Reece Notton and Paul Stevenson: Recession remedy - focus on the customer before cutting costs

A dramatic rise in unemployment over the next year or two is forecast as a result of the recession, and there is no question that many sectors of the economy are considering a very unpalatable future.

But before deciding to make roles redundant or cut the headcount, give some consideration to a few key facts:

* Good talent is still hard - very hard - to find, and in a recessionary period it is even more valuable.

* Once released, good people don't return.

* Being released from an organisation is tough on all involved; those being released, those having to handle the release, and those who remain.

* How well your organisation handles releases has a direct impact on your brand.

We constantly see organisations taking the kneejerk reaction and going direct to the "cut staffing" option, not planning the process around the three groups of people mentioned above. More often than not, the result creates more damage to the organisation's short- and medium-term prospects than was present before the redundancies were made.

The economic need may be to cut costs now, but it is imperative to maintain a sustainable business for tomorrow.

There's a lot of talk about "post-1987", but exactly what were the lessons we learned then, and more importantly, how do we make them relevant to business today?

We learned that cutting costs as a first option often leads to self-destruction or implosion of the company. We see two types of reaction to the credit crunch: make an arbitrary cut - often the magical 10 per cent - or reduce costs.

What we also learned was that the key to success is looking at what is needed to survive - and this is more from a customer perspective than a corporate one.

We spend a lot of time with companies encouraging them to plan around what their customers' expectations are. The companies that will come out best, in the medium- and long-term, are those who actively put their customers first.

There's no easy way to do it, but there are some realistic measures of success that can be used in respect of the affected triumvirate of individual, organisation and remaining employees:

* For exiting individuals, it is critical that they are treated with the three underlying principles of dignity, fairness and consistency and understand that their needs are paramount and of primary importance.

* Equally, success can be measured on how they achieve their career transition goals within their selected timeframes. Success is not just measured by how quickly an individual transitions to a new role or career option; the quality of choice and achievement of the career goal is also really important.

* And finally, existing staff need to be provided with the support, tools and strategies to effectively manage their careers now and in the future.

We are seeing a blurring of lines, with HR and recruitment companies moving into the outplacement space, but often lacking crucial experience in strategic planning.

For the departing employee, it shouldn't be a matter of "any old job" but more an opportunity to make an effective career move. This is part of an advisory programme starting well before redundancies and finishing afterwards with positive communications to ensure remaining staff don't scuttle the company through inertia.

The single most important move a business might make in this current environment is a successful outplacement of some staff, while maintaining morale before cutting costs and energy within the company.

How does this seemingly impossible task happen? Dignity, fairness and consistency are paramount both with the departing and the remaining staff. From a management perspective, those handling the redundancy process can expect stress and trauma but this should be minimised by careful planning, support and coaching, from well before the redundancies begin.

And for those remaining, the mission-critical elements are that they see the organisation being fair and supportive to retrenched employees. Naturally there's a "there but for the grace of God go I" mentality which has a major psychological impact on the psyche and attitude of those remaining.

More than ever, organisations are asking us how do they inspire and lead staff in difficult times. We see employees who are fearful of losing their jobs, who start to lose enthusiasm and often go into survival mode.

Survival mode signals the death knell for retaining and growing business, and we spend a lot of time working with organisations around the processes and communications to make sure all parties are focused. Invariably, morale increases as does the speed of return to productivity as they see their ex-colleagues being effectively supported.

Customer focus and productivity are key in these times and opportunities to create customer value and find new ways to go to market still exist.

The more progressive clients we work with take the opportunity to review their structure from a customer value perspective before restructuring or retrenching, so rather than just reduce cost, the organisation is in better shape to positively handle the changed environment and succeed within it.

Post-1987 we saw a marked difference between the performance of organisations who simply downsized and those who took the opportunity to review the needs of the changed market and structured and resourced the organisation to deliver.

In today's environment, the same choices are there again.

Reece Notton and Paul Stevenson are with the Grafton Consulting Group