Cutting costs to avoid redundancies
Advice on contingency & financial planning for cutting costs amid Covid-19
It’s inevitable that there will be redundancies as a result of the current coronavirus crisis. Indeed, some experts are warning that hundreds of thousands of jobs could be lost. Most businesses will want to avoid redundancies and retain their best staff for when it’s business as usual again.
After all, rehiring staff can be costly and inefficient, meaning the business takes longer to get back on its feet. However, in the current environment, limiting redundancies is a big challenge for businesses and means developing and implementing a shrewd combination of cutting costs and workforce management strategies.
Contingency & Financial Planning For Cutting Costs Amid Covid-19
Sound financial and contingency planning is at the core of any successful business, but even businesses with strategies in place to deal with unexpected scenarios will struggle given the unprecedented scale of the current crisis. Most redundancies come about as a result of the need to reduce business cost, so firstly, it’s important to look at other ways of cutting costs. Initially, this means examining what you can do to adapt your business model or work processes to stay in business throughout the crisis.
Firstly, with the exception of essential staff, cease hiring and withdraw any employment offers. Agency staff should be replaced by redeploying permanent employees. Social distancing means many employees are not able to perform their duties in the same way, so redeploying staff and maximising flexible working arrangements should be the next step.
Make sure you engage staff in this process. Ask for feedback on what they think can be done. With jobs at risk, employees will be eager to do what they can to help the business survive. For instance, under normal circumstances, staff might be hesitant to do this to use holiday leave, especially given current travel restrictions, but with redundancies looming, many employees will be happy to do so if it means keeping their jobs.
Achieving Efficiencies Through Workforce Management
In terms of workforce management, the next step is to reduce working hours. Try to do this as evenly as possible in order to share the hit among staff. Be aware that doing this can amount to a breach of employment contract, so get advice from your HR department or legal team before moving ahead. Agreements may have to be made in writing.
Likewise, if you need to make temporary layoffs, unless, there is a clause in employee contracts to say otherwise, you may have to continue to pay those staff. However, emergency schemes, such as the Coronavirus Job Retention Scheme, can help struggling businesses with these costs. Research what help is available and how you can integrate that into your contingency planning in order to minimise redundancies. Another option is to offer unpaid sabbaticals. You might be surprised how many employees are willing to take up the offer of unpaid leave to spend quality time with their families or on a personal project.
The last resort for cutting costs before redundancies is to cut pay and benefits. These will need employee consent and businesses could face additional problems by going down this route, but the worst option of all is redundancies. Not only can redundancies have a negative impact on the business and the lives of those who lose their jobs, the entire workforce can be affected through the loss of employee morale.