- Retrenchment and PMET

Retrenchment and PMET

Written by Wilfred Ling

Saturday, 02 May 2009

“More help for white-collars” was the newspaper headline in Straits Times today. Apparently it was reported that many while-collar workers are affected by the economic crisis. PMETs are those who are professionals, managers, executives and technicians. The government is encouraging to go for “upgrading.” Actually many of these professionals are highly skilled. They should be the one teaching others how to upgrade. It will be such a waste if they need to convert to another occupation just because their skills are seemingly redundant. I have an idea.

The reasons why PMETs are retrenched are due to three reasons:

They have become too expensive for the company. The company does not have enough revenue to support their high pay;
Their marginal revenue product has decrease; or
The company is insolvent and hence must fire all its employees.

Other than the last reason, it is still possible for PMET to be “hire” by their firm but at rock bottom salary. During economic crisis, the firm will not be able to afford to pay an in-house expert of say $100,000 per year. But would the firm be willing to pay say $5000 per year to tap on the expertise of the expert? If the firm is not insolvent, I am sure the firm will be more than willing. How to survive based on $5000 per year of salary? Yes this can be done and it is called Pooling. But a more common word to use is that the PMET has to become an entrepreneur himself.

The PMET has a certain professional skill. His skill is not easily attained or duplicated. The issue is that companies cannot afford to pay them a full salary. If the PMET setups his own company and market his skill to say 20 companies and charging each $5000 per year, his income will be the same $100,000 per year. If he is good and by word of mouth can serve 30 companies, his income will be $150,000. By this pooling method, he will be able remain “employed”. He will be self-employed. The sky is the limit.

I know many professionals dislike being an entrepreneur because of the necessity to do marketing and sales. Unlike being a fixed-salary employee of a large company, being self-employed means the need to do marketing (advertisement/road-show/etc), network, visit prospects, “sell” your service, close the deal and provide after-sales support. The PMET is not only a professional but has become a marketing department, salesman, businessperson and also a servicing agent. But take it this way – without sales the economy does not function at all. Being an employee of a large firm does not mean the firm does not do sales. A manufacturing company must “sell” its outsource service to large MNC and convince them that the company can do its job. An IT company must be able to approach companies and get business to provide IT solutions. EDB is in the business of “selling” Singapore to investors and to setup their shop here. Who does all the sales? Often they are called Business Development Managers (BDM) in corporation. But sometimes they have no special sales title other than Program Manager, Project Manager, Director or even CEO!

It is sad that many professionals do not want to do “sales.” They feel it is “low-class” to “beg” for sales. I think that feeling has to do with ignorant rather than a fact. I want to share how an entrepreneur lawyer goes about his business. I know of this lawyer who runs an OMO (One Man Operation) legal firm. He approaches SME to be his clients. Many SME cannot afford an in-house legal counsel but they still need a legal person to do some work such as vetting market brochures, articles and mass mail just to ensure there are no legal problems with these materials. What he did was to charge each company $300 per month in a retainer fee. Each company will give him 3 or 4 materials each month to vet. He will take about half an hour to vet each article. He services 20 companies. By doing this he earns 300*20= $6,000 per month in gross revenue. This is a recurring guaranteed income unless these clients stop engaging his service. In addition to this, he also does other non-recurring business such as litigation, Will writing, etc. By doing this, his income consists of a fixed component (the recurring income) + a variable component. He is not that those high flyer type of lawyers who charge $1000 per hour. Still I am sure he can make a decent living.

Besides being able to make a decent living, the PMET entrepreneur job security can be more stable than being a fixed-salary employee. How can this being? A fixed-salary employee will lose his income once his employer retrenches him. On the other hand, a PMET entrepreneur servicing say 20 companies will only lose all his income if all 20 companies fire him. Is this possible? If he is a lousy fellow, this is possible but than a lousy employee will also be eventually sack as well. If the companies that the entrepreneur serve is diversified in industry, than the chances of being exposed to a single sector industry risk is minimized.

Can I suggest that instead of finding another course that is specialized in skill, the PMET may want to look for a course to teach them basic marketing concepts, human psychology and business planning. Also learning some essential accounting skills will also help. This knowledge will assist the PMET in setting their own business. But always stay away from courses that promise you some quick-get-rich-scheme.

Setting up a business can be very easy. There are times no capital outlay is required other than time spent on transport to meet customers. The paper work to setup say a Sole Proprietorship or a Limited Liability Partnership is not difficult. In fact, a few clicks of the mouse button on the internet are probably all that is to do. For certain business, it is also possible to use your own HDB as the office. So there is no need to pay rental even. Even if the HDB flat is not permitted, there are many “virtual office” which you can use at a super low rate to park your business address. The important thing is whether the PMET is willing to come out of their comfort zone and start controlling their life (rather than allowing their employer to control).

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