Simon Fowler suggests a long-term and pragmatic approach to the problem. Surveys indicate that hiring confidence among employers is low. Some are even considering redundancies due to rising employment costs.
Media reports indicate that UK employers could be facing one of the biggest redundancy waves for more than a decade.
According to the CIPD’s latest Labour Market Outlook report, a tier of businesses plan headcount reductions. The Autumn Budget has impacted on employers’ confidence in their business.
The Empowering People group conducted a study that found 81% of large UK companies expect to make changes, including redundancies, within the next 12 months.
This rapid pace leaves no room for strategic planning. Could this create a talent deficit in the long term that hinders future recovery and growth?
Answer: Yes. The consequences of making rash decisions solely based on cost savings, without a strategic long-term plan, can be severe.
The Department for Education reports that nine out of ten businesses struggle to fill skill gaps. Redundancies could worsen these problems, preventing a long-term recovery of the workforce.
It is difficult to balance immediate cost pressures and long-term workforce plans, but ignoring the future talent pipeline could create more problems.
Why short-term thinking is not a good idea
Even though many organisations are struggling to avoid headcount cuts in the current economic climate, losing knowledge and specialist skills can be a threat to future success.
Redundancies can also damage the morale of employees and harm employer branding, which could hinder future recruitment.
After a round of redundancies, employees who remain in the organization may feel demotivated and anxious. They might also suffer from’survivor guilt’ which can reduce productivity and increase attrition.
How can an organisation balance long-term planning with cost-cutting?
Workplace transformation
Business leaders should look at alternative measures to improve efficiency instead of relying on immediate redundancies for a ‘quick cost reduction’.
The transformation of employee relations is an area that often gets overlooked but has huge potential. Although organisations recognize its importance, there is a gap in converting that recognition into tangible investments in transformation. Many organisations still use outdated management tools to handle employee relations matters.
Investment in technology and training can improve employee relations, resulting in benefits for the entire business.
According to AdviserPlus, the use of the right tools will allow line managers to successfully resolve 63% of ER situations in 2024 without HR involvement.
By equipping managers to deal with people issues more effectively without involving HR in every case, organisations can reduce the number of sick days, lower the cost of tribunal claims and improve the employee and manager experience.
This strategic shift transforms the way we work, enabling managers to be more confident and capable people leaders and to create a more productive and engaged workforce.
Data-driven decisions
Employee relations data can be captured and analysed in a way that allows HR to assess the health and performance of an organisation.
Data points such as absence patterns, grievance rates and discipline can reveal issues that affect employee morale. They can also identify potential risks and highlight trends that impact productivity.
This approach allows for informed decisions to be made that will improve employee well-being and result in significant cost savings as well as productivity improvements.
The redeployment of workers and their upskilling is a sustainable way to manage the workforce.
The right transformation solution will reduce the need to drastically reduce the workforce and create the foundations for long-term, sustainable growth.
Investing in existing employees is a strategic imperative for forward-thinking organizations.
The redeployment of employees and their upskilling is a sustainable way to manage the workforce. It builds a team that can adapt to future challenges, rather than shrinking them.
By identifying employees who have transferable skills, organizations can fill key roles and create an agile, flexible and innovative workforce that is ready to take on new challenges.
Investing in employee training and development equips them with the necessary skills to adapt to changing business needs and to an organisation’s evolving needs.
Seamless Collaboration
This strategic approach is only effective if it is implemented in a seamless manner.
We see this disconnect all too often between HR professionals and business leaders who are focused on immediate cost cutting.
HR must show the strategic value of its strategies to business leaders.
It is vital to have open communication and make decisions based on data. Organisations can better manage workforce changes by sharing insights and aligning themselves on strategic goals.
Streamlining processes
Many organisations face the reality of reduced headcount despite the positive effects of proactive strategies. This makes it crucial to simplify the redundancy management process.
It is now more important than ever to comply with the process. The fire-and-rehire legal updates, which came into effect on 20 January 2025, allows employment tribunals the ability to increase compensation awards up to 25% in cases where an employer does not comply with their duties of collective consultation under the Statutory Code on dismissal and engagement.
The government also tabled a bill amendment last week that would increase the maximum period for the award of protection in the event of a failure to consult, from 90 days to 180.
The use of technology can ensure that a people-centric and compliant approach is adopted. The administrative burden of redundancy procedures can be reduced by streamlining processes. This will also reduce the risk of costly tribunals due to errors.
HR can now focus on compassionately supporting affected employees as well as those who remain in the company.
Business leaders and HR face significant challenges in the current economic climate. However, by adopting a collaborative and strategic approach they can weather the storm and create a workforce that is more adaptable and resilient.
By balancing strategic workforce planning with cost-cutting, you can become stronger and more competitive.
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