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. 

Over the past few weeks I’ve been speaking to some senior bankers about the financial crisis that’s gripping us all. One thing that seems obvious is that the one sector that is likely to make a lot of money over the next few years will be the corporate lawyers.

My reasoning is that the banks are beginning to argue over themselves over who was to blame for selling AAA assets to financial institutions that weeks later were assessed as being worthless. Who was to blame, the banks, the buyers or the rating agencies?

Then there are the law enforcement agencies such as the FBI investigating some of the “deals” and “Sell-offs” to see is some acted fraudulently.

What is interesting is that whilst the US authorities are taking action the UK Government is not instigating any criminal investigations. Perhaps the UK Government is too afraid of what they might find or perhaps they intend to let the US authorities extradite hundreds of our top bankers to face the courts and imprisonment. (Someone asked me last week if they would have a prison big enough).

In any event most corporate lawyers must be thinking that all the Christmases until 2020 are about to come early.

I was asked a few days ago what I felt were the the “mission critical strategies” that a business should employ for survival during the downturn.

The first piece of advice that I gave was not to be panicked into knee jerk reactions. Panic inevitably results in poor decision making and poor decisions inevitably leads to long term regret.

The answer was then expanded into six key areas:

1) Plan for a long downturn. It’s likely that things will be slow for between one year and five. (in Japan their last recession lasted a decade)

2) Focus on productivity.(Both individual and team delivery)

3) Retain the best talent and continue to develop it. (Historically, talent tends to leave when it believes it is not learning)

4) Encourage innovation

5) Ensure robust succession planning so that if people do leave there is continuation of productivity.

6) Reduce expenditure as far as possible on non-productive items

With the ongoing banking crisis and stock markets around the world continuing to fall it is possible that the best paid experts and talent in the future will not be bankers but those able to predict trends in business.

With everyone from Governments, businesses and individuals wanting answers to the current economic questions perhaps the best paid experts over the next two years will be those able to predict the future.

Of course the information being from futurologists, and paid for by business, will need to be based upon historical precedent and expert analysis. The individual in the street, however, might still have to rely on the astronomer’s predictions in their daily papers. 

One has to wonder how likely it is that anger over the financial downturn will spill over into prosecutions of those bankers found to have been negligent, incompetent or having given themselves huge salaries and bonuses despite being aware that their companies were in trouble.

Reports that bankers have taken upwards of $300 million in salaries and bonuses have been greeted with some disbelief by both customers and politicians. Such revelations can’t generate sympathy for any banker hauled before the courts.

However, one has to question whether such a series of court cases might be more of a reflection of “revenge” as opposed to justice?

There is one thing for sure, that is that banks can be expected to be saddled with rafts of restrictive legislation in the future.