How to avoid redundancies in your business

1. Recruitment freezesA recent survey by the Chartered Institute of Personnel and Development found that 44 per cent of companies polled had frozen recruitment to avoid endangering existing jobs. However, it is important to ensure that the extra workload does not put excessive pressure on key areas of the business.

2. Pay freezes or cutsMost employees will accept pay cuts in return for job security (although the recent threat of strike action by Tube workers means that’s not a given!). In Lancaster, North West Engineering Group – where about half the workforce had already been laid off or put on short time – this month agreed a 15 per cent pay cut with its 70 employees to avoid further redundancies. 3. Pay deferral schemesThese are easier to implement than pay cuts, provided employees believe the business will recover and be able to pay the money eventually. 4. Halt overtimeAs many manufacturers see reduced demand, this is a limited but straightforward way to cut costs. 5. Short-term or flexible workingNearly a fifth of firms surveyed by the CIPD, including chartered accountants KPMG, are making greater use of flexible working; 415 Productions offered staff either a 5 per cent pay cut or a four-day week to avoid making redundancies.6. Reduce use of agency workersContinuing to use agency or other temporary workers when permanent staff are losing their jobs can harm working relationships. Reduce the number of agency workers at your business and offer existing staff the opportunity to pick up the slack. 7. Cut bonuses or pension paymentsHandle with care. Some 17 per cent of companies surveyed by the CIPD are cutting bonuses this year – but this can demotivate key staff, who may be performing well in a difficult environment. And cutting pension payments, even temporarily, has an exponential impact on future pension entitlements.

8. Sabbaticals Jaguar Land Rover and Vauxhall have offered staff sabbaticals in return for reduced pay. Some professional services firms are offering them without pay to newly-qualified staff. Ideally, they should be used to give employees experiences that will benefit them and the company on their return.

9. Secondments to other companiesThis is an ideal way to retain staff and increase their skills, while reducing costs. Texas Instruments has “lent” several employees to vendors for up to eight months on condition that the supplier reimburses their salaries.

10. Redeployment Moving staff from quieter areas of a business to cover needs elsewhere can help keep them motivated and save on recruitment costs.

In all these cases, effective leadership – which includes communicating clearly with employees and showing genuine appreciation of their cooperation – is the key to ensuring staff remain committed and motivated. Otherwise, as soon as the upturn comes, key employees may well leave to pursue the opportunities recovery creates – and that isn’t the result that any business which believes people are its greatest resource should want!Jo Clarkson is operations director of The Alternative Board.Related articles Semi-redundancy scheme: Brilliant or barmy? How to keep your staff happy "You’re fired"? Beware hasty redundancies

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