Why are employees the first to go?

The workflow in most businesses, including energy, is subject to seasonal fluctuations. But layoffs and pay cuts should always be the last resort for employers when they need to cut costs.

Closer scrutiny of any business will often reveal inefficient systems with complex processes which generate unnecessary waste. Despite this, it’s often people who are the first casualties of cost-cutting.

It may sound radical, but instead of getting rid of staff it would be better for businesses to invest in employee engagement. Far too often this is an area of the business that is under-rated and undervalued. But research has revealed that UK business leaders believe the country’s GDP could be boosted by a massive £26billion if employees were more engaged.

Companies with high employee engagement scores record better performance in a number of areas in comparison to those with low engagement scores, according to a recent study. They have twice the annual net profit, revenue growth is more than double, productivity is 18% higher and employee turnover is 40% lower.

Not only can employers reap these benefits from investing in employees, but they should also be aware of the dangers of disengagement, particularly in a challenging economic climate. A disaffected employee will exercise little initiative, have only average productivity and will only make minimum effort. What’s worse, their negative attitude could become infectious among their colleagues and if their opinion is shared outside work, your brand will be publicly tarnished too.

For those reasons it’s important to take the office temperature from time to time and find out how your employees feel about working in your company. Like any good doctor, you should listen for symptoms before making a diagnosis. Surprisingly most solutions cost very little and in fact when the right investment is made in the right places – it’s more likely savings will be made. Surprisingly pay and benefits are rarely at the top of employees’ wish lists.

Of course sometimes the only option to save costs is to release people from employment. This decision is only the first step. Planning how you go about it needs careful thought and preparation. If done badly, it can ruin employees trust and morale across the company could drop alongside profits. Even superstars who you would never release from your team will be left frustrated if job cuts are poorly handled.

Companies that manage to grow despite a recession are the ones that communicate openly, invite involvement, and don’t shy away from difficult conversations. A good boss will never seek refuge in silence or go into hiding.

If there are issues and your business is facing challenges your employees will be aware of them – don’t make the mistake of thinking they are not. All people want to know is what your plans are. Keep them in the loop, otherwise they will leap to their own conclusions, which will probably be wildly inaccurate and damaging for on-going business.

* Dean Hunter, energyvoice.com