Michelle Rodger: Why redundancies should be the last resort for business

WITH unemployment soaring above two million you could be fooled into believing that redundancies are the best way to cut costs.

In theory it makes sense: fewer staff and the associated costs loosens the straitjacket around cash flow and potentially shores up the business until the tide begins to turn. And everyone else seems to be doing it.

st a business softie who doesn’t like sacking folk. Even those traditional harbingers of doom, the accountants, agree that redundancies as a cost-cutting measure should be a last resort.

It’s not often you hear bean-counters suggesting staff cuts should be put on the back burner, but the Association of Chartered Certified Accountants has recommended spending, yes spending, on people.

According to ACCA, now is a good time for businesses to invest in their current talent pool, and add even more depth to that pool with continued investment in training and professional development.

That way, when the anticipated upturn in the economy does arrive, next year or the year after, your business is well placed to take advantage.

It’s all about talent management; attracting, retaining and developing top talent. Getting it right during times of instability means leveraging the very best from your employees; loyalty and commitment can wander if staff are worrying about job security.

If your staff are less connected to the business and morale plummets then productivity will take a hit and costs will rise relatively.

The answer, according to Tony Osude, the head of professional development at ACCA, is to focus on getting talent management practices right.

His experience shows that those organisations that take “holding positions” or “paths to growth” strategies with investment in people, typically are those that are fastest to recover and will ultimately, enjoy more sustainable commercial success over the longer term.

Author Peter Sheahan puts it simply in his business book Flip. He tells a story about a firm of accountants which had just shed a significant number of staff in anticipation of the downturn. On repeating this tale to a rival firm of accountants, he was asked for the contact details of the staff that were let go. According to Sheahan, the first firm may have better short-term profits but when the current financial crisis passes the second firm will be eating the first firm for lunch.

Talent management is increasingly at the fore of strategic business thinking. A recent survey by HR software provider StepStone highlighted that 70% of business leaders think talent management is becoming more important to their company.

And 42% – like Sheahan’s forward-thinking accountancy firm – think the recession will be a good opportunity for them to target talented employees who have been made redundant.

The same survey, however, revealed that only 35% think talent management is part of HR’s role. StepStone sees this as bad news, insisting that HR leaders should be “joined at the hip with CEOs”.

But I would suggest the remaining 65% are right. Talent management is far too important to be shoved exclusively under the HR departmental umbrella. Every department in a business has a key, but differing role to play in developing, supporting, retaining and motivating talent.

So do you have a talent management strategy? Or do you have a people development plan? Or a recruitment and retention initiative? Whatever you call it, it should be as high on your agenda as a financial or marketing strategy.

Or how about some easily implemented solutions like those employed by entrepreneur Gill Ferguson? Having spent years honing her skills recruiting for some of the country’s top employers, she set up her own Search and Selection company last year.

Ferguson believes that moving talented staff around the organisation can result in creative solutions and an engaged and motivated workforce.

She recommends prioritising recruitment – the vacancies you have may not be ones the business needs to meet future demands – and a robust induction programme to ensure new hires hit the ground running.

Identify potential trainers in your business that can train in-house and keep costs down.

Or consider joining a training consortium: it’s a critical time to keep delivering training and development. There are significant cost benefits from sharing the financial burden through a consortium.

Talent management is simply about having the right people, trained in the right skills, performing at the best of their ability, in the right role, at the right time. It’s about aligning their personal development with your business and financial strategy. Our need for talent has never been greater.

(source: http://scotlandonsunday.scotsman.com/12702/Michelle-Rodger-Why-redundancies-should.5163922.jp)

Richard Reid is the founder of Pinnacle Proactive, Specialising in the Employee Assistance ProgramStress ManagementStaff Retention & Absenteeism. Take a Proactive Approach to Growing Your Organisation & its People. For more info visit http://www.pinnacleproactive.com

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