Published on March 31st, 2011 by Alan L Sklover
Question: Hi, Alan. I just joined a bank software division (2 months back). Now the bank has decided to outsource my team which comes to around 200 employees to their vendor company.
I would like to know what kind of issues will be faced by the 200 employees. Hope this re-badging will be happening by May, first week.
Answer: Dear Raju:
“Re-badging” is another one of those new words that have arrived on the employment scene in the last few years, including such newly-minted words as “downsizing,” “outplacement,” “outsourcing.” Re-badging by a company is having their employees continue to do work for the company, but not as its employees, but instead as employees of another company with which the original employer has a re-badging contract. In effect, each employee wears a “new badge.”
In all matters, keep in mind that a primary motivation for “re-badging” is to save money.
What should “re-badged” employees expect? Here are a few hints of what is likely to be experienced:
a. First, “re-badged” employees are likely going to have to re-apply for their jobs, and face background checks. Employees facing re-badging are likely going to have to go through a sort of new-hire process in which they have to submit an application, submit a lot of personal information, and submit to background screening. If, for example, an employee was arrested a year ago, and did not tell his or her employer, this could result in job loss.
b. Second, “re-badged” employees commonly experience restructured functions and responsibilities. As you might have guessed, new management means new managers, who have their own ideas about managing. It’s for this reason that there is frequently a degree of “upheaval” in functions, reporting lines, and responsibilities after a re-badging effort.
c. Third, many re-badging efforts involve – sooner or later – reduced compensation and benefits. Keeping in mind that a primary motivation for re-badging is to save money, don’t be surprised to see – sooner or later – lowered compensation, lowered benefits and lowered number of days off, vacation and sick time.
Be especially mindful of how working for the new company may negatively impact such things as (i) calculation of years of services for many benefit and savings programs, (ii) loss of stock or stock option vesting in the former employer, and (iii) even, potentially, the loss of eligibility for benefits given to people by way of law, in the U.S. including what we call COBRA, Family Medical Leave Act, and even unemployment benefits
d. Fourth, while many “re-badging” efforts provide assurances to employees of a certain period of job security, most re-badging efforts end up reducing overall headcount. In many instances, “re-badged” employees are offered assurances of continued employment, because the former employer does not want to have all of its experienced employees depart after re-badging. However, over time, the new employer will likely decide who they need, and who they do not need, to fulfill their contractual obligations as a “rebadging vendor” to their “re-badging client,” that is, the former employer. It’s for this reason that re-badged employees are likely to experience a lowered degree of job security.
e. Fifth, and finally, your new employer will be seeking new leaders, and this represents new opportunity. Bear in mind, where there is change, there is opportunity, and this is no exception. “Old management” had its favorites and enemies. Now, “New management” will be on the lookout for new leaders to assist them in running the company, and this results in a brief period of intense examination and extraordinary opportunity for those who represent “unique human capital.”
Lots of other new circumstances may arise in the course of your company’s re-badging. These are the ones our clients have experienced the most frequently.
I hope you and your colleagues find this helpful, and that you will consider how you can best understand, address and take advantage from your future employment circumstances.
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© 2011 Alan L. Sklover, All Rights Reserved.