What to do about staff in a recession 2009

In the second of a four part series, Peter Savage looks at the staffing minefield you encounter as you consider cutting staff costs to survive the recession


Last day of the calendar month and, yes, another batch of companies goes bust. The recession is biting, and probably harder than any I can remember. I shan’t get on my high horse again – about phoenixes rising from the ashes – but there must be a better way to sort out business malfunctions than what has happened in a nameless AV hire company that has, supposedly, gone back into administration four months after its third phoenix experience.
The good news is that the Brits have made a great movie in Slumdog Millionaire and are showing the rest of the world that, despite everything, we are still capable of creating world class, small budget movies.
Also good news (or is it?) is the fact that we are happy to pay our executives – those who caused our banking crisis – pensions that could match an average premiership footballer’s salary. And this brings me neatly to staffing and what companies should do if they have to cut down or downsize, or, in other words, make redundancies.
Follow procedures
My first piece of advice on this is: be very careful. When things are going badly, first thoughts are often to cut costs, and that the easiest and quickest way to do so is to shed staff.
You are right to look at cutting costs – and reducing staff is one way of doing so. But you have to do it the right way. This means, first, deciding whether cutting staff is necessary (are there other savings you could make?). Then, if it is, it means adhering to rules and regulations because, if you don’t, your actions will come back to bite you.
Interestingly, no costs are awarded to a defendant in an industrial tribunal. But there are hundreds of no-win, no-fee lawyers keen to represent them, knowing that many company bosses – you and me – would rather make an out of court payment (that’s a win and a fee for the lawyers) than take it to a costly tribunal.
Take advice
The second piece of advice is: join The Federation of Small Businesses. For an annual membership of around £300 (for a company with 10 to 20 employees) you’ll have access to free HR advice which, so long as you follow their steps and use their documentation, can take all the financial stress and risk out of the redundancy process.
Others, such as banks, offer HR advice but I have yet to find anything that gives so much for such a reasonable subscription. Look up www.fsb.org.uk to see what I mean (and, no, I don’t have a vested interest in promoting them).
Don’t rush
The third piece of advice is: take your time. Don’t rush the process plus, unless a member of staff has been with you for less than a year, you can’t do anything without periods of consultation and taking legal steps (which always take time).
Make a plan and stick to it rigidly. If you’ve been following these articles, you’ll remember that two years ago I advocated having a plan when starting a business, to make sure you set off in the right direction. Well, plans are just as important when things are going the wrong way as when they are going the right way.
Consult others
I don’t mean consulting people who charge the earth for obvious advice. I mean talking to people in similar positions to you.
I have a regular, monthly catch-up with two old mates of mine who run comparable, though different, businesses. Before the alcohol kicks in, we compare notes about work and wives. The work conversation invariably brings up a topic that really focuses the mind.
For instance, this month we started discussing how staff don’t seem to care about how the company is performing. This is despite you explaining that times are tough and how an all round effort is needed to keep the good ship whatever sailing. They keep on doing their personal stuff – Facebook, phone calls, eating breakfast past the start of work, internet banking – all the things that really wind up employers who are stressing about whether they should make redundancies. We came to no great conclusions, apart from deciding that staff probably feel that working for me seems to be the best option, if you don’t want a hard time. In other words, I’m not tough enough.
However, the process of discussion had a therapeutic effect – it got the issue, and the aggro, out of our systems and we returned to work the next day in more positive frames of mind.
Don’t take it personally
I always stress the importance of not taking anything personally. If you and your business are struggling – and, trust me, some of the best business people and businesses I know are struggling – don’t take it personally. I think the gentleman I referred to earlier in this article has much more to do with the trouble we are in than you or I do – and Gordon Brown is not going to bail out any of our businesses. Remember that much of our industry’s current problems are out of our control. You haven’t become a bad businessperson overnight; macro issues have affected our micro world.
So keep positive. You may have made mistakes but so does everyone. And finally, keep lucky. It always helps.
If you missed the first article in this series about the recession, or earlier articles on financial issues that affect your business, or if you would like to contribute to our blog, look at www.azule.co.uk/articles.asp. If you would like to know more about how to keep going in a downturn contact peter.savage@azule.co.uk.