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Employers urged to retain staff

Businesses should look to hold on to their staff if at all possible during the downturn.

While cutting wage bills may seem an option, keeping employees could stand firms in better stead come the recovery, the Chartered Institute of Personnel and Development (CIPD) has advised.

In its latest annual barometer report, the CIPD warned that 2009 is shaping up to be the worst year for jobs in two decades. Some 600,000 jobs are predicted to go during the course of the next 12 months.

However, John Philpott, the CIPD’s chief economist, pointed out that, although many employers will look at redundancies as a first resort when reducing costs, job losses come at a price.

An average redundancy costs £16,375, the CIPD said, before other consequences, such as falls in productivity, are added in.

Dr Philpott continued: “While making people redundant can seem one of the most straightforward ways of cutting costs, redundancy is itself a significant cost to most organisations with a number of direct and indirect or hidden costs.

“We urge employers to plan for recovery by investing in and growing their people, rather than reducing their workforce. Employers should hold their nerve and focus on retaining talent and investing in the skills of their people.”

Dr Philpott added: “It is these people with their commitment, productivity and ability to add value who will ultimately keep individual businesses and the whole of the UK competitive, and put us in a strong position to recover from the downturn quickly.”

Just as pressure on jobs is set to mount, so wages will also feel the effect of the economic slowdown.

The survey revealed that 56 per cent of employees who responded to the poll said that they expected to receive either less than they did last year, no pay rise or, among a small proportion of them, a pay cut in 2009.

Charles Cotton, the CIPD’s reward adviser, said: “With job cuts seemingly lurking around every corner and trading conditions tight, employees are realistic about their pay prospects for the year ahead. Against this backdrop, employers will need to work hard to find new ways to motivate their employees to perform.

“Targeting pay increases to reward superior performance, making intelligent use of non-financial rewards, and targeted investment in training and development are all ways of making limited budgets go further in efforts to weather the storm, and emerge ready to capitalise fully on the recovery.”