As the oil price plummets to its lowest level in more than a decade, oil and gas industry bosses in the north-east are making cuts to curtail declining profits.
We can’t avoid that reality.
The energy sector is increasingly feeling the pinch and staff layoffs are inevitable as challenging times ensue over the next quarter and beyond.
Redundancies in any company during a recession are tough. But in a cyclical market, it is important to try and make the process as pain-free as possible for those whose jobs could be at threat.
At times like these, being open and honest pays dividends as all too often managers shout good news from the rooftops and keep the bad news in the boardroom.
Let’s face it the staff and contractors know exactly what is coming so the best you can do is be as open in your communication and give as much warning as possible.
People don’t like being made redundant or having their rate cut – but worst of all they don’t appreciate being lied to.
So how do we continue to engage staff through these harder times?
We need to demonstrate that headcount cuts have not been an automatic and immediate solution. Businesses leak money every day from overpaying suppliers, mismanaging their cost base, through waste and so on.
So companies must consider a list of cost reduction strategies before going straight for the axe.
As soon as the change is foreseeable – tell the staff.
Be prepared and have the answers ready to the questions you are going to get – for example, why, when, and how.
Using this as an opportunity to get rid of ‘dead wood’ will often come to light, but people don’t lose employment rights during a recession so be fair and be reasonable.
Engagement is about culture. We are not going to claim that culture is not affected when a business sheds jobs. But how you do it will differentiate you from being a great employer and a terrible one.
We know – or at least hope – that at some point over the next six to 24 months the market will turn. The stories will change from recession to skills shortages and ‘talent wars’, so remember to ensure the people leaving your organisation go with a view that you have done absolutely everything you could to try and keep them on board, as otherwise the vacancy listing is likely to be fairly lengthy when the good times arise again.
Companies don’t often drop the ball on such processes because they don’t care about the staff.
They get overwhelmed, and understandably so, on having the actual face-to-face conversation with their own direct reports about redundancy.
It becomes stressful and based on UK law around employment being fairly complicated compared to other jurisdictions, they often get lost in the process.
Whilst the policies and processes are all important please never forget – it is first and foremost about the people.
Ultimately, by being open and honest with staff and focusing on the long-term business strategy for growth, companies can come out of a recession with a stronger reputation than before.
Dean Hunter is the managing director of Hunter Adams.
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