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Blog : What price people cuts?


What price people cuts?

By Jane Sunley, Managing director, learnpurple & talent toolbox

People are reporting job losses on a daily basis though what effect is this really having on service industries and how will they recover afterwards?

Last week I was in a high street chemist; long queue, four till points, only one member of staff. In the end I gave up (and I wasn't alone) and left without out purchasing anything. A fellow defector explained on the way out of the store that she'd just come from Oxford Street; large American clothing chain, one person on the till, no one on the floor. Again she'd left without buying anything, went off to a competitor and spent over £200.

Out for dinner on Friday night, service slow, not enough people on the floor, left without pudding, coffee and maybe even that second bottle of wine - the process was just too slow and painful to stick it out.

Truly a recession beating week which saved me almost £80, and my fellow disgruntled shopper over £200. So what price staff cuts and lost headcount? As a very basic example, and maybe the examples given aren't typical but if just .1% of the population had a similar experience on that one day it would have cost UK business over £8.5m. So are drastic staff cuts really helping the bottom line?

Then there are all the companies that have spent the good years building up a talented team of people, bonding them together and engaging and retaining those people by developing them, communicating with them, empowering them, encouraging them to learn by experimentation. They've laid careful succession plans, managed aspirations, consulted, nurtured, built trust and adult to adult relationships.

Enter panicsville. OK maybe it's understandable though surely there's time for a deep breath and a bit of strategic thinking first? Enter command and control, parent-child relationships, knee-jerk reactions (or in many cases knee-jerk preemptions because actually the results are fine but they might get worse). Enter the end of consultation. Enter zero tolerance, autocracy, fear.

I was beginning to think I was being naive or idealistic and that maybe the drastic preemptive cuts have become a valid norm . Then recently, hurrah; rays of hope from the enlightened. I've had three conversations recently with business leaders who are determined to weather the storm without throwing their sailors to the sharks. They are still committed to protecting their talent, to keeping their good people practices in place. These leaders are developing their people more, not less. They are taking advantage of the downtime to futher upskill their people, to develop leadership skills, to introduce mentoring schemes and so forth. They're not being complacent though, they've tasked their people with coming up with the income boosting and cost saving ideas. Some of the outcomes of this have been revelations. It seems these companies are experiencing a sort of 'Dunkirk spirit': 'We're pulling together to do our best to stay positive and beat this thing and our company will support us no matter what'.

One company even reported that when tasked with boosting the bottom line, their teams had suggested a unanimously agreed pay cut rather than sacrifice jobs or development opportunities. Another was surprised at the maturity of thought, realism and willingness to take responsibility of even the most junior team member. I'm not that surprised. After all we all employ adults not children. And if a company's spent a lot of time and effort building something great where people have a true sense of purpose and belonging, it stands to reason they'd want to hold onto their job and do all they can to preserve that. In another business, a group of sommeliers came up with a really innovative way to boost wine sales. It's interesting how pressure and a sense of involvement and responsibility can bring out creative and original ideas and some of these will become the fabric of how business is done way into the future. Which of course will contribute to competitive advantage.

So you decide: which organisations will be in the best shape to face the future - especially when the upturn eventually arrives??

Stripping assets in a knee-jerk fashion makes it difficult to grow a business in the longer term. It really is a case of 'one step forward, three steps back'. Instead, first examine whether people can be redeployed, cross-trained or given an income generating activity to enable you to retain the talent you've spent so long growing.

In conclusion, one cannot take lightly the consequences on an organisation's market perception and brand awareness; the effect on its reputation as a great place to work. The influence on the remaining workforce cannot be underestimated - if cuts are made then real effort needs to go into nurturing those who remain to ensure they have the motivation to work productively and positively to help you out of the downturn.

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