pertinent to avail the VSS always utilise for your intellectual growth.
    The Employeer should not lose their worth apprecisting man power on the plea of unforeseen budgetary savings , which caused un-necessary low return in the long term .
    The jist of the interview is Never kill the baby (girl) child on the assumption that the child in the mother’s womb is a boy.

  5. bilal said:

    now a days every person is looking for merits or demerits of financial discoveries instead of having islamic knowledge.we must see that is vss etc according to sharia or not then should talk about it .i think there is something wrong in such kind of schemes if we read deeply islamic law.

  6. abdullah said:

    i agree 100percent with bilal,s comments.we being a muslin must prefer islamic law.i also studied the detail of such schemes which are not according to sharia.so how can we discuss the merits of such policies?

Comments are closed.

Top