This is without a doubt one of the ugliest parts of running a business. Having to make redundancies is not something people take lightly, and it has to be done with the utmost care. In the hard financial times we find ourselves in, options are limited. You know you have to let some people go or your business will have to face liquidation. Your plan is probably to let some people go now, and when you are back on your feet you re-hire some others. The chances of you re-hiring the same people are slim, unless you are able to get back on track within a few months. The question you have to ask yourself therefore is: who can you afford to let go? To make the right decision, there are a lot of factors to consider beyond wages and experience, and this is where Business Recovery can help you.
Preserving the Future of Your Business
Your business can sometimes feel like a part of your family or an appendage and you want it to be around for as long as possible. The redundancy choices you make will inevitably determine the outcome. There are some people a business cannot do without, no matter how much it will cost to keep them. There are also some people that cost too much to keep with respect to how much value they add to your enterprise. In assisting you with your decisions we will take into account the lifespan you have imagined for your business, your target revenue, and the bare minimum you need to survive. This will also take some of the burden off your shoulders, to enable you to keep handling other aspects of the business. Running a business in a struggling economy is stressful enough as it is, and having to make redundancy decisions on your own makes it a lot worse.
Rewarding Loyalty and Experience
One painful situation a lot of business owners have had to deal with is having their employees quit the firm after others have been made redundant. The people you let go of have gone on to other companies or have relocated, and the ones you put your trust in have left you in a precarious position. When we analyse your redundancy options, we take into account not just the experience and expertise of your employees, but also their loyalty. If they found a better job today, which ones will leave? How many of your employees believe in your product/services and are willing to stick it out with you? Are they willing to take less money to see your business come out on top? These are just some of the questions you have to consider.
Compulsory and Non-compulsory Redundancy
Once we’ve outlined the staff you absolutely cannot do without, it is time to make decisions about others. The preferred method of redundancy is always the Non-compulsory alternative. Non-compulsory redundancy relates to voluntary redundancy and early retirement. Some of the employees may volunteer for redundancy, either with or without a cash incentive. This gives you the option of re-hiring them without any negative feelings towards your company. Early retirement is also an option that doesn’t discourage the remaining staff. If you choose to utilise this method but still have to make some other people redundant, we will then discuss the compulsory option. Most employees after being made redundant will go without a fight. But some will not be as understanding. It is therefore necessary to have clear redundancy criteria free from any bias or hint of discrimination. Your employees will need to know exactly why they are the ones being let go, because if you leave it vague then there is room for speculation and misunderstanding. Letting go of an employee on maternity leave for example will automatically raise questions.
Legal and Governmental Procedures
As you write out your selection criteria, it is good practise to get your lawyer involved. A lawsuit is never good for business, especially when you are already facing financial difficulties. When making a collective redundancy (letting go of 20 or more employees), you will need to inform the Insolvency Service Redundancy Payments Service (RPS). If your workers are in a Trade Union, their representative will also need to be informed of the proceedings.
Help Your Redundant Employees However You Can
This is one of the most important parts of the process. Remember that the redundancies are a temporary solution, and you will be looking to re-hire in the future. The last thing you want is for your company to be tagged as unappreciative of employees. When employees are made redundant, they need to know you did your best to help them and that it was a tough decision for you. If you are able to get them in touch with employers who you know with vacancies for example, that will have a positive impact on them and on your business. If the best you can do is advise them to visit their local Job Centre plus, great. But whatever it is, let them know they were valued.
This is a guest post from Business Recovery the business turnaround specialists.