Many businesses are spending much of their time planning how to recover from the impact of COVID-19 and rightly so. If you trust the media, it looks relatively positive but let’s face it, relatively bleak.
As a business, you must protect your employees, and most importantly, the company’s future. Equally, one must make sure that the customers are ok too because without them, there is no business. It’s all interlinked; just a set of cogs that must keep turning to keep our industry, and our customers’ industry, in motion.
Ultimately the economy survives only by these cogs turning together in unison.
Most businesses grow in two ways: it increases customers, it grows revenue and in turn employs more people. Its not rocket science.
However, if the business is hindered, it will not grow and therefore will not employ more people and in situations of decline, it will begin to sink and a preventative approach to save the business is needed. Often by virtue of cost reductions, implementing efficiencies to lower operating costs or shutting down areas of the business which are failing to perform are the obvious choices.
Employee costs are often the highest cost in the business so it is no surprise that this is the first place to look when business are being forced to analyse ways to reduce costs, especially in situations of reduced revenues or downturns. Reduce people = Reduce costs.
This is where many businesses are right now.
Furloughing and redundancies – is that the best we can do?
Every day we read in the news that more businesses are furloughing employees and making employees redundant and it is tragic. Having the responsibility for employees is a huge pressure for any business owner and one that is responsible for many a sleepless night.
Business owners are forced to assess who can stay and who can go; “last in, first out” is a phrase often heard, “revenue earning employees stay, non-revenue earning employees go” is another. If a business is to have any chance then costs need to go, and if you have employees who are not attached to a revenue, the decision has to start there, that’s if you are fortunate to have that choice at all.
It is already clear that businesses are starting in their back offices; administration, accounts, finance, HR, payroll – staff all being furloughed or let go under redundancy. Phrases like “in order to just keep the lights on, what is the utmost minimum of resource we need?” or “by reducing costs in the back office, we see quick wins in cost reduction”. It’s all to help rescue the business and prepare for the recovery ahead.
And if business do furlough and then successfully continue to run successfully, then in 3 months’ time the undisputed question will be: “why bring those employees back at all?”
How can you prevent people from losing their jobs?
It is possible to do something for your business and your employees to prevent them losing their jobs. A way you could provide continual employment for your employees for the long term could be to consider outsourcing.
If you could outsource the services provided by your existing inhouse employees to an outsource partner and your outsource partner was willing to undertake the Transfer of Undertakings Protection of Emplovment Regulations (TUPE) of those employees then you could have a win-win situation.
Your employees would remain in employment, remain in situ and remain in a position to ride the storm that we are all facing, but with a more positive outcome. It would also mean that those services that were being provided, continue to be provided via your outsource partner. Your outsourcing partner would be utilising the same people, of whom most importantly, have the expertise needed to support your business.
Furthermore, if done in the right way, and with the right outsource partner, you would see significant cost reductions from the old operating model to the new.
By way of context, by outsourcing your HR and payroll employees and transactional processes to an outsourcing partner it’s often possible to save up to 30% of your original annual running costs. So, if running HR and payroll inhouse, on your technology costs your business £1m per year, outsourcing employees and processes could reduce that cost by over £300k per year.
Ultimately, the facts are; you need to sustain your business, you need to reduce costs and your employees need, and deserve, certainty of guaranteed future employment. Leveraging an experienced outsourcing partner could be the way to do it.
Everyone wins, no employees lose their jobs and it protects our cherished businesses that are currently keeping us awake at night.