The continuing discussion on banks and bonuses seem to shift between the need to attract and retain people and not upsetting taxpayers who have bailed the banks out.The discussion must have been made more complicated by Barack Obama deciding to restrict bonuses.

In the UK the banks in question are RBS and Lloyds TSB but one must presume that others such as Barclays and even HSBC will be looking at the result with interest.

Could this be the start of moderate salaries and reduced bonuses accross all sectors?

It’s inevitable that as companies such as Barclays, Lloyds TSB, Marks & Spencer and even Tesco suffer reduced profits they are developing a strategy that reduces costs by reducing staff.
 
Such companies then create smaller working teams or integrate the remaining staff into other departments together with their responsibilities.

There is a hidden downside with this strategy.That is that often there isn’t enough time, or motivation due to a sense of emergency, to integrate the new team properly so that they are capable of being as productive as they might be.

Our research, over nine years, into individual and team productivity following the integration of new people shows that only 60% of such changes deliver the results that were anticipated.

Poor communication, lack of understanding of team results and changes in management style all contribute to the potential failure. The result is that costs rise, goals and opportunities are not met and this results in further downsizing.

Companies that are changing their teams need to consider that they are in effect changing the make up of the team dynamic and need to consider a integration period in exactly the same way as if they were to be introducing a new members of staff

A major challenge for business leaders is to maintain organisational productivity. (Formally defined as the ratio of an organisation’s total output to total input, adjusted for inflation, for a specific period of time).

Yet is this challenge made more difficult during a downturn?

One of the inputs in the formula is the workforce but at this time when many companies are laying off their people talent. The question that should be asked is how this affects the productivity of those that remain and can improvements in productivity be sustained under such circumstances?

During the previous downturn I was involved with a company that made a series of redundancies and each time a new redundancy was announced productivity collapsed in other parts of the organisation. This wasn’t to say that people seemed to stop working, on the contrary everyone seemed very busy.

However, productivity continues to fall as people discussed the worsening situation and the company’s Directors buried themselves in their offices stating that they were busy “saving the company”.

Too often business leaders might assume that they are unable to positively affect the situation and that under the circumstances a drop in morale is inevitable. I disagree with this assumption and advise far greater “management visibility” at such times.

The potential of three million being made unemployed in the USA if General Motors, Ford and Chrysler fail to gain financial backing from Congress coupled with Woolworth’s collapse and general downturn is the world heading for a “Depression” in 2009?

Honda’s decision to shut down production during two months of 2009 but retain all their talented people for a future upturn is a smart decision.

For some time I have been advocating that to shed staff to save money saves one asset, money, but it reduces another asset, the talent contained within the people.

In the last downturn both Hershey and Pilsbury adopted similar tactics and came out of the downturn faster and stronger than their competitors.

I wonder how many other companies might look at this tactic and copy it?

During these uncertain times it’s inevitable that at some point we will need to meet with employees to carry out a hearing whether it’s a warning of dismissal or an appeal against redundancy.

How these meetings are approached is important when a Tribunal might consider whether you have acted reasonably or not. The main points to consider are:

a) Don’t prejudge the situation or alleged breach of discipline.

b) The employer needs to listen to what is being said.

c) The employer accepts that there is an issue that requires consideration but that no decision has been taken before all the evidence has been considered.

d) That it’s an opportunity for the employee to state their case and be heard by an employee with an open mind and with fairness.

It is crucial that handwritten minutes of the meeting are taken and that these match the typed record. Minutes should not be adapted but should be an accurate reflection of what happened at the meeting. (retain the handwritten notes as these may be required later).

Any issue raised by the employee must be examined and that all issues for consideration must be open for review and investigation. It is important to remember that one of the decisions that can be made is to agree with the employee.

If, having held the hearing, you decide to issue a warning or reject the employees grievance then there must be reasoned justification and you may need to state why you were satisfied with your conclusion on that point.

When holding such meetings it’s best to take advice so that they are conducted correctly and to ensure that you abide by the staff handbook covering such events.

This morning a number of people have contacted me over the headline that the Chamber of Commerce has predicted a rise in unemployment in the UK to three million whilst at the same time blaming the UK and US Governments as well as the banks for the situation.

It seems that people are now beginning to become angry at what is happening.

People are failing to understand how the UK Government is reducing benefits, cutting grants to students, unable to force banks to maintain loans whilst continuing to pay bankers their bonuses.

The tone of the telephone calls seems to be:

a) That as people feel they are having to pay (physically and through redundancy) for an unjust system of rewards to those that caused the current situation the more likely we are to have social unrest.

b) That people’s demands for protectionist policies such as reducing immigration will begin to increase in volume.

c) That if the tax cuts that are promised don’t satisfy the public expectation then there will be even more anger.

BT has announced 10,000 job cuts today, with unemployment rising and the dark clouds over manufacturing companies such as General Motors is there an end of the reluctance for companies to make their talent redundant?

It poses a question: Will companies ensure that they identify the best talent to survive the recession or assume that talent can be picked up when needed when an upturn comes?

History would indicate that once talent is lost it’s very difficult to replace. 

Last week the CIPD reported that the average cost of making someone redundant was £10,000. Being an average figure some people are receiving much less and some much more than this amount.

Thus, an employer making 150 people redundant using this figure will have to find £1,500,000 (average). The costs may be a reason why unemployment has been rising slowly to date.

If Barack Obama wins the presidential election will there be a “feel good” factor affect both the markets and how people feel about their future?

and if there was a feel good factor will this soon disappear as the hard reality of the financial downturn becomes apparent and unemployment rises.