I once recall a debate I attended hosted by the CIPD with the title “Business before people?”, HR have always had a hard balancing act of managing the commercial considerations with the people agenda. Never before has this been more prevalent.
The recent CIPD/Adecco Labour Market Outlook survey found that one in three organisations are expecting to make job cuts over the next three months. Until now, redundancies have remained fairly low, helped by the significant support afforded from the Job Retention Scheme.
However, as it is starting to wind down before coming to an eventual close at the end of October 2020, it seems inevitable that many businesses may have to face difficult choices in how they sustain their businesses in a tough market and reduce their costs. As HR professionals, we will be asked to step up and support organisations with these choices, balancing business imperatives, wellbeing and support to people, with moral and legal responsibilities in mind. We will be judged on how we navigate these difficult times.
Reflecting the worsening economic situation due to the pandemic, around one in three organisations expect to cut jobs over the next three months as the proportion of employers looking to make redundancies increases. Hiring intentions are beginning to rise - slowly but remain well below levels seen in previous years. Employment confidence is at an all-time low for the survey: this quarter marks the lowest net employment balance on record when using current methods.
Employers also intend to keep a tight handle on pay increases over the next 12 months, particularly in the private sector. This pay slowdown may be an important factor in limiting large scale job cuts, as was the case in the last recession. HR plays a vital role in how these delicate decisions are communicated as they will have a direct impact on employee relations and their sense of value, which are hugely important in the retention of staff and reputation of the business.
The proportion of employers intending to make redundancies over the next three months has increased to 33%, rising 11% since last quarter. This jump reflects the worsening economic landscape and clarity over the Government’s Job Retention Scheme. Whilst redundancy may be seen as an immediate financial requirement, the average direct cost to employers in making a redundancy can total £11,125.
Overall, employment demand is down this quarter compared to Spring 2020, with 29% of organisations surveyed said their intention is to decrease staff levels. However, the net employment score remained high in some sectors such as healthcare and public administration, unsurprisingly it was lowest in hospitality, transport and retail.
Employers have made a number of money saving responses to the economic climate, almost a quarter of employers have used short-time working – a temporary measure to maintain employment where redundancies would otherwise have taken place. This initiative appeals more to private sector employers than those in the public sector. Additionally, more than two-thirds of employers have extended homeworking significantly across their workforce, with some terminating agency or temporary worker contracts. Others have used temporary lay-offs through the Job Retention Scheme and cut any training budgets where possible.
It is clear the business landscape has changed, for some this will be a permanent change, others might be able to get back to some “normality”, what is clear is that HR professionals need to be able to balance the commercial and long term view for the good of the business as a whole and be on top of their game to navigate what is bound to be some very challenging waters in the coming months, possibly years, ahead.
One last thought – how can professions like the CIPD better equip HR professionals with the strategic and business skills that make them the most sought after HR people in what is a very crowded market.