The COVID-19 pandemic has had an unprecedented impact on the global economy, leading to a global recession that has forced many businesses to look at the restructuring of their operations in order to survive. The pandemic has caused widespread disruption to supply chains, reduced consumer demand, and led to a significant increase in remote work and rapid development of technologies simplifying business operations. These factors, along with the current cost-of-living and energy crisis, further supply chain disruption due to the war between Russia and Ukraine have only added to a spiralling economic crisis.
As companies face declining revenues and rising costs, they are forced to make difficult decisions about their future. One option is to restructure their operations, which can involve anything from reducing headcounts to changing business models. With many businesses struggling to adapt to these difficult times, it is crucial to explore alternative solutions that can help businesses navigate this uncertainty and come out stronger on the other side.
What is Business Restructuring
Business restructuring is a strategy used to improve a company's profitability by making significant changes to its financial or operational structure. It can involve downsizing, closing down unprofitable divisions, or reorganizing the company's management structure. One of the most common actions taken during a business restructuring is implementing redundancies. While redundancies may be necessary, it is essential that companies handle them with care, sensitivity, and transparency. By doing so, companies can minimize the negative impact that redundancies can have on their employees and ensure the long-term viability of their business.
What is Redundancy
Redundancies are the process of removing employees from a business and often form part of a business restructure. They can be voluntary or involuntary, and it's important to note that redundancy does not necessarily mean termination.
Redundancies are generally considered when there is a need to reduce costs or improve efficiency within an organization. The decision may be made by management or by shareholders who want their company to be profitable at all costs; in either case, it's up to HR professionals and other staff members to implement this change effectively so as not to harm morale among remaining employees or disrupt operations too much while reducing headcounts as needed. The redundancy process should be fair and transparent, with clear communication about why the redundancies are necessary and how they will be implemented. Businesses should also provide support to affected employees, such as outplacement services, to help them find new employment. A well-planned and executed redundancy process can help a company to reduce costs and improve efficiency, ensuring the long-term viability of the business. Due to the sensitive nature and specialist knowledge and expertise required, businesses often look to bring in a HR consultant firm, like activpayroll that help navigate the complexities, whilst ensuring your employees are supported throughout the whole process.
In this blog, we'll explore some of the alternatives to redundancies that businesses can consider, including internal talent pools, transferable skills for redeployment, retraining and up-skilling, remote working, voluntary redundancies, job sharing, and reducing hours. By examining these options, businesses can create a plan that will enable them to weather economic uncertainty and emerge more resilient than ever before.
Internal Talent Pools
Internal talent pools are a great way to keep your employees engaged and motivated. They allow businesses to offer opportunities that are both challenging and exciting, which can help ensure that employees stay with the company for the long term and promote brand advocacy. Internal talent pools often contain a wealth of specialists who tend to know your operation, products and customers inside out and they are great assets into accelerating business growth. However, there are some disadvantages to using internal talent pools: You may not be able to find enough people with the right skillset who want to work on a specific project or in a team; If someone leaves their position as part of their rotation through the pool (for example because they got promoted), then another person must take over their responsibilities until they find another replacement - this could mean extra work for other staff members who aren't part of any rotations themselves!
Transferable Skills for Redeployment
During business restructuring, transferable skills can be a valuable asset for both employers and employees. Transferable skills are skills that can be used in multiple industries or job roles, such as communication, problem-solving, and leadership. These skills can be especially useful during a time of change when employees may need to adapt to new roles or industries. For employers, transferable skills can help them identify employees who can be redeployed to new roles or departments, reducing the need for redundancies. For employees, transferable skills can make them more marketable and valuable to potential employers, increasing their chances of finding new employment. Overall, transferable skills can play a crucial role in ensuring a smooth transition during business restructuring, benefiting both employers and employees.
Retraining and Up-skilling
Retraining and up-skilling are two strategies that businesses can use to navigate uncertainty. Retraining involves teaching employees new skills, while up-skilling is a way of improving their existing ones. While both have advantages and disadvantages, they're both useful in helping companies adapt to changing conditions.
Global Remote Working
Global remote working can offer several benefits during business restructuring. With remote working, companies can access a broader talent pool and hire employees from anywhere in the world, making it easier to find the right people for the job. Companies can hire employees from countries with lower costs of living, which means they can pay them lower salaries while still providing a good standard of living for their employees. This can be particularly beneficial for companies that are struggling financially during a restructuring.
Employees can also work from home or any location they choose, reducing the need for expensive office spaces and facilities. This can be especially useful during business restructuring when cost-cutting is a priority.
Voluntary redundancy is a process in which a business offers employees the option to leave their current position and receive compensation for doing so. This can be an attractive option for both parties, as it allows employees who have been laid off or feel they are no longer needed at the company to collect some money, while companies reduce their headcount and costs.
The main advantage of voluntary redundancies is that they allow businesses to reduce their overall costs while still retaining some level of talent within their organization. They also tend to be less disruptive than other forms of restructuring because they don't involve forcefully making staff redundant --instead, employees decide whether or not they want out based on personal circumstances such as finances or family needs. This is viewed as a much more positive move compared to compulsory redundancies as employees choose of their own free will to put themselves forward therefore it is far less devastating to overall morale.
Job sharing can offer several benefits for businesses that are looking to restructure. By allowing two employees to share one full-time position, companies can reduce costs and retain valuable employees who may have otherwise been let go during the restructuring process. This can be particularly useful for companies that are facing financial difficulties or downsizing. Job sharing can also provide greater flexibility for employees, allowing them to balance work and personal responsibilities more effectively. This can result in higher employee morale and job satisfaction, which can lead to increased productivity and better overall performance.
Reducing hours is a strategy that can be used to reduce costs. It involves cutting the number of hours you pay your employees, but not their rate of pay. This can be done by reducing the number of days they work or changing their schedules, so they have fewer hours during each day.
Reducing hours is advantageous because it doesn't require any upfront investment and saves money on benefits like health insurance and paid time off (PTO). It also allows companies to avoid layoffs, which are often costly for both employees and employers in terms of morale and productivity loss. However, there are some disadvantages: reduced productivity due to less face time with co-workers; possible problems with morale if workers feel undervalued; difficulty filling open positions if there aren't enough qualified candidates available at lower wages than before; increased strain on remaining staff members who pick up extra workloads during slow periods without additional compensation.
We’ve explored opportunities of how businesses could restructure in the current economic climate and how you can prepare for future uncertainty. If you are considering a business restructuring, activpayroll can help you navigate the process and ensure that you are in compliance with all relevant laws and regulations. Our team of specialists can provide guidance on payroll, tax, and HR matters, as well as help you assess your global payroll needs and develop a plan for managing your workforce during the restructuring. Whether you need assistance with job sharing, remote working, or other strategies to reduce costs and improve efficiency, activpayroll has the expertise and over 20 years’ experience to help you achieve your goals.