Alternatives to redundancy

Companies could be repeating the mistakes of the past if they continue taking short term cost cutting measures such as redundancy that could eventually lead to skills shortages. In this article we consider the alternative options.

Redundancies often seem an obvious choice when you need to cut back and reduce your costs significantly, however, they do create a considerable amount of stress and insecurity throughout your whole workforce. Also, we are all well aware of the legal framework surrounding redundancy situations which can be rigid, expensive, time consuming and often require specialist support.

So don’t jump straight for the easy option, instead here are our 5 top alternatives to help you avoid making redundancies but still ensure you have a “flexible” company that can adapt to changing circumstances.

Ask and you shall receive
Sometimes, it’s much better to enable people to leave the business willingly rather than force them out. You cannot know every employees motivations or personal circumstances so asking for volunteers for redundancy or early retirement can save quite a few unwilling people from facing the inevitable. Remember to be careful in how you word this message – you don’t want people to feel pushed out. It is also important that you retain the right to reject voluntary applications as you may end up with applications from one or two star players. Your wording should be, “we reserve the right not to accept all or any application, particularly, if we consider that it is in the best interests of the organisation to retain certain staff”.

Think the previously unthinkable
Sabbaticals? Isn’t that what academics do?
Not anymore! The sabbatical can be one way to entice staff to go out and do something different for a year whilst costing you very little and saving you a lot! Some might want to volunteer for a charity; some travel the world but just never thought it possible! Usual schemes involve keeping a job open for the employee on sabbatical, perhaps paying them up to 20% of their salary each month (as a sweetener!) and not seeing them until they return with 1,000’s of photo’s!

Trim hours, rather than whole jobs
Think about what you actually need for your operation to run. Can two people share one job? Do you really need to be available from 8am to 8pm or will 9am-6pm do? If you can trim hours here and there you can still save money and people will understand the need to work fewer hours and appreciate that they still have a job! You will need to consult with staff (if you are reducing the hours of more than 20 this can be quite difficult) to ensure they understand what is going to happen. Also, think about the introduction of flexible working, some people like to get in at 8am and leave and 4pm, others in at 10am out at 6pm! Think about work-life balance – this message can be very powerful so make sure to use it.

Share your staff
Not everyone out there is suffering at the moment, in fact, some of us are still growing and need experienced people! Think about the opportunities that might exist to second your employees to another organisation that might not be experiencing tough times! This will allow the employee to continue to develop, get them out of your business whilst it’s needed, give them additional and useful skills and experience but save you on recruitment costs when things pick up back at the ranch.

Defer, defer, defer
Normally we would be recommending that you pay everything on time, every time! However, one way of reducing costs at times of difficulty is to defer pay settlement, make pay cuts and look at pay freezes. These may be sensitive to manage but could nevertheless, be less damaging than redundancy.

If you would like to discuss any of the above options further then please do not hesistate to contact your HR professional.