It has become almost trendy for companies to say they are taking a "sinking lid" approach to staff levels.
In other words, not replacing people when they leave, but not making redundancies as such.
"It's popular because it's the easiest, least offensive move - you are not offending any employees
or unions," says Business New Zealand's chief executive Phil O'Reilly.
The big problem is that your best people tend to leave, so while your staff numbers may be working for you, the quality of your people may not be what it was.
Grainne Troute, general manager, group services & HR at the SkyCity Entertainment Group, agrees.
"You almost have an approach of consecrating these organisations who have made no redundancies because it's a laudable objective rather than saying there may be some redundancies."
But, says Troute, "it's reactive". The people with the most chance to find opportunities to leave are the best, so you are left with the poorer performers.
Trying to survive with fewer people is understandable in this market, but you need to be very proactive with your staff levels, she says.
Management should be looking at job structures; when someone leaves it may mean it's time to redesign a position, says Troute.
"My argument is that it needs to be something that you decide on versus being reactive - otherwise you are not managing the situation."
If the situation is just left, and existing staff take on more work, they are not going to be performing to the peak of their ability, she argues. Managers will be looking around thinking, "Why are people disengaged, getting sick, absenteeism is up, what's wrong?"
"If you give people three jobs to do, you are actively deciding to have that job done at a lesser [quality]," she says.
Troute, who hires about 100 new staff every month, says: "Our approach is traditional. We are constantly looking at the organisation - are we putting people in the right place?
"In management too, we are still replacing. We are looking at every role to make sure we do need it, but we do feel we have the structure pretty close to right."
The sinking lid approach is not a complete no-no, but it must be a short-term solution, says O'Reilly.
"It's a tool that might be relevant for a certain point of time," he says. But if it's the "path of least resistance" it is not a good idea.
Smart people will be thinking about ways in which they can utilise the current situation strategically, he says. Staff may leave and managers should ask: "Do I still need that role in that way?" It's a pretty sensible question to be asking in a downturn but it should also be asked in the good times, he says.
O'Reilly prefers to call it the "sinking lid handle". "If someone leaves, ask yourself, do you need to replace at that level? Is it worth doing? Do you need to replace them with the same person or a different person or at all?"
The longest sinking lid policy he has seen went on for nine to 12 months. The contradictions in the policy start to play out after that, he says.
"Managers and supervisors will start to cheat on the sinking lid. For example, consulting expenses will rise - if you can't have someone in [full-time], you'll get a consultant in; the overtime bill will go skyrocketing."
For those left behind, the sinking lid policy can cause resentment and morale problems. To avoid resentful staff, bosses have to keep communicating and New Zealand companies are doing relatively well with this, says O'Reilly.
"But if you carry on for too long then people say their goodwill is being abused," he warns.
People can only work so hard. "You can't maltreat people," says Chris Johnson, executive coach at headhunters Kerridge & Partners.
Most people, if reasonable, will understand the pressure points, he says.
"They will go the extra mile but if you violate that you've got to be very careful because people will remember."
If you "overcook it" he says people's behaviour will change in the workplace - and the job will not always get done.
"You lose line of sight - you focus on the things that are the most immediate, not necessarily the right things," he says.
Often the alpha male in the workplace will find themselves juggling various responsibilities but they may end up having a breakdown. They don't put their hand up. They'll say: "I'll manage, I'll get through it."
There are other ways of doing it, says the executive coach. Someone has to take the leadership role and begin to think creatively, says Johnson.
"You should not be using the same old sledgehammer to crack the same old nut," he adds.
For instance, if the company can't afford a new person for the role, then they should think about retraining, and upskilling other staff.
Meanwhile in Britain and the US, there are now some signs from companies looking at investing in staff, says the headhunter.
Johnson urges New Zealand companies to be thinking about the quality of their workforce now.
"You should be on the front foot thinking about tomorrow - if you don't as other countries pick up you will see the switch of the brain drain," he says.
And remember, your company has got to be ready for growth. If you end up starting the recovery without the right levels of talented staff, you are not going to have a fast takeoff.
*Gill South is a freelance journalist and author of the newly released Because We're Worth It, a "Where to from Here" guide for today's working mother.
