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Simple ideas for smarter reward in a downturn
Roddie Aherne, Business Director of NorthgateArinso Ireland, formally Cara Payroll Group, floats some ideas on dealing with the issue of balancing costs with retention of talent.
With Ireland’s unemployment rate hitting 12.7% in February, with the European union is expecting the jobless rate to rise to 11,5% in 2011, and with the US unemployment rate reaching a 25-year high of 8.1%, the painful effects of recession are being felt everywhere and there is wide recognition that employers need to reduce costs. In this scenario, how can businesses make the right HR decisions and implement change effectively?
While there is an understandable temptation towards making knee jerk reactions such as reducing headcounts or cutting training budgets, employers need to ensure that making cuts now do not have a negative impact on the ability to deliver services in the future.
BENEFITS, TRAINING AND PERFORMANCE MANAGEMENT
As salary negotiations loom for many employers, there is an obvious reluctance to offer pay rises of any size – small, large or indeed any at all. However, employers may be able to compensate by offering alternative, lower cost benefits that can contribute value and aid employee retention. For many employees, the offer of increased flexible working is a considerable perk and can also contribute to reduced overheads for the employer. Home and/or remote working for example can help to improve work-life balance and reduce travel/ office costs.
In the current climate it is also likely that employees and their families will have concerns and the offer of an Employee Assistance Programme is often reassuring to employees and far less costly than widespread pay increases or bonuses.
There is also an instinct to cut training budgets however the obvious danger is that, in doing so, employees are left insufficiently skilled to support the ongoing needs of the business. As an alternative, employers should consider more cost effective solutions including online training or the wide range of government funded training programs. To further support retention and increase skills, employers should also utilise the availability of internal expertise and offer ‘on the job training.’
As the pressure to achieve efficiencies becomes increasingly clear, employers also need to ensure that the performance of all employees is effectively managed, offering support and communicating clearly on the required standards at all times.
REDUNDANCIES OR RESTRUCTURING
Where alternatives such as reductions in recruitment or overtime are insufficient and there is no option but to make redundancies, employers should give careful consideration before deciding which roles to place at risk. It is also essential to ensure that there is a genuine redundancy situation and avoid knee jerk reactions to economic concerns. Though it is tempting to focus on the savings to be made, it is essential to assess operational needs as they exist now and in the future and to determine where the skills gaps will be as a result of redundancies.
To ensure that redundancies are handled fairly and effectively, employers should engage the HR team at the earliest opportunity. Consultations with employees must take place at the earliest opportunity and at least 30 days before the notice of redundancy is given. In carrying out redundancies, key points to remember will include ensuring that communication is clear, selection criteria is fair, effective consultation takes place, alternatives to redundancy are considered and that employees have the right to representation.
EMPLOYEE MORALE
In the current climate, there is now an increasing need for employers to maintain morale. Where redundancies have been made, there is an obvious impact on morale for the employees that remain within the organisation but, by giving encouragement, recognition and praise, employers and managers can help to lift the mood. At times of concern employees will look upwards for reassurance so senior managers should take every opportunity to demonstrate that they are involved, approachable and honest. When employee numbers have been reduced, the need to ensure that the remaining employees are sufficiently trained and motivated is of great importance.
CONCLUSION
The economic climate is placing increasing pressure on employers to cut costs. Caution however should be taken before making such decisions. While many employers will be reluctant to offer pay rises or bonus payments, there are alternatives that can help to address training needs, to cut costs and to maintain staff morale and retention.
Where redundancies are necessary, HR should be involved at the earliest opportunity and senior managers should engage with all employees both during and after redundancy consultations.
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