As of this month, 28,000 workers in the US tech sector have been made redundant in mass job cuts with Microsoft and Gopuff being the latest tech companies to announce their own redundancy plans. 

I think it’s fair to say that for even the most cut-throat businesses, redundancy is something that isn’t taken lightly. We would hope that a company anticipating or going through a period of economic struggle will likely consider redundancy as a final resort, after all we are dealing with people, the most valuable asset in any business. But sadly, this isn’t always proving to be the case. 

Something we continue to hear a lot about in the media right now is the number of businesses making redundancies to prepare themselves for a period of economic crisis and/ or in response to the vast changes we are witnessing in customer buying behaviour (more on that in my article from last month. 

But, are these businesses making redundancies thinking far enough ahead into the future? 

What happens when the business stabilises (because economies do bounce back) but there’s no staff to actually do the work?

We need to ask the question, are the recent flow of redundancies across tech and other industries really necessary or in fact a huge mistake?

Let’s take a look at an industry that was hit hardest by the impact of Covid to set some further context; the hospitality sector. 

According to a recent House of Commons report, Hospitality Industry and Covid-19, the Office of National Statistics reported that in 2019 the economic output of the hospitality sector was £59.3 billion, which accounted for roughly 3% of the UK’s total. In the three months to March 2020, there were 2.53 million jobs in the hospitality sector in the UK, representing 7.1% of total UK employment.

During the UK’s national lockdown(s), the sector was one of the greatest users of the furlough scheme - across the full length of the furlough scheme, 18% of all furloughed jobs were from the hospitality sector. 

When the UK economy began to re-open last year, the sector faced immediate staff shortages. Again, the ONS tells us that for the three months to February 2022, there were 166,000 job vacancies in the hospitality sector which accounted for 7.8% of all employee jobs. 

There are a number of reasons leading to the major staffing crisis in hospitality right now, the main ones of which are;

• businesses are now hiring again on mass following making staff redundancies 
• staff are not returning to jobs that were previously furloughed
• staff are finding new and better opportunities in other sectors 
• many staff have moved away from the UK during the pandemic. 

And on top of this, the industry is now under pressure to increase salaries and improve working conditions in an effort to bring people back to the sector. What a mess!

I use the example of the hospitality sector as I believe as customers we are getting a glimpse of the impact first hand - under-staffed restaurants, tables left uncleared, service and food quality often not meeting our expectations and a sea of vacancy adverts in high street restaurant windows. The industry simply cannot recruit enough, qualified and talented staff. 

And it’s a similar story for travel and tourism; we’ve got to question whether the mass redundancies made back in 2020 were the right thing to do considering the epic disruptions to the industry now as a result of staff shortages. (As a side note I would love to see leaders in the hospitality and travel sector offer their support and advice to businesses considering redundancies now, based on the impact they have experienced over the last 2 years.) 

So what can businesses considering redundancy learn from the repercussions faced by the hospitality and travel sectors?

Redundancies should be considered as a businesses absolute worst-case scenario, not as a precaution. Let’s look at the tech sector again for a moment. The majority of companies currently making redundancies are likely to have enough runway to keep their staff employed during a turbulent economic time and pandemic, but they are deciding to cut costs anyway, with the expectation that they can simply re-hire when the economic outlook looks brighter. An example of this is Coinbase who rescinded already accepted offers from a number of employees, many of which were students who had turned down offers elsewhere, and are now left scrambling for employment.  We only need to look at the current state of the hospitality and airline industries now to see that re-recruiting is easier said than done. 

 In short, when businesses cut their staff it is much harder to get them back when you need them. And even if they do come back or re-recruiting is relatively simple, we’ve got to consider the opportunity cost by way of lost talent, time and financial cost to re-recruit, investment in onboarding and training, as well as the huge issue I am hearing every day right now (particularly for tech related roles) which is that TALENT IS SCARCE! 

 Isn’t it about time companies started thinking more about the person behind the redundancy before making ‘precautionary’ cuts? I urge companies that before putting your people through redundancy, that you explore every other avenue first – one of those avenues could be retaining your talented staff through TheHIVE. 

Staff sharing through TheHIVE affords businesses a revolutionary solution; matching under-resourced businesses with over-resourced, non-competing businesses, to utilise the talents of vetted and qualified individuals through staff sharing, without the need for unwanted redundancies and high recruitment fees. We support businesses in retaining valued and talented staff through providing secondment or staff sharing opportunities, at a time when talent is almost impossible to find.

Where can I learn more about staff sharing? 

We are at a very exciting time in the development of TheHIVE with over 200 members and businesses hiring shared staff through our platform. We are on target to release our Beta phase platform later this year and turn the outdated and underperforming world of recruitment firmly on its head. Join us on our journey by subscribing to this newsletter where we will be sharing regular news, information and updates including sign up to our waiting list AND for more information on the roles our members are currently looking to fill through staff sharing, reply to me directly and I’ll add you to our mailing list.