Managing the Loss of Staff
In recent months many law firms have been adjusting their headcount to reflect the new trading landscape they find themselves in. Certain departments will have been affected more than others, but all departments with the possible exception of employment and insolvency departments, are likely to have been adversely affected to some extent.
This article does not deal with the formal process of redundancy, as that would be too much like teaching grandmothers to suck eggs. However, there are a number of management and human issues that can all too easily be forgotten in the process.
Things to consider
To fully comply with the legal niceties the process of redundancy should be fair. However fairness and transparency should also be a part of the wider process of consultation and communication within the firm about its situation and prospects – particularly as law firms are full of professionals that can spot dissembling at 300 metres.
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- Ensure proper communication with those that continue to work in the firm. To this end a lot of “management by wandering around” can be helpful in re-building confidence and optimism within the firm.
- Consider whether revised budgets and financial projections should be produced in order to comprehensively support the actions taken – we are regularly employed to help firms prepare or review these.
- Ensure that the redundancy process covers the right numbers of posts – cutting too deeply can affect operational effectiveness whereas cutting too little can mean that further redundancies are required later which can lead to a significant deterioration in morale. This is because this creates innate uncertainty over the prospects for those who remain.
- Look for opportunities to focus on the future such as new client wins and opportunities.
Firms can also become over-focussed on the impact that a round of redundancies can have on the marketplace. In more “normal” times this is a justifiable concern, but is perhaps less so when most, if not almost all, firms are facing some kind of adjustment to headcount. Indeed history demonstrates that it is those firms that acted decisively, but in a well planned and thought through way, that maximise their opportunities for success when the up-turn comes.
If possible firms should also be looking to maximise their potential to react quickly to opportunities as they arise. For example some enlightened firms are currently retaining profits and cash or negotiating additional credit lines where possible, not only to provide a safety buffer, but also to fund attractive teams or individuals that may yet become available in the market as a result of other circumstances in their respective firms.
In summary the secret of success in the current environment is to act decisively to respond to change in the marketplace, to plan in detail to the extent that data is available and to husband resources as a safety net and as a means of funding opportunities and communicating openly and fully with their staff. This will enable them to reduce uncertainty and to deal openly with any concerns they may have.
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