Restructure, Retrench or Redundancy?
Many UK businesses are being hit by the global ‘credit crunch’ as the knock-on effects threaten their growth plans. Reduced profits and cash-flow problems mean that to survive this period of uncertainty and lack of confidence, employers need to reduce costs. Redundancy is often seen as the only answer, but there may be other alternatives.
John Philpott, Chief Economist at the Chartered Institute of Personnel and Development commented on the latest set of official labour market figures. They revealed the worst deterioration in the UK’s underlying job situation for at least a decade. He said that the demand for staff had weakened and would do so as the economic downturn continued to bite.
He warned of, “an autumn and winter ‘avalanche’ of redundancies as employers ready themselves for further job cuts.”
Helen Astill, Managing Director of Cherington HR believes that many employers are not aware of the complexity and risks involved in the handling of redundancy situations. “I am concerned that some employers are leaving their businesses open to tribunal claims if redundancy situations are mishandled. In circumstances where they are desperately trying to save money, it is foolhardy to risk losing more by not following a fair redundancy procedure.”
The need to restructure a business or retrench its position may arise as a result of the current economic climate. It may also be an opportunity to review the overall business plan. Furthermore, a company that looks after its employees during these difficult times, may find that they will respond well. Indeed a recent survey revealed that 34% of employees were worried about their jobs.
The next few articles look at the redundancy process and possible alternatives.
Posted on 19 Nov 2016