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Is cutting staff the answer?

By CCIWA Editor

The end of JobKeeper will prompt many businesses to reassess their operations.

Inevitably, staffing will come into the equation. 

There’s no doubt small business owners find cutting staff, or even reducing hours, one of the hardest parts of their job.  

Angela Fritsch, director of Rockingham-based Integra Business Accountants, says she often advises clients to “bite the bullet” and cut poor performing staff in hardship.  

But she knows it’s not easy, after restructuring her own business in 2016.

“Make sure you follow the rules, but look at redundancies,” she says.

“You don’t realise how much dead wood you are carrying until you make some of those tough choices.” 

Ultimately, cutting some jobs can save others. 

“I had a builder (who cut staff) tell me, ‘At least I’m still trading. I felt sick for a day, but realised it’s my business, and if I don’t do something my family are going to suffer’.” 

But are job cuts always necessary? Before considering redundancies answer a few key questions: 

What size savings do I need to make to get this business back on track?

This will help clarify whether you can cut costs with greater efficiencies, or you need to cut jobs. 

Is this temporary?

If it is, you may find it expensive to re-hire and re-train staff. Can you work through this rough patch by reducing hours or asking staff to take some unpaid leave? (Ensure you have agreement from staff to do this, and that it is confirmed in a written agreement with the employees affected).

Will staff cuts impact customer service?

What aspects of the business do customers value most? Cuts that impact customer service can cost you more than you save in the long run.

Are there better ways to cut costs?

Optimise savings everywhere. Can you cut a better deal with suppliers? Can you get a break on your rent, or reduce office or warehouse space? Can you achieve efficiencies by either in-housing or outsourcing some processes?

Can you reduce hours rather than jobs?

This option is relatively simple with casual employees, whose hours can be varied according to need. However, you cannot unilaterally cut the hours of full-time and part-time employees. They must agree to formal changes. But be frank and you might be surprised. Some employees may be happy to move from full-time to part-time work or reduce their hours. It can be a win-win. 

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It’s vital you are open and honest with employees about the company’s situation and what you are hoping to achieve with any staffing changes. It’s particularly important to reassure key staff, as they may get nervous and begin job hunting.

And above all seek advice. Employment law can be particularly fraught for SMEs.  

But this is precisely where CCIWA can offer the best value for smaller enterprises, with HR experts to guide you through employment changes and guard against unfair dismissal claims. Do things by the book and you may even discover flexible employment options you didn’t know were available. 

For help and guidance on this issue, contact CCIWA's Employee Relations Advice Centre on 9365 7660.

The end of JobKeeper will prompt many businesses to reassess their operations. Inevitably, staffing will come into the equation.  There’s no doubt small business owners find cutting staff, or even reducing hours, one of the hardest parts of their job.  
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