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The True Costs of Redundancy

In this article, I want to explore the true costs of redundancy. You may be facing the difficult decision to make some of your staff redundant. If so, then you might want to take time to so some careful calculations. This is not always the best way to cut costs and keep your business alive.

Redundancy is, sadly, a business norm in these days.  Many people have faced redundancy one or more times in their working lives and it is always damaging for them.  But it is often very damaging for their employer as well.  It is really expensive and rarely brings the desired cost savings.

The benefits for business

The immediate benefits for any employer are obvious.  Salaries no longer have to be paid to those people.  You don’t have any employment costs such as tax and national insurance for them. You save on their pension costs.

There might also be a saving on management costs.  If there are fewer people to manage, then you might be able to reduce your management team.  You might find that managers need to spend less time managing the people who are left (although this is debateable).

Some employers think that redundancy is a painless way to dismiss someone who might be “difficult”.  Maybe someone is not performing very well. Or an employee might have a huge amount of time off sick.  You may even have a disruptive employee, or someone whose attitude is not what you would like.   Redundancy can seem an easy way to part company.

But this is not what redundancy is for and there are strict legal constraints which might prevent you parting with the “right” person.

So what are the true costs of redundancy?

There are some very obvious costs of making someone redundant.  For example, if they have over two years of service you have to pay Statutory Redundancy Pay of up to 30 weeks of pay, depending on their age and length of service.  And there may be some enhanced redundancy payment if there is such a clause in their contract of employment.

Of course you also have to continue to pay them whilst the consultation is ongoing and during their notice period.  Or you might pay them in lieu of notice pay if you want them to leave sooner.

If they have accrued any holiday entitlement and not used it, then you have to either give them that time off before they leave (on full pay) or pay them in lieu of their unused holiday pay.

There are other small costs, such as allowing them reasonable time off to seek alternative employment, which has to be on full pay.

The Hidden Costs

Then there are many hidden costs as well.  This may be where you find that the true costs of redundancy start to mount up.

Things like your own and your managers’ time to prepare for redundancy come under this heading.  And your time to do any scoring which is needed for selection.  Then there is the time needed for consultation and to plan the remaining workload.  The managers who are doing this work are likely to be amongst your highest paid people. They will not be productive on other things whilst they are involved in a redundancy process.

In addition, there is the time that your payroll staff will take to do all of the redundancy and other payment calculations, and to make the payments.  Again, while they are doing this, they are not working on more productive things for your business.

If you recognise Trade Unions, then your TU representatives will not be doing much other work during this time.  If you don’t recognise Trade Unions, and you are planning more than 20 redundancies, then you will have to appoint employee representatives so that you can do collective consultation.  And, however many redundancies you are planning, TU representatives or other colleagues might be asked to accompany individuals in any consultation meetings.  All of that costs their time and productivity on other things.

There are many other small things – time to write references, time to answer questions, time to consider suggestions.  A redundancy process leads to a huge loss in productivity, however well it is managed and handled. And productivity levels take time to build up again to pre-redundancy levels.

Potential Extra Costs

There are also many more potential costs in a well-managed redundancy programme.

If you want to get people out of the work place before their notice period ends, then you may need to pay garden leave.  This might be the case if the reason for the redundancy is a lack of work.

Some companies provide outplacement services for their redundant employees, to help them to find alternative work or to do some training for a career change.  This, of course, has a cost attached to it.

You may want to provide counselling services to help your employees and their families come to terms with their redundancy.  Or you may want to provide financial advice to help them manage their redundancy pay, pensions, etc.

Counselling may not be enough to prevent some sickness absence, where individuals have anxiety, depression or other stress related illnesses due to pending redundancy.  So your sick pay bill might well go up during this time.  And this may not just affect those facing redundancy, but their colleagues who remain in the workplace after they leave.

On the subject of those who are left behind, you may well need to provide some training in unfamiliar skills for people who have had to move into different jobs or pick up unfamiliar work.

Before considering redundancies, you are likely to have had to end any contractors or agency temporary staff. This may involve payment of some fees to employment agencies.

And then, of course, you may face legal challenges and end up having to pay costs to defend any such challenge, or a settlement agreement to prevent a court case.  Not to mention staff time to work on such cases, and potential legal advice.

Delayed  Costs of Redundancy

When you are calculating the true costs of redundancy, there are some costs later down the line which will crop up as a result of your redundancy programme.  These must be included in the overall cost of redundancy, as they  only arise as a direct result.

This includes things like future recruitment costs if there is an upturn.  You may end up trying to recruit the very skills you let go during your redundancy programme.  You might have to then pay to train people up into these roles, because you have lost your investment in your redundant employees.

Depending on how well your redundancy programme was handled, you may find that your company reputation has suffered and that you find it harder to recruit in future as you have a bad name as an employer.

The disruption during the redundancy programme will have an incalculable effect on cost and you will definitely have to spend time and money to support your remaining employees (survivors).   They will have lost productivity and will need time to settle.  You may even find you face some resignations as people search for potentially more stable employment.

One final potential cost is in your client base.  If the reputation of your business has suffered due to the redundancy, then you may lose clients, or find it hard to attract new clients.

In Conclusion…

I am not saying that you should not embark on redundancies, if that is what your business needs to to, but I am suggesting that you should look very carefully at the true costs of redundancy and how long it will take your business to recover from such a move.  It is worth giving serious consideration to alternatives to making people redundant as a cost-cutting exercise.   It rarely cuts costs!

If you think this article is useful and you would like more advice on dealing with this  – or any other people-related issue in your business – please join our mailing list, or contact us for further guidance.

Cost Cutting – Is Redundancy The Only Option?

At some point in your business you may decide you need to cut your business overheads.  There may be many reasons for this: loss of a large customer; a slowdown in sales; new competition; or – at present – a global pandemic!

A quick way to cut your losses may be to reduce your employment costs.  Some job cuts might save salaries, benefits, employment costs like tax and National Insurance.  You could save on training costs, sick pay, holiday pay.  This can seem attractive, but is redundancy the only option?

Redundancy is never a cost-effective solution

Making staff redundant is never a short-term solution to your financial difficulties.  It is expensive in so many ways.  The redundancy payments themselves can be costly, particularly if your employment contracts offer an enhanced redundancy package. On top of that, you also have to pay notice periods, or pay in lieu of notice.

There are other costs, which may not be immediately obvious.  Things like the management time needed to plan, prepare and carry out a redundancy programme.  Or the unsettling effect on the remaining staff, which will surely lead to a drop in productivity.

This just skims the surface of the costs involved.  I could write a whole different article on redundancy costs alone.

Redundancy is a real negative for your Business

Redundancy  is expensive and hugely time-consuming. It means letting go of employees in whom you have invested  and who might be hard to replace in future.  It usually has a negative impact on those staff that remain.  It is very bad publicity.  It can lead to legal challenges unless handled carefully.

If your business has an uplift and you need more people, you may not be able to recruit again straight away. Even if you can, the people who were redundant may no longer be available or willing to return.  If you can recruit, you will have the cost and the need to train up new staff.

So is redundancy the only option?

It is not, of course, the only answer.  It may seem to be the simplest and cheapest way to cut costs. But you might find it very instructive to look at alternatives before you commit to redundancies.

  • Firstly, a thorough understanding of your Business financials. Is redundancy really the only option, or are there other reductions in cost which could be made instead to mitigate the need for redundancy?
  • Can any of the work be adapted, or dropped (temporarily or permanently?
  • Can you recycle, reuse or repair furnishings, equipment, tools instead of renewing?
  • You might look at reductions in things like non-essential travel; company vehicles; subsidised cafeteria, etc.
  • Are there any grants or incentives available from the Government or elsewhere which might help you get through a sticky financial period?
  • Your employees might have some ideas, so communicate and consult with them. They have a big interest in helping you to save their jobs.
  • Before you make employees redundant, look at limiting the number of contractors and agency staff you are using. Are they doing work which could be carried out by an employee instead?
  • The Government’s furlough scheme during the global pandemic is coming to an end, but could you offer something similar to your employees? This keeps them on your payroll, but reduces your costs.
  • Other alternatives might be to offer sabbaticals; to offer reduced hours or reduced working days; offer a salary reduction; look at secondment or redeployment opportunities

This list is not exhaustive and there may be other things you can do to avoid some or all of your redundancies.

If you think this article is useful and you would like to talk more about dealing with redundancy, – please join our mailing list, or contact us for further guidance.

Reactions To Redundancy Which Managers Need To Plan For

I have supported employers with redundancy programmes for over two decades now, and I have seen a huge variety of reactions from employees when they face the news.

There is not one answer and nobody can guess or predict the emotions felt by someone else when they are dealing with redundancy.

What are some of the common reactions to redundancy?

Redundancy can feel like bereavement and the individual needs to grieve. Even if it is voluntary, it can still engender a feeling of loss.

It is a frightening time for many people.  They worry about finding another job.  Especially when many others are jobseeking at the same time.   Often there are money worries as well.  Redundancy payment only goes so far  – and often is nothing like the amount people are expecting.

Those who lose their jobs – through no fault of their own – may feel a sense of failure. They wonder if they could have somehow prevented it – especially if they have been through a selection process and scored less well than some of their peers.   They might even feel shame and dread the reaction of family and friends.

Some feel anger, borne from fear.  They feel that they have been let down by the Company and their hard work has gone unrecognised. They might threaten legal action.

Some employees might welcome redundancy

The odd one is happy with the situation.  They have plans for their future and were only hanging on at work in the hope of some redundancy pay.  These are the ones who might volunteer for redundancy, but they may also be your best workers who have no fears about finding other work.

A manager could see any, some or all of these reactions to redundancy. Most people probably feel a mixture of all these emotions.  And some people may not show their emotions.  Or they may stifle their natural reactions.

And what about managers?  What are their reactions to redundancy?

My experience is that redundancy consultation is among the most difficult conversations a manager has to have with the team members.

Nobody wants to give bad news.  And in most cases, you can expect that it is bad news. So you are probably dreading the meeting yourself!  On top of that, you might be apprehensive about the reaction you will get.

In some cases, the manager may also be concerned about his or her own role.  Their job might also be at risk of redundancy.  Or they may just be concerned in case it is going to happen to them soon. If the Company is in such straits that it is making jobs redundant, can it survive?  Will their job be safe?

Additionally, the manager is likely to have built some kind of relationship with the employee.  They may be grieving the loss of a good employee.  Or concerned  about whether the employee can find another job.  They will be worrying about future team dynamics without that individual.  There could be some concerns about how the work will be distributed. What can be changed or stopped so that the remaining team can function?

The survivors will also have reactions to redundancy.

What about the people who survive the redundancy and remain in the Company?  How are they going to feel?

Of course, their overwhelming reaction will be relief that their job is safe.  If there has been a selection process, some may even feel superior and falsely proud that they were scored high enough to stay. Or there may be some who are frustrated because they would actually like to have left with the benefit of a redundancy payment.   And any of them might wonder when/if there will be more redundancies in the future.

Teams will be concerned about the workload. What about the work which was done by the redundant employee?  How will that get done? Will they need more training?  If so, some may be happy, others may worry.

People will also be grieving the loss of a colleague.  A familiar face no longer there. Some will be friendly with the departed person.  They might feel aggrieved on behalf of their friend.  Others may be relieved that a difficult colleague is no longer there.

Others may also have reactions

There are also others who may have some reactions and emotions about redundancy.  For example, customers and clients of the Company. Particularly if the redundant employee was client-facing.  Or suppliers may have a relationship with specific employees. This can also have an effect on business.

There may be others who will have emotions and reactions to redundancies .  When companies are planning for redundancies, they might find it helpful to think about all of these reactions and how to deal with them.  This will help the business to quickly get back to some productivity following the redundancy programme.

If you think this article is useful and you would like to talk more about dealing with redundancy, – please join our mailing list, or contact us for further guidance.

Leading A Remote Team, With Love

This article is for you if you are faced with leading a remote team.  Especially if that is new for you.

Who is working at home?

Of course, there are those who cannot work from home under any circumstances.  Medical and emergency services.  And retailers – and those who restock the shelves.  This probably needs a whole separate article.

Then there are those people who already work from home occasionally, or often. Or all the time.  They already have set routines and are wondering what all the fuss is about.

New to Home Working

Finally, there are those for whom this is a novelty.

There may be some who think it is a chance for a release from being managed and will think about how they can use it to the best advantage.

But the vast majority will welcome being trusted.  They will be slightly nervous about the logistics.  And they will be keen to make it work so they can continue to do it sometimes in future.

What are people feeling?

People will be distracted and interrupted by family around them.  Some people will be sharing all sorts of advice – some of it fake – about coronavirus. Others will never mention coronavirus and will be “burying their heads”.

We all have concerns at the moment and we need to balance everything in our lives. We need to get work done to ensure we continue to have a job/business at the end of this crisis.  And we are also caring about ourselves and our families.  In particular, we are worrying about the more vulnerable people in our immediate circle.

Leading a remote team during the current situation

We need to balance the needs of our customers, clients, suppliers and teams, with our own needs, concerns and emotions.

Managers and leaders are critical in helping business to continue and the people within the business to carry on. Managers are key to keeping everyone updated. Their role is to help bring a sense of calm, rationality and peace.  In short – this is the ideal chance to manifest love and leadership.

We need to offer help, support and compassion. Whilst at the same time delivering value, maintaining services and processes.

How to cope with leading a remote team

You might think you are too busy and have too much work to deal with all this.  But managing your team is THE MOST important part of your job.  The people make the business and you cannot afford to lose them or their goodwill.

It helps if you recognise that there are many different reactions.  Others may not feel the same way you do, or as their colleagues do.

The principles of leading a remote team are no different from managing a team in person. The most important thing for a manager is to keep in regular contact with the team (phone, email, messenger, zoom, facetime, skype).  Listen to what they are (or are not) telling you.  Offer practical solutions where possible.

Have you thought about team meetings?  These are more important than ever, to weld a team together and enable them to collaborate.  You can set a regular time and date and hold the meeting by zoom or skype – some method where they can actually see each other is best.  And encourage them to contact each other regularly and keep you all in the loop.

Dealing with the negatives

Where things can’t be changed, be honest, but understanding.  Try to help people to come to terms with things which are impossible to change. Don’t promise things you can’t deliver.

People are going to be struggling with all kinds of anxieties.  It is helpful if you canlag up counselling or other help which is available.  Many companies provide a counselling service, but if not, there are plenty of charities which can help in a wide range of situations.

One major difficulty which many will face is financial.  Even if your workplace is still able to function remotely, many cannot.  This means that your team may have partners who are unable to work through illness.  Or they may have been laid off or moved to shorter hours.  This puts more pressure on your team members who may have become the only wage earner in a household.  So again, it is helpful if you can provide information about financial advice or help  which is available

We need to be aware of potential mental health issues.  People will be feeling isolated, or trapped. They may be facing financial difficulties and/or relationship difficulties.  They may be anxious, frightened, worried about falling sick.  Or they may be anxious about vulnerable relatives or children.  This makes your regular contact even more important.

Celebrating the positives

It is even more important than usual to remember to thank people.  We all need some recognition for what we do  – even if it is just “part of the job”.  This is even more important when you are leading a remote team.  They need to know they are not invisible and that you notice things they are doing.

The world goes on and people have birthdays and other causes to celebrate.  So help them to enjoy their special occasions.  We need to have fun days to enjoy even more than usual.  Celebrate team and individual “wins”.  Give them a reason to keep positive.

Finally, it is helpful to get the team to think about their personal wellbeing.  Encourage fresh air, exercise, healthy eating, even just standing in the garden to look at trees and greenery.  Taking a regular break is really important.  We all tend to get stuck behind our computer, head down and involved and the day flies past without a break.  This is not healthy or productive.

What are the likely reactions to homeworking?

Some people will have only just found this “freedom” and so might spend all their time scrolling though social media and not getting anything done.  But this novelty will soon wear off and the vast majority will knuckle down to work in a few days.

At the other end of the scale, some will be really conscientious – to a ridiculous degree.  They will  want to prove themselves reliable and trustworthy. So they are likely to work solidly without a break – and that is almost a worse problem to manage!

I am already seeing some people who are in a real state of anxiety.  They have been infected by the media and social media and the general scaremongering which is rife at present.  They panic about every news bulletin, social media post, etc and so can’t settle to anything.

Of course, this situation is different from “normal” working at home.  People may have their kids and partners at home. Tthe house is crowded. There is no privacy.  They are keen to get some work done, but it isn’t really practical.

Finally – and of the most concern – there are some people who will withdraw into themselves and go silent.  They are unable to face their fears and anxieties.  They do not have a network around them who can help them to have some perspective. So they internalise it all and withdraw more and more.

As time goes on, things will change

  • Some will get used to it and settle into a routine.
  • Others will find living with their partner so closely doesn’t work, and they will find their own way to manage – move into the shed or a caravan. I predict (sadly) that all this enforced closeness to our loved ones may force a temporary increase in the divorce rate.
  • Some will hate it and can’t wait to get back to normal.
  • There will definitely be a few who continue to need support to stop them becoming more and more isolated.
  • Some (I suspect quite a large majority) will find they love working from home, at least for some of the time, and will demand that it continues when workplaces reopen. I foresee that the world of work may see some permanent changes.

…. And finally…

These are strange and unsettling times for us all (and I really mean “all”).  The whole world is facing this crisis and I find that quite comforting.  Brought together in adversity.  Maybe, maybe not.  But the point is that we are all having to get used to things which are outside our comfort zone and don’t feel familiar.  So reach out to someone if you need some help – there are plenty of others going through the same things you are!

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Love and Leadership

Do the words “love” and “leadership” belong in the same sentence? And what does that word “love” actually mean, anyway?

The dictionary definition is fairly simple.  Love is “an intense feeling of deep affection”.   Or it can be “a great interest and pleasure in something”.

We have all felt love, haven’t we? Love for a parent or a sibling; love for a partner or a child; even love for a pet.  Of course, these types of love are all different from each other. The love of a mother for her child is different from the love of someone for their life partner.  And that is different from the love between two brothers.  OR IS IT?

I couldn’t say that I love my husband differently from the way I love my sister, or my cats.  Yes, the intensity of the feeling might vary, and the physical expression of that feeling might differ, but the way I treat my loved one is no different.  For me, it means you want the best for that person, you want them to be happy, you want them to succeed.  If you love someone, you will go the extra mile for them. You will put yourself out for them. Or you would change your plans to accommodate them.  Their welfare is important to you and you care about what they are thinking and feeling.   These things are common for every type of love.

What do we mean by “love” in the workplace?

Firstly let’s separate the feeling of love from the actions which we take when we feel love.  Then it is easy to see how this can translate to the workplace. Indeed, it can apply to any other situation in our daily lives.

We go to work for a variety of different reasons. The basic reason is usually to earn money to fund everything else in our lives.  But while we are there, we have dealings with other people.  Most of us want those dealings to be pleasant, friendly and helpful.  Our colleagues can even grow into being personal friends.

For those dealings with others to be pleasant and effective, then we really need to love those people.  We want the best for them, we want them to succeed, we put ourselves out for them, we help them. We do this, probably unconsciously, all the time. Maybe we thank people and we help people. Perhaps we teach people what we know.  We help them to do the best job they can do.  The underlying reason we do these things may be that we want them to do the same for us.  We all have a need for love, and the workplace is no different from anywhere else – we want to be “liked”.

So what about love and leadership?

A leader – whether in the workplace or politics, or in a sports team or a country –  would do well to show these outward expressions of love to the people they lead.  Surely a leader should want the best for the team? They should want team members to be happy and to succeed? If those things are true for individual members of a team, then they will be true for the whole team.

In a position of leadership, I would say it is absolutely critical to “love” those you lead.  On that will rest your success as a leader and the success of the outcome you are seeking.

How does a leader show love? Put every single possible step in place to ensure the welfare (physical and mental) of your team. Make sure your team are at the heart of all your plans and decisions. Be prepared to change course (or at least adjust the course) if it will be a better option for people. Consult with your team regularly to temperature test your plans. Make sure everybody is included.

The benefits of love and leadership

The strange thing about love is that the more you give out, the more you get back.  A leader who loves the people they lead will find that those people are prepared to love them in return.  They will bend over backwards to meet deadlines.  Perhaps, they will sing the praises of the leader. Because they feel safe and secure they will do their best work. They will make sacrifices if necessary. In short, they will love the leader.

The question may not be “what are the benefits if I lead my team with love?”  It is better to ask  “what will be the size and consequence of the failure, if I don’t love my team?”

Oh, and what is the biggest benefit of all?  You will find you love yourself, as well.

But what about the difficult decisions?

You may think you would not gain respect if you are “soft” on your team.  My answer to that is that love is not soft.  It comes from a place of strength.  People will respect you far more for being kind, helpful, approachable and, yes – loving.

There are times in business when difficult decisions have to be made. Sometimes we have to do some difficult things. I am thinking about times like redundancies, disciplinaries, even dismissals.  You might think that love doesn’t have a place in these types of action.

But I would say just the opposite.  There have been any  number of really difficult and unpleasant situations I have had to manage.  I have seen every reaction you could imagine. And I am proud that I have helped people when they are facing some of the darkest times of their working lives.  I have treated them as humans.  Yes – I have loved them.

If you think this article is useful and you would like to know more,  please join our mailing list, or contact us for further guidance.

Things You Should Know About Appointing A Manager

Appointing a manager is probably the most important business decision you will ever make.  If you get it right, you will find that your recruitment bill goes down and your staff retention figures go up.   Your customers will love you and return for more business. You will prevent a huge number of sleepless nights and headaches due to people problems in your business.

How can you be sure you have chosen the right people to be managers in your business?

A good example, or a terrible warning?

How do you want your employees, customers, suppliers, ex-employees to remember your business?  Do you want them to feel confident that your company provides the best service, with the least possible difficulty?  Do you want them to know that your team is knowledgeable, friendly, helpful?  Would you like people to say your company is a great business to deal with?  Or if employees said it was the happiest place to work?

Or would you rather that people warned others not to work in your company?  They might say you don’t care about your employees.  Or customers might complain about bad service from a grumpy employee?  How would you feel if your reputation was for a great product, but that people wouldn’t use your company again?

What have these things got to do with appointing  a manager?

Your managers are critical to the reputation of your business.  Even if they never have any customer dealings.  Of if they manage a support function, rather than the front line.   A poor manager will never be able to get the best from the team.  And the resulting problems will have a knock-on effect on other parts of the business.

Your managers can make or break your business. The investment in your managers is the most important investment you will ever make.  And you need to ensure you get a good return on that investment.

So how should you choose a successful manager?

The very worst reason to appoint a manager

I have seen it hundreds of times.  And it is often a disaster.

Someone is really good at the job they do.  They might be achieving far better results than anyone else.  In so many companies, that alone is the reason why they are then promoted to manage a team of people doing that job.  If they are good at the job, then surely that makes them the ideal person to lead others doing that job?  Wrong!  As well as being a good widget maker, they might also have the skills to train other widget makers.  Or they might be empathic, good listeners.  They might be good at decision-making, team leading, communicating, inspiring others.  But just because they are a good widget maker does not guarantee that they are good at those other things too.

I once knew a sales manager who was absolutely brilliant at sales.  He was able to be charming to customers and to achieve seemingly impossible sales figures.  But he was a bully and his team were all terrified of him.  Soon, some very good  sales people left the company.  And the people who needed some development and encouragement never got it.   The team performance started to drop alarmingly.  The team effectiveness spiralled downwards and the sales figures for the team became very low.   Eventually, the CEO took action and the manager was moved.  He was replaced by a manager who had people skills and who could get the best from the team. Magically, the figures started to improve and the team overall became more effective.  Their figures were consistently good – and not reliant on just one good performer.

Tips for appointing a successful manager

The most important skills needed by a successful manager are people skills.  These include things like the ability to communicate and to understand what motivates others.  They need to be able to deal with stressful situations for themselves and their team.  They need to manage conflict and change.  They need to be able to inspire and encourage.

But you don’t need someone who is a soft touch and gives in to every demand made on them.  They must be decisive and able to navigate difficult decision making processes.  Then they need to be able to communicate their decision and the reason.

Additionally, your investment should include initial and ongoing management training.  You cannot throw someone into a management role and expect them to just pick it up by themselves.  Many of the necessary skills can be learnt and developed with practice.

And what about the time to manage people?  Managing a team  can take up an enormous amount of time and energy.  Doing it successfully requires planning and giving time to the team members.  So a team manager cannot also hold down a fulltime job doing other things.  The team manager needs to view managing the team as the major part of their job.  Any other work they can also do is a bonus!  This is another reason not to give your best widget maker the promotion to being the widget team manager.

Planning Ahead

As with every other aspect of your business, my most important piece of advice when appointing a manager is for you to plan ahead.  Design your management structure before you need to create or replace managers.  That way, you can give serious thought to the qualities of the person you are seeking to appoint.

If you think this article is useful and you would like to know more,  please join our mailing list, or contact us for further guidance.

A Strategy To Increase Financial Returns For Your Business

It is the start of a new year and a new decade.  This year can be the best ever for your business.  You want to improve your financial returns and see the benefits of all your hard work.

Your employees are your best asset – you often say as much.   But do you really mean it?  And, if you do, do you know how to get the best from them?

This is where a strategic Human Resources (HR) plan comes in.

Why do I need a strategic HR plan?

You may know what your Human Resources team is employed for.  They are there to recruit people, to write policy which will protect your business.  And then to implement that policy and make sure it is followed.  When things go wrong, HR is there to help you with difficult things like redundancy or disciplinary action. Even the really bad stuff- like dismissing people.  HR will then support you if the worst happens and legal action is taken against you in the Employment Tribunal.

But what about strategic advice?  You have strategic financial plans and marketing advice.  But there is no need for an HR presence at the top table – HR is an operational, back-room function.  It is a necessary drain on the business.  It doesn’t produce any revenue, or improve your profits.  Or does it?

What difference does HR strategy make?

Human Resource planning should be at the heart of every business decision you make.  If your employees truly are to be your best asset, then doesn’t it make sense to invest in them? A strategic HR plan will help you to maximise the investment in your employees – which is very likely to be your largest investment.

A strategic HR plan will show you how to  improve your financial returns on that investment.

What are the financial returns from a strategic HR plan?

In terms of real financial returns, there are six key areas where a strategic HR plan can make an enormous difference for your business.

  • Return on Sales

Each sale is worth more if your production costs are kept down.  This includes recruiting the right people in the shortest possible timescale.  It means retaining them in the business once they have been recruited.  Strategic HR can help you manage the performance of the individual and look after their wellbeing.  All of those things make them work efficiently and effectively and reduces production costs.

  • Return on Assets

If you get the right people in place, train them properly and look after them, then your assets will be better maintained.  The use of the assets will be optimised.

  • Revenue growth

This really just means more sales, which can be achieved by better customer service and increased numbers of customers.  Again, your employees are key to this and a proper strategic HR plan can have a huge impact on this aspect of the business.

  • Profitability

Profitability is increased because of the revenue growth, as already discussed.  Again, if you look after your employees, then your expenses will be reduced (less absence, greater retention, higher work rate).  Because your revenues are up and your expenses are down, then your profitability is increased.

  • Market capitalisation

If your company is traded on the stock market, then your value per share is important.   Your employees are key to this equation, as they affect all the other financial impacts, as discussed above.  If your employees feel valued and loyal, then there is likely to be a positive effect on market capitalisation.

  • Revenue per employee

Finally, if your employees are happy and feel valued and engaged in their work, then they will be more effective and efficient.  This, coupled with reduced absence and lower turnover, can impact your revenue per employee.  This is another critical area for the business where a positive HR strategy can really pay dividends.

HR – a critical strategic business partner

This all demonstrates the fact that strategic HR has a positive impact on all of your financial measures.When your staff are happier, you spend less on absence cover, recruitment, performance improvements, and so your financial returns improve on sales and on assets.

If customer service has improved and the speed and amount of work has increased, then the obvious outcome is revenue growth and higher revenue per employee.   And because your revenues have improved and your expenses are reduced, this means that your profitability is higher.

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How To Help Your Employees Have A Happy New Year

Firstly, I would like to wish all my readers a Happy New Year.  I hope you have all had a good break and have come back to work refreshed.  I hope you have renewed interest and energy and exciting plans for a new decade.

Of course, we all feel renewed and refreshed after a lovely Christmas break with friends and family, don’t we?

Well, actually, the answer is different for all of us.  We give each other a cheery greeting and wishes for a happy twelve months ahead.  When we say “Happy New Year”, it is much like asking how someone is.  We mean it genuinely and  – if we think at all about it – we hope that they are well and happy.  But we rarely take the time to properly consider whether someone is genuinely looking forward to another year.  In reality, they might be feeling lost.  Or they might even be dreading the future.

Reasons why some people dread a new year

We make assumptions that everyone has enjoyed their Christmas break.  But the truth can be quite different.

When couples and families are forced into spending time together for more than a few hours, they can discover unpleasant truths.  Sadly, many people seek advice on divorce in January.  They have discovered over the Christmas period that they just cannot live together any longer.  Even if divorce is a step too far, some people find that their family relationships have changed. Or they may have discovered family problems which were previously unknown.

A happy and successful Christmas can bring other problems.  January can bring enormous credit card bills, or overdraft payments. Even when people earn a good salary, it does not follow that they are good at managing their financial situation.

Or there are those who have over-indulged themselves at Christmas.  We often eat rich food, in much greater quantities than our bodies can process.  Or we might drink more alcohol than usual, for longer periods, or at different times of the day.  This can lead to a need to give up things we normally enjoy, like chocolate or alcohol.  Or we decide to go on a weight-loss plan.  Then, when these new regimes prove hard to stick with, we beat ourselves up for not resisting.

New Year – new opportunities

Of course, some may have used the break to think about their life direction.  It is often a time when people come back to work with a plan to change roles, or even move to a different employer.  Some will decide that they want to leave the safety of employment and set up in business for themselves.

January is also traditionally a time when people start to plan their holidays for the year.  They will start dreaming about a sun-drenched beach.  Or they might prefer cultural breaks, or learning a new skill.  We are keen to save our spare cash to pay for our holidays.  We might spend our lunchtimes and breaks looking at exotic destinations and comparing travel costs.

Things beyond our control

In the northern hemisphere, the weather in January can make life difficult.  As I write this article, we are slowly recovering from storm Brendan in UK.  There has been torrential rain across the country, coupled with very strong winds and high tides.   We have to contend with flooding, trees down, huge waves breaking over sea-defence barriers.  This is fairly standard for this time of year, although maybe more extreme than previously.  But the big concern is for the future – what will the next decade bring in terms of climate change and altered weather patterns?

And, of course, colder and wetter weather brings illness.   This is the time of year when we all have colds, flu, upset stomachs (from all that over-indulgence, maybe?).  Many people may have had a rotten Christmas break because they felt too ill to enjoy it. Or their partner or children were ill.  Or maybe the whole family went down with something nasty.

Mental health concerns

Christmas is a time when our mental health can take a real knock.  The perceived joy and fun going on at Christmas can be in stark contrast to our own situation.  If we are lonely, then this can become unbearable at Christmas.  And it is not just those who live alone who feel lonely.  Returning to work can be a welcome relief and return to normality.  Or it can just make us realise how bad things have got.

Many of us put our problems to one side and decide to enjoy Christmas.  The holiday break can be a welcome relief from our concerns.  But now that the holiday is over, we have to face up to our problems again.

Why is this the employer’s problem?

All of these things, good and bad alike, can make it really hard for us to get motivated again.  We have had a break from normality and finding our pace again can be difficult.

If we have had a great time, then we don’t want to face the return to our usual situation.   It can be really hard to throw ourselves back into work mode.  If the holiday has been less good, then it can be really difficult to face up to those problems and difficulties which we have been avoiding.

Either way, our productivity can be low and our employer may not get the best from us during January.   And this is probably a time of year when they were expecting great strides and renewed energy from us.

So how can an employer turn this around?

There are so many things which a good employer can put into place to enable a successful January and beyond.

There is help available to tackle many of these issues.  If an employee is facing personal problems, an employer can provide a counselling service, or legal advice.  At the very least, you can point the employee in the right direction to get appropriate help and support.

You may want to consider flexible working, or different working patterns, or moving people into different roles.  You should be holding discussions, consultation, regular conversations with your employees.  That way you can find out what help they need, what direction they want to move in, what their plans are.

If people are having financial problems, there are many debt counselling schemes.  There are interventions to help people reduce financial outgoings, to save, to plan for their future.

There are wellbeing services you can consider, from massages, to meditation, to practical help, to fitness, weight loss, dietary control.   At the very least, you should be making sure they take regular breaks and go outside to see some greenery.

You might want to consider training and development plans to help people move in their preferred direction.

Steps towards a Happy New Year

I have deliberately talked about the difficulties and problems which can come as a result of the Christmas and New Year break.  Of course, the vast majority of your employees will have had a great break and will be feeling refreshed and ready for the next challenge.

But it would be great if you can think about ways to help your employees really have a Happy New Year.  The best way to do that is to talk to them and find out about their concerns, their plans, their dreams.  Then you are in the best position to help them.  If you help them, then they will help you to ensure that your business is successful and brings you a very Happy New Year!

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Flexible Working At Christmas – A Gift For Your Staff And Business

Flexible Working at Christmas can be such a huge benefit. You may already embrace flexible working within your organisation. But if you don’t, then Christmas is a time of year when you might think again.

In general, there are many good reasons to allow flexible working.  It can increase productivity, retention, improve trust and wellbeing.  But at this time of year, above all others, the gift of flexible working can make a massive difference in your workplace.

This article will look at a few of the reasons why your employees will thank you for allowing flexible working.  If you ask them, they will probably come up with things I haven’t listed here.  But they are not the only ones to gain from flexibility.  Your business will benefit too.

School Holidays and Caring Responsibilities

School holidays are among the most obvious issues which arise at this time of year.  Schools close for the holiday period and parents have to make alternative arrangements for childcare.  This may mean using up their own hard-earned holiday allowance.  Or it may be the additional cost of paid childcare.  Either way, many parents will be very grateful for some flexibility which allows them to be there for their kids.

And it is not just those with children.  Many of us have caring responsibilities and they don’t all involve children.  Day centres for the elderly or disabled also close at this time of year, or have staff shortages.  The additional burden falls on the nominated carers. Paid carers also want time off to be with their own loved ones.  It can help enormously if you can allow flexibility in how and where your employees do their work for you.

Nativity Plays and Carol Services

While we are thinking about parents, we should consider that they are likely to want to take time out for various activities.  Schools put on nativity plays and carol services, or even just Christmas parties.  It is only natural that parents want to attend and support their children.

Again, it is not just those with children.  It is the time of year for parties and celebrations. It is a time for short break trips to visit Christmas markets, or see various tourist sites with Christmas lights.  Whether or not people actively celebrate Christmas, many want to be with their families.  For some, that can mean extensive travel.

If you can give the flexibility to allow people to fit all these arrangements around their work, you will make huge strides towards a culture of trust and mutual benefit.

Driving Home For Christmas

Driving, or any other form of travel, can be incredibly stressful at Christmas.  Rail and bus timetables are often disrupted.  In the northern hemisphere,  the winter days are shorter.  So travel to and from work is done in the dark.  The roads are busy.  Often the weather can be bad, wet or snow, or both.  And there is always a concern that someone may have had too much to drink.

If we can adjust the times at which we travel, then it can be such a relief.  Or maybe even cut out the commute to work completely.

And on the subject of alcohol, what about last night’s party? How many of us can say we have never been to work with a hangover?  The effects of alcohol hang about a lot longer than we think.  Even if we don’t feel ill, we may be slow to react – or less alert.  Certainly, we are not safe behind the wheel of a car.   Even if we make it safely in to work, then how productive will we be?  If we could have a later start and finish later, or make the time up another day, then that could really help.  It might also mean we produce better results.

Preparations for Christmas

For many of us, Christmas is a really busy time of year at home.  There is extra cooking to do.  Making a cake or preparing party food.  There are extra beds to make up for all those visitors.  Not to mention the shopping.  And wrapping up the Christmas presents.  Writing cards and letters and decorating the house.  All of it is great fun, of course, but it all takes time and adds to the stress.

If our employer is flexible  we can work at home, or adjust our hours.  This helps us to plan better and achieve all those extra things without so much anxiety.

Which means that flexible working is also good for our wellbeing.

Business benefits of flexible working at Christmas

As an employer, you may think that this is all about your employees.  And, of course, it is a huge benefit for them.

But you will reap the rewards as well.  When you allow flexible working, your staff will be less stressed.  They will be able to concentrate properly at work and their productivity levels will be higher.   They will be happy and more healthy and that will affect their dealings with their colleagues, and your customers and suppliers.

The biggest benefit for you as an employer will be the increased trust between you and your employees.  Your reputation as a good employer will be enhanced.  That can only improve retention and recruitment, as well as giving a happier workplace.

So give your employees the gift of flexible working this Christmas, and see what gifts it brings for your business in return.

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