the risks and rewards of rightsizing now

A large number of companies face the painful need to rightsize, but how does a business employ rightsizing processes to make it ‘Covid secure’?

What steps are needed to make the right, albeit difficult, decisions when it comes to staff structure for the future prosperity of a business? Louise McCosh, who heads up the internal and client-facing HR team as HR Director at professional services firm French Duncan LLP, explains.

When the Chancellor announced the introduction of the Job Retention Scheme, he was widely praised for the support he was offering to millions of people affected by the coronavirus pandemic.

Now that support is gradually coming to an end, a cliff edge looms. Research from the Institute for Public Policy Research (IPPR) suggests up to three million people could be at risk of losing their jobs, with two-thirds of these being sustainable in the longer term.

This means one million of these jobs will probably never return. UK unemployment has already swollen to an estimated 1.5 million, and the last time it hit 2.5 million was in the recession that followed the credit crunch. That was the highest rate since 1996. You have to look back to the early 1980s, the era of shipyard and coal pit closures, to find higher unemployment rates than that.

Virtually every business is now rethinking its model for success. Size is a fluid concept, as the need for both physical premises and volume of staff are in flux.

There are some industries that are thriving through lockdown – ecommerce and technology companies have benefited from the sudden shift to online shopping and widespread investment in digital services and products. Home and DIY businesses have also performed well, as have pharmaceuticals, biotech, and some manufacturers.

But the majority have not. Those bearing the brunt of coronavirus restrictions are losing custom, reducing their staff base, and rethinking their premises for the long term. They are also challenging preconceived notions of what success looks like: a restaurant with a regular passing trade may now have to reshape for takeaways and deliveries, for example. Or a retailer may have to reskill its staff to better focus on online sales and customer service, while investing in better logistics.

Rightsizing applies to both circumstances. Underpinning recent change is the ubiquitous requirement to shift from old ways of working to new ones. This means there is probably not just downsizing taking place, but also new hiring, upskilling or entirely new thinking.

Rightsizing poses risks that downsizing does not. The latter is a more straightforward process of reducing your staff base to maximise (or simply protect) profitability. The former, however, could involve increasing your staff in new areas of your business. If redundancies are underway elsewhere, it is important to take a holistic approach to the entire process.

There are three important recommendations that employers should consider before rightsizing takes place.

Focus on roles not people

A common pitfall for employers in considering rightsizing is to use it as an opportunity to ‘clear the decks’ or remove personnel who may be underperforming or are simply not well liked internally. This approach will quickly result in the process becoming unstuck and ultimately risk a claim – or claims – for unfair dismissal.

A redundancy is only valid if you genuinely have a diminished need for a particular type of work, and the ‘history’ with particular employees should not be a feature in what roles you need to dispense with.  Instead, employers should consider where work has reduced and therefore which roles may no longer be viable.  From there, a fair selection criterion to identify which employees to consult – looking at the work they do, their skills and knowledge, are all important.

Embrace the consultation process

Conducting meaningful consultation with the employee whose role is at risk of closure is a legal requirement of the redundancy process, but employers should avoid viewing this step as a box ticking exercise.  Entering the consultation meetings with an open mind is essential to a fair process and the people most likely to come up with alternative suggestions to redundancy are those in the current role.

It might be that those at risk put forward the option of job sharing, remote working to save on building costs, or reduced hours through flexible working.  Employers should give genuine consideration to all suggestions and where they are not feasible, clearly document the reasons why.

Put yourself in the employee’s shoes

A redundancy process is one of the most difficult things an employee can go through and for most people, it is a rollercoaster of emotions from shock, anger, rejection, and worry.

The process itself can come across as formal but thinking about how you would feel at each stage of the process will enable you to show empathy. This could be acknowledging that this is a difficult time for the employee or offering support to help the employee such as reviewing their CV, introducing them to recruiters, providing an employee assistance programme or outplacement support.

It has been well documented that the pandemic has changed the way people spend their working day, particularly for the traditional office-based ‘nine to five’ roles. This new way of working has dramatically changed the views of employers in relation to flexible and remote working in the short term, but it is the employers that look to adopt this in the longer term that will be well placed to achieve efficiency and effectiveness.

Undoubtedly, embracing flexible working can avoid the need for rightsizing, whether it be companies saving on office space costs or compressing working hours.

For example, a four-day week or nine-day fortnight can save on costs of opening the workplace on particular days. A change in culture could see employees favour working reduced hours to achieve an improved work life balance and therefore employers save on salary costs.

The volatility that Covid-19 has injected into our economy and workforces across a range of sectors, and despite government intervention, has forced business owners to make difficult decisions about its future business model and crucially, its people.

Employers should heed these recommendations, plan for the future, and strongly consider what roles are required within their business. In doing so, they can rightsize to survive.