Meltdown or opportunity to engage?

Each week we hear of more organisations cutting jobs in a bid to survive the economic downturn. Redundancies, restructuring and the constant reworking of budgets appear to be the order of the day. Not surprisingly staff in these organisations, and people in general, are feeling insecure, frustrated and overwhelmed by new workloads and the reductions in headcount. This impact works against employee engagement which is fundamental to driving individual and organisational performance and the retention of key talent.

So what are the options for organisations? If implementing redundancies is a real prospect, you need to consider various options and key strategies for addressing employee engagement and performance during the downturn.

Things to consider

It often takes companies 12-18 months to realise the financial benefits of layoffs. Severance costs can be very significant and the negative attitudes of survivors can result in major reductions in productivity. The resulting time lag can coincide with a strengthening of the economy resulting in organisations spending large sums to rehire the same skill sets lost due to redundancies.

In knowledge-intensive organisations, redundancies may be a poor option as hiring replacements is costly. Also, the costs associated with the loss of organisational specific knowledge and the damage caused in motivation to those remaining is usually underestimated.

Previous downturns show that the best employees tend to “jump ship” after redundancies are implemented. While voluntary turnover decreases, the top 10% of talent continues to be just as mobile as ever.

If redundancies are unavoidable it can be very distressing. The key questions that organisations need to ask are, “Is it fair and will it be handled fairly?” and, “Have we exhausted all other options, is this the last resort?” Failure to address these two key criteria can have a very detrimental impact on employee engagement and performance.

Alternatives to redundancies

There are of course other options to be considered before resorting to redundancies:

	Reducing costs by reducing working hours across the board. Temporarily changing to a four day week means that key talent is retained, a 20% saving is achieved and no redundancy costs are incurred. Similarly nine-day fortnights provide cost saving options.
	Encouraging staff to use their leave entitlements
	Offering staff the option of additional leave, that is leave without pay
	Closing the business during quiet periods such as either side of the Easter break.

Address employee engagement

At times of forced reductions in staff numbers it is important to look at maximising staff engagement and performance.

	Increase leadership visibility and communication. Provide clarity regarding new and revised strategies, objectives and individual roles.
	Identify and develop the key skills and attributes needed to act and think differently in a changing market. Ensure that these skills are retained, fostered and developed.
	Use the quieter periods and reduced workloads to develop, retrain or re-skill employees.
	Focus on retention of key talent. Ensure your conversations with them clearly spell out their role and their importance to the organisation. Consider immediate learning opportunities for key talent.
	Educate your leaders so they can effectively manage through difficult times. Areas to consider may include developing staff, communicating with employees and dealing with stress.

If you would like to learn more about these strategies, join Saward Dawson and People Axis at our special breakfast workshop on 1st April 2009. If you are considering implementing redundancies, please contact Tania Hannath at People Axis to learn more about their outplacement services.

Published : 13March 2009