With the financial downturn, loss of bank confidence and recall of loans it’s inevitable that well known brands will disappear from the high street.

Marks & Spencer, Curry’s and other brands are recording falling income. More concerning is the amount of investment owned by the banks in Iceland.

However, there is one glimmer of hope, and that it if the shopper should decide that an “enjoyable Christmas” to put all these miseries behind us is necessary and, as in the past, spends in the high street to blow away the blues.

If not then it won’t be just banks such as HSBOS, lloyds TSB and HSBC won’t be the only businesses shedding staff this year. Unemployment in the UK will increase sharply and perhaps we will be talking “depression” instead of downturn.

HSBC have announced that they are cutting jobs in an effort to reduce costs.
Could this be an attempt at saving money whilst ignoring other cost saving ideas that could protect jobs?

Or is it that reducing staff is the easiest solution for the bank, one that sees instant savings and which requires little managerial thought?

During past financial downturns companies would rush to lay off staff as a means of saving money. As a result the time taken to recover was longer because of the need to re-recruit talent. Most businesses seem to be avoiding this mistake in the current financial climate.

However the question must be in people’s minds, “At what point will unemployment be the final option for survival?”.

If so:

a) What type of work would you expect them to do?

b) Would you expect to pay (over and above general salary) a large salary?

The recession is increasing the turnover of senior executives. It is also making success in the job essential. The financial impact of not meeting targets or worse is likely to affect profits and team morale more acutely whilst companies are under pressure to make sales and cut costs.

To counter this companies would do well to concentrate on not just finding the “fight new hire” but on managing the integration process long after the start date.

Since Margaret Thatcher’s Government  introduced legislation that made striking difficult and secondary striking illegal unions have found it difficult to flex their muscles in the same way as they used to.

However, with a financial downturn will the tide begin to change and if so how will that affect business in general?

That will probably depend upon what happens to inflation. The cost of many raw materials for production such as copper, fertilizer and oil have doubled in the last few months. Already at its highest for ten years inflation is likely to rise even higher.

The result is that there will be demands for increased salaries in order to keep up. Petrol tanker drivers are possibly the first in a series of high profile wage demands that will include teachers, health staff, civil servants and refuse collectors that will run through the coming autumn and winter.

To counter rising prices firms, including SME’s, will feel that a mix of strategies including increasing product charges, reduction in quantity delivery and reducing costs such as advertising. In the end, however, it could result in savings that will result in “regretted layoffs”.

However, care needs to be taken with laying off employees because once gone the same skills may be very difficult to re-employ when times inevitably get better.

The reason is the demographics of the working population. Sourcing managerial and technical talent is seen as being the most important challenge for countries such as UK, USA, Japan and Australia. Yet the working population is getting older and many of those “Let go” will be older employees that may retire or choose to retire before the economic situation improves.

Coupled with the fact that booming economies such as China are recruiting managerial and technical talent as fast as it can (It’s cheaper for China to recruit one expert-expat to work in China than to send 20 of their students to study abroad) this could well mean that much of the top talent currently available will have disappeared in the future.

For over a decade employers in the UK have become used to the fact that employees have a great deal of choice in the job market. Talent could leave to jobs with more money and benefits and in the USA and the Far East.

To fight this trend employers in the EU have been encouraged to “engage with their staff”, provide training and development opportunities and ensure that their talent is at all times happy and well managed. This trend has been encouraged by the UK Government as well as EU legislation providing employees with redress for any unfair treatment. In fact for ten years “niceness” has been in vogue.

However, has the tide begun to change? With the financial downturn employers would expect to see employees become less demanding so as to protect their jobs.

That will probably depend upon what happens to inflation. Already at its highest for ten years and predicted to increase to above 4%, employees are likely to expect increases in salary in order to keep up. Petrol tanker drivers are possibly the first in a series of high profile wage demands that will run through the coming autumn and winter.

Employers will feel constrained by increasing costs and an inability to increase their product prices and cost savings will result in “regretted layoffs”. The time to know that a recession is upon us is when the daily news bulletins begin to report redundancy figures as happened in the 1980s.

The trick for forward thinking businesses will be to identify those employees that are essential to survive the downturn, identify the skills that are needed and to develop a strong team that can ride out the storm.

In order to increase the talent pool in a business companies might consider “Zig-zag” career progression that enables top talent to gain a variety of experiences.

In doing so this replicates the career process that top talent defines for itself when developing a career. This means moving from one company to another and from one responsibility to another.

Placing top talent in one position and maintaining that for too long is likely to create boredom and frustration that eventually means the loss of the talent to one’s competition.

Why is it that only 18% of financial services firms are able to describe themselves as very successful at retaining talent?

This should worry firms who fear that their key executives will be easy prey for competitors with the need to maintain sales during s financial downturn.

Throwing money at the problem is recognised as a blunt tool for recruitment and retention that can too easily be beaten by competitors eager to lure talent away. Few firms are confident that they are genuinely engaging and motivating their talented executives.