The Bank of England recently announced that the UK was heading for its longest recession since records began; couple this with the impending dark winter, the festive season could be in danger of losing its sparkle.
As the festive season approaches many businesses are facing hard decisions as to whether redundancies are needed to survive the bleak economic outlook of 2023. Many managers and teams alike are facing not only a process that can seem daunting and unfamiliar but also a moral dilemma of both professional and personal proportions.
What is important at the centre of any decision is the appreciation for the hardship businesses are facing; with the steep increase of inflation resulting in fewer sales and energy costs skyrocketing. It is becoming apparent that the balance of surviving a recession and the challenges that brings needs to be balanced and fairly weighed against the treatment of employees.
Empathy and integrity are two values highly regarded within the commercial world, often billboarded on many values and mission statements alike, and best of all these values are free of charge.
Redundancy unfortunately can be a strategic measure taken to streamline and improve the balance sheet. When you cut the proverbial cloth, the impact is immediate, and the margins are improved. Salary and wages are usually the largest outgoing of most enterprises, so it is no surprise this is often the go to method of cutting expenses.
Making redundancies and the aftermath
It is not always straightforward and can give rise to complex issues often overlooked. The aftermath of any redundancy can deeply affect morale and curate a negative culture from within. Any redundancy process needs to be handled fairly and transparently to avoid any allegations of unfair treatment.
The power of PR should not be underestimated and the best strategy is having a sound business case to present to staff. It is every organisations responsibility to ensure that any approach taken is fair, consistent and ultimately the right thing to do.
Documenting a sound business case avoids the mistake of acting too hastily and making the wrong decisions early on. It is important to step back and look at all alternatives in the tool kit rather than just redundancy as an option.
Sweeping redundancies to increase margins may in the first instance provide the relief needed however, you may be leaving your business vulnerable in the future with the loss of embedded knowledge and skill sets that could support the business in the medium to long term.
In addition, likely recruitment needs, and associated costs should be factored in before making any decisions to cut staff as these costs will be an additional burden when times improve.
An early stage of the process would be to conduct a thorough review of activities but most importantly if the decision is taken to make staff redundancy, then providing the surety that the process is fairly conducted and applied is of utmost importance.
The difference between positive leavers and those that could potentially damage your reputation within the marketplace can often hinge on the treatment received during any anticipated or actual process. The rise of social media platforms and review sites give the voices of those past alumni are now a powerful PR tool that can impede any organisations brand or perceived reputation.
Another aspect to consider is the overall weight of the process across the organisation. The impacts can resonate across the business including those not affected by the redundancy process. The very nature of redundancy can give the impression of poor company performance or instability and may make those in situ nervous about their own future. Therefore, a detailed business case with a medium to long term forecast is critical at allaying worries and fears of those who are non-affected or of those affected but survive the process.
The moral impetus upon those carrying out the process comes into play pertinently when time and resources are required to support and implement a comprehensive process. Often a business will be looking to make the changes as quickly and as streamlined as possible and quite often staff can feel unsupported. It is therefore important to understand what is and is not possible in the circumstances but to plan how best to move the process forward.
Studies have shown that employees subjected to a redundancy process still support and trust organisations if they have been provided a fair process. Open and prompt communication is key to ensuring those affected are in the loop and understand what is going to happen. It is well acknowledged that redundancy can be seen as breaking the psychological contract between employer and employee and any perceived downsizing can be seen as a negative step forward. Therefore, ensuring that those who remain fully understand the medium and long term goals of the business is vital to retaining talent going forward.
If you would like any support or guidance in preparing for a redundancy process or with the process itself please do not hesitate to contact us for a no obligation discussion on 01983 897003.