Redundancy: the threat to business recovery

In wishing you a Happy New Year, I am acutely aware that many finance professionals are concerned about the challenges they face in 2009.

But, as we know, challenges also provide significant opportunities. This is a key time for accountants, who play a crucial role in innovation, business survival and success, to put our professionalism, skills and experience to good use.

In this context, I was interested to read the New Year Message from Richard Lambert, director-general of the Confederation of British Industry (CBI), who urges business leaders to take the longer view and to retain their labour force to benefit from the recovery when it comes.

I wholly endorse that message. There is a real threat to recovery for businesses which overreact by cutting staff numbers to the bone. During the last recession in the 1990s many accountancy firms made large numbers of staff redundant, only to experience a severe skills shortage when conditions improved.

A further insight comes from the Chartered Institute of Personnel and Development's analysis released this week, which shows that the real cost of redundancy can reach £16,375 per employee laid off - before hidden costs are added in. From this, it appears obvious that a knee-jerk reaction to the downturn could be unnecessarily costly now and in the future.

ACCA believes businesses should plan for the long term, where possible, but is very conscious of the issues facing our members, their employers and clients now. Are short-term pressures becoming overwhelming or is your organisation still confident that it can keep its gaze on the horizon? I would like to hear your thoughts and experiences.

Comments

[Mohammad Huzaifa (former ACCA blogger)]

I am of the view that Redundancy can result in a short term gain but overall long term pain.
Human Resource of an organisation is the most flexible and manageable factor whose input do have a significant influence on other variables. The current economic weather offers an opportunity to "re invent" the way Businesses will have to be conducted, new concepts will need to be developed and shared among closely connected stakeholders who are geographically spread.
The framework of Integrity and Professional Ethics is indeed the main determinant of "success" which do provide stability in such unprecedented turbulences.