Flipkart slims down for the ‘lean’ organization look :Non performing employees told to resign or get severance pay

Benguluru July 29:Flipkart is offering employees who have failed to meet professional expectations the choice to either resign or be sent off with severance pay, according to three people directly aware of the development at India’s largest online retailer.

The decision is expected to impact 700 to 1,000 staff, two of the sources, who are part of the senior management team at the Bengaluru-based company, said.

“The cleanup is a part of the process of making Flipkart a lean organisation,” said one of the people cited above.

The move, while not unique to Flipkart, is reflective of the challenging times for the online retail industry, as well as the company, which is attempting to find a balance between saving costs and chasing growth.

While the absolute numbers look large, Flipkart has about 30,000 employees, which means the decision affects some 2.3-3.3% of the workforce.

What is raising eyebrows is also the fact that such occurrences are not common at Flipkart, which has expanded rapidly in recent years and tended to take a benign view of those at the bottom of the performance hierarchy.

Now, however, things have changed as chief executive Binny Bansal strives to maintain the market leadership of India’s most valuable startup while putting the company on a path to profitability.

Flipkart came in for some criticism earlier this year after it deferred the joining dates for campus recruits from the Indian Institutes of Management.

A joint report by KPMG and CB Insights recently revealed that funding into start-ups has nosedived by as much as 24 percent from the December quarter of 48 percent to $1.15 billion in the first quarter of this year.

The overall trend seen is a slowdown in hiring by start-ups. “The days of hyper-aggressive hiring by start-ups are gone. The mantra now is to hire only when it is very essential.

With VCs taking a more cautious approach to funding, and consolidation being the norm across sectors, many start-ups are finding it tough to sustain their hiring levels. Also, with most of them focusing on their burn rates, the trend of hiring highly-paid professionals from bigger companies, or from premium B-Schools and engineering colleges is on the ebb,” says Ajay Kolla, Founder and CEO, Wisdomjobs.com.