Double dip recession - how can companies prepare?
The following article was written by Fiona Severs of Lexington Gray and was first published in the December issue of OnRec magazine and is reproduced by kind permission (www.onrec.com/pages/magazine)
It seems that you can not open a newspaper at the moment without reading about the possibility of a double-dip recession. While conditions are undoubtedly turbulent, how can companies prepare to maximise business in both the short and longer term while reducing the impact of such a double dip?
Many businesses are currently experiencing an upturn in demand. Following redundancies, some are struggling with workforces that are overstretched. Longer hours, pay freezes and concerns about redundancy all take their toll on staff morale.
So what is the solution? Building flexibility into the existing team reaps rewards in both the short and longer term.
In the short term, employing skilled individuals on a fixed-term contract is an intelligent way of relieving pressure on the existing team and meeting increased demand without reducing quality or, worse still, turning work away.
The result? An agile business able to adapt to rapid changes in market conditions, with little of the risk and commitment associated with hiring permanent staff in an unpredictable market. Better still, companies can ‘buy-in’ skills and experience missing from their existing team.
Employing staff on a fixed-term contract is also a clever way to provide cover for maternity leave, secondments, sabbaticals, holidays or sick leave.
Fixed-term contracts terminate when the contract expires at the end of the set term without the need for the employer to give notice. If no longer required, the worker simply leaves at the end of the contract – no redundancy rounds or associated dip in morale for the permanent team. If, however, demand is still strong, the contract can be renewed or, if the market has recovered, the employee could be taken on permanently- ready to hit the ground running having already been integrated into the business – the ultimate ‘try before you buy’ and much less risky than taking on a previously unknown employee.
Studies repeatedly indicate that, longer term, businesses that are able to maximise flexible working amongst their employees have a competitive advantage.
Recent research conducted by PricewaterhouseCoopers indicated that 47% of UK employees rated flexible working as the most prized benefit. Performance related bonuses only gained 19% of the vote and came in second.
A report produced by the Family Friendly Working Hours Taskforce (established in November 2009 by the Secretary for State for the Department for Work and Pensions) stated that flexible working had the following business benefits:
- 65% of employers said flexible working had a positive effect on recruitment and retention thus saving on recruitment, induction and training costs;
- 58% of SME’s reported improvements in productivity;
- flexible working had a positive effect on recruitment for 42% of employers (other research has indicated that this is more marked when recruiting Generation Y for whom flexible working is of even greater importance);
- 70% of employers noted some or significant improvement in employee relations.
Additional cost savings and environmental benefits result from flexible working practices that allow employees to work from home. These include reductions in energy usage, in metered water and in carbon emissions. Sparing staff the daily commute also helps to reduce traffic congestion. In addition, organisations adopting such working practices may have a better guarantee of 'business as usual' during major disruptive incidents (like strikes or security alerts) than those dependent on a central office base.
Managers may fear that staff working from home will be less engaged or less productive than their office based colleagues but several studies would refute this concern.
The Family Friendly Working Hours Taskforce included an interesting case study in its report:
A legal services company employing about 20 staff encouraged employees to work from home. Initially there were concerns that home-workers would be less productive than their office based counterparts. However, the type of work performed by the company simply required that staff have access to a computer and internet connection at home to do the job effectively. Perhaps surprisingly, the company found that, compared with those who remained office-based, staff working from home achieved efficiencies of 20 per cent or more in terms of output.
All of which demonstrates that flexible working enhances that all important bottom line, whether the business is facing good market conditions or an uncertain economic climate.
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