Crash Course in ... avoiding redundancies

The economic downturn has come home to roost; sales are down and there are worrying signs that they are about to fall off a cliff. It's only a matter of time before you have to think about making redundancies - but is there any alternative?

by Alexander Garrett
Last Updated: 09 Oct 2013

Plan ahead. 'Try to envisage what talent you'll need in five or 10 years' time,' says Owen Morgan, head of commercial operations at HR consultancy Penna. 'Workforce planning in sectors such as manufacturing allows you to plan ahead for a temporary downturn in production.' Offering fixed-term contracts where appropriate can also obviate the need to make redundancies.

Stop hiring. 'There's a lot of movement in the job market, so you can achieve a certain amount of saving through natural wastage,' says Mike Emmott, employee relations adviser at the CIPD. 'However, clearly, you need to have people in the right jobs, so you'll have to continue some recruitment.'

Cut overtime. If you're in a sector where people are still paid overtime, look at reducing or axing it to cut the wage bill.

Target temps. 'Agency and other temporary staff are usually taken on as a lining for the fatter times,' says Ken Sharp, senior adviser with Acas. 'If you want to keep your permanent, skilled people, look at cuts in the temporary part of the workforce first.'

Look for volunteers. Offering voluntary redundancy should be standard practice, but act with caution. 'If it's offered across the board,' says Morgan at Penna, 'your more valuable people are often the confident ones who go out and find a new job, so make sure you have had effective career conversations so they know their value to the firm.' Make it clear you'll have final say on who goes.

Discuss it. If you're laying off more than 20 people, there's a statutory obligation to consult with employees' representatives. But approach it as a genuine attempt to find out whether your people can come up with ideas to avoid redundancies. 'People on the shop floor often have ideas for savings that management has never thought of,' says Sharp.

Redeploy. Part of your business may be faltering while another is still growing. 'We often find a firm is letting individuals go in one area while recruiting similar people in another,' says Morgan. 'There's a need for joined-up deployment. Using existing employees can save on redundancy costs and recruitment costs - you have somebody who understands the culture of the business.'

Take a break. If you judge the downturn to be temporary, offer sabbaticals, extended training or study leave as ways to cut the wage bill while keeping the door open for individuals to return when business improves. 'There may be long-serving people in your workforce who would look forward to six months away from the business,' says Emmott. 'They may return with new skills.'

Do say: 'At this difficult time, we are going to explore as many options as we can to avoid making redundancies.'

Don't say: 'We're all doomed!'

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