Redundancy - not the only answer

The team at the leading Cardiff law firm has been inundated with calls from employers asking about redundancy but several are learning of alternative solutions to save money without losing staff. Employment lawyer Jeremy Consitt said: “We’re having calls about redundancy after redundancy and everything connected with it. Over half of what I’m working on at the moment is redundancy related and it really gives you a picture of how hard the recession is hitting everyone.

“It’s difficult because you’re dealing with employees who are being dismissed – they know they won’t be able to find another job and they’re downtrodden - then there are the employers who don’t want to dismiss staff. There’s always the feeling that employers don’t care about their employees but they do. They are realising there is a human element to what they’re doing and it’s hurting them and they’re finding it distressing too.

“If you look at a company’s budget, the staffing cost is usually the biggest spend. Your staff is both your biggest financial liability as well as your biggest asset. The cost is so huge that it’s often the first place people will look to make cuts.

“Because they are in a crisis situation, a lot of people become quite blinkered and only see one part of the picture because they are focussing on it so intently. They’ve got to look at the wider picture and reexamine the other parts of it where there may be answers.

“But we’re asking them if they have looked at other options. Some have and redundancy is a last resort but for others the alternatives can work. It’s perhaps something they would never have thought could work for them and they are grateful that redundancy is not the only road to go down.

“The first alternative is looking at restructuring and streamlining the organisation. This may involve cutting the number of staff working hours in the day or even cutting back to a four day week. It’s a question of whatever works for each individual company.

“Another option is to cut salaries. It sounds worrying but people are not averse to cutting their salary if it means they can keep their job.

“If you lose your staff, when the tide turns then you have to face recruiting costs, retraining costs and the efforts to find the right calibre of staff again. If you do have to make people redundant, as a first port of call take advantage of natural wastage and offer voluntary redundancy.

“Aside from hours and salary, other ways you can save money are by looking at your overheads andbenefit packages. Become more efficient, simple things add up and together they can make adifference.

“There are other ways of cutting costs rather than going straight to the workforce. It’s not about working harder but smarter. Can you get people to do different jobs? With some retraining, you can plug holes in one area of the business while cutting costs in another. In a recession your business psychology has got to be different, you need to play to different strengths.

“Look at marketing as well. What was a good marketing tool in a boom time may not be working as well now as people’s spending habits are different and the market itself is different. Don’t rely on the statistics and subsequent approach formed previously, make sure your targets and strategy are based on today’s market for the best results. “What is key when taking these approaches is how you engage with your workforce. It may be possible to push through changes to hours as a genuine business necessity but that may not help you. It could result in employment tribunal claims which will end up being more costly than no change at all.

“You need to engage with the workforce to bring them on board with any changes. If they can understand that times are desperate then they will be more likely to support you. But if you go in there like the proverbial bull in a china shop then employees will react badly and start fighting for their rights.

“Get the level you pitch this to the workforce just right. It’s not like an ordinary pitch to a customer, this is your workforce and for some this job is the only thing they know. An upfront and straight talking but sympathetic approach will help.

“If you can get that right you can save yourself so much expense and you can move forward as a team.

“Once you’ve got agreement, then you can go along with it - it can be that simple and morale will be higher than with redundancies because everybody is still in work. Everyone now knows there is a recession and people are becoming more grateful for what they have got. It’s the idea of employer and employee working together to get through this.

“Some employers will have no options but for those who do, look outside the box to see what all the options are. Be open to suggestions as these are difficult times and new solutions and ideas are required. Flexibility is key to both employee and employer.

“It’s not about crisis management, but long term planning and realising there’s got to be a different way of looking at things.

“Traditionally in a recession, it was predominantly the manufacturing sector that struggled. But this recession is also hitting the service industry in a big way. It’s affecting industries which have never been affected before and across the board - this is not just about your blue collar workers but white collar workers too including those at management level and even directors.

“The silver lining is that we will come out of this recession. It is cyclical and we will recover which is why it is so vital to plan for the long term. It’s not just a case of managing a crisis now, it’s a question of recognising it, accepting it and working through it.”

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