The Corona Virus / Covid-19 – We are facing the biggest challenge in Human Resources since the credit crunch and financial crisis of 2008, but we will weather the storm.
Yesterday, PM Boris Johnson asked businesses to stand by their employees, as the Government will stand by business. Politics aside, I was heartened to hear this. This is absolutely the right message. Over the coming hours or days, let’s hope that support gets to businesses in time, and the banks, business and the Government work together to support Britain’s workforce. We expect to hear today what support the Chancellor of the Exchequer will provide for employees who may have already lost their jobs and / or their income.
I started my career in hospitality and catering in the early 80’s and my heart is broken to hear that so many of my friends and ex-colleagues are facing a very uncertain future. Many employees who work in catering and hospitality have accommodation tied into their job, so if they loose their job they loose a place to stay.
During my HR career, I have made 100s of redundancies, and I have been made redundant myself. It’s devastating. If you are a manager or a business owner, and you say that making redundancies doesn’t bother you, or you don’t have a sleepless night before that redundancy conversation, then you have no business managing people.
I have worked in two companies that that have gone through Chapter 11 – one following 9/11. I also worked through a number of re-structures as a result of the financial crisis of 2008. These companies not only survived – they thrived. And I learnt important lessons.
I’m an optimist, and I believe that the economy WILL return, and when this happens, as it did after 9/11 and the 2008 credit crunch, businesses will need their very best talent to thrive. So, how can businesses retain talent and at the same time survive the storm, rather than a make a reactionary wield of the redundancy axe?
My top tip is ‘Leaders go first and take the biggest sacrifice’. How can you realistically expect your employees to agree to a salary cut, or the removal of discretionary benefits if the leaders of the business don’t make the biggest sacrifice? It’s a tough call, I know but let’s face it if you are asking employees to take the same percentage salary cut, that’s a big deal for many. This is what leadership is all about. People follow you. They watch you. What else can you give up over and above what you ask your employees to do? The car allowance? Expense allowance? The pension contribution (not withstanding auto enrolment)? Also be prepared to make the sacrifice longer than your employees.
Also engage with your investors if applicable, and see what they and your shareholders can do to support you and your employees. They have an interest in the long term success of the business and will understand that we are in unprecedented times and we all in this together.
Communicate. Communicate. It’s a 2 way thing.
I can not stress this enough. Collaborate with your employees. They often have good ideas that could work. You should not underestimate their willingness to be flexible and adapt. Do this early. Everyone is impacted by this situation and everyone has a vested interest in making things work. You cannot communicate enough. Be brave. Be humble. You do not have ALL the answers. Leadership no longer works like this. Employees often get to the answers quicker, or quicker than you want to communicate decisions – be aware of this and act fast.
So what can you do to avoid redundancies?
- Freeze overtime. Eliminating voluntary overtime is a simple way to reduce costs. Before you do this, consider whether overtime is contractual or not.
- Limit / stop travel – no one should be making any unnecessary travel right now so costs should reduce as a result of this.
- Dispense with discretionary benefits. Be aware that a discretionary benefit may have become custom and practice and therefore contractual if it has been made available over a period of time.
- Offer early retirement or voluntary redundancy. Are there any employees who would be willing to take voluntary redundancy or early retirement? This is a dismissal situation so it is important to ensure the correct procedures are followed.
- Freeze recruitment. In tough times it is necessary to work with the resources that you have in order to keep costs down. This means taking advantage of natural wastage, not replacing exiting employees, reallocating workloads, and reshuffling employees in order to control headcount.
- Holiday purchase. Look at offering employees the opportunity to temporarily buy extra annual leave and sacrifice their salary on a pro rata basis to pay for it.
- Reduce the working week for a temporary period of time. If your business is unable to consider operating a four-day work week or less, then reducing the hours in a working day may be another option. This is a contractual change so employees need to consent to any change.
- Promote job sharing. Job sharing allows multiple people to fill one job role. This saves costs and encourages teamwork.
- Offer sabbaticals to senior employees. Sabbaticals are often regarded as an important part of an employee’s career development, and may be granted for a variety of different reasons including study, research, travel or voluntary work.
- Short time working. If the contract of employment has a ‘short time working’ clause, then a business can exercise this. If not, you’ll need employees consent.
- Temporary reduction in pay. You will need employees consent for this. Talk to your employees 1:1 to discuss what they need each month to survive. What can they afford to sacrifice? Employees will have different individual situations.
- Unpaid leave. Offer unpaid leave to employees who may wish to take it. You might want to consider sweetening this by offering an additional holiday day or 2.
- Ask the employees if they can come up with any ingenious or innovative ways of reducing costs whilst avoiding redundancies.
I strongly recommend that if you are making changes to contracts of employment, you always take employment legal advice.
If you need assistance in implementing any of the above measures to help your business avoid redundancies, get in touch.
Liz Jewer is a HR Consultant, Exec and Team Coach, Workplace Investigator and Mediator
m: 07803 007 591