If I think back to when I worked in an accountancy firm in the late 80s, I can remember that the profession-wide, knee-jerk reaction to the talk of recession was to reduce radically the intake of graduates. The thought was that by cutting training contracts, it would cut the bottom line, which it did. But what also happened was that five years later, there was a shortage of newly qualified accountants. And the accountants who were around drove their market price really high as a result. But against that, at LIFFE there was downsizing as a result of the introduction of automated trading. It was measured and planned both from managing the resources to delivering the news. For example, we redeployed people across the business where possible by considering the requirements of the whole business in its current and future state, and people were advised of the day on which announcements would be made. In this way we were able to treat people with dignity and respect and as a result maintain the reputation of the LIFFE as a fair employer. Part of my role now at Abbey National is to work with the business to manage a flexible workforce, to see where we have shortfalls and oversupply. I believe that as a result Abbey National can respond with organisational agility rather than a knee-jerk reaction.
Chris Parsons, Penna Change Consulting
Almost all industries are announcing cuts in staff, but the danger of downsizing is that you not only lose staff, but also the inherent continuity, culture, pool of potential leaders and strategic capability for the future. And the downturn seems to be almost bottoming out in the US. If organisations cut staff, they may just have to recruit aggressively in a years time. An answer might be to re-allocate people to work in development or get the more experienced staff to train junior people in a bid to build up capability and to take advantage when the upturn happens. It all helps to avoid the cost of redundancy and the loss of skills and knowledge. Then when things pick up, you have search, induction, training and getting-up-to-speed costs. Of course, if you have inefficiencies and downsizing can reduce them it may be appropriate. The key thing is to develop overall capacity to take advantage of the future.
Paul Winter, managing director, Corpra
There is an economic slowdown coming and the slimming-down needs to start now. But not just because everyone else is doing it. You have to look at the big picture. If in retail you have 500 units think what youll have in five years time. It might be 150 and a large internet operation. So react accordingly. But anxiety makes staff inert and conservative; they stop thinking about their next career move and keep their heads down. Companies put off investment in property and plant. As a result, the markets in property and plant and people become less liquid. The solution is to start shedding the excess while the environment is still relatively dynamic which means now. Dont be afraid to outsource. You buy in expertise and flexibility and if youre having a bad day, you dont have to be nice to them.
