Many businesses have been forced to reduce staffing costs to survive the economic downturn. Traditionally, redundancy has seemed the obvious solution to make these savings, but many businesses have realised that this can cause long-term damage, through the loss of employees’ valuable knowledge, skills and contacts. Those businesses recognise that more productive outcomes can be achieved by using temporary flexible working solutions.
Background to flexible working
Flexible working has become more widely known since 2003, when ‘family friendly’ legislation giving carers the right to request flexible working arrangements was introduced. However, despite the legislation being progressively extended to employees who care for adults and older children, in 2007 and 2009, it does not give employees the right to work flexibly, as there are a number of business grounds available to employers to refuse a request[1].
In general, many UK businesses have regarded ‘family friendly’ flexible working as an unwelcome threat, rather than a means of enhancing the business.
More progressive businesses have been able to deal with the consequences of the economic downturn, by developing their existing ‘family friendly’ flexible working arrangements to help reduce wage costs, over a temporary period. Typically, this will take the form of asking staff to agree to arrangements under which they can be required to work fewer hours, or even to take sabbaticals, over a given period, with corresponding salary savings[2].
Examples of flexible working schemes
One example is KPMG (the accountants), which introduced a ‘family friendly’ flexible working policy to its 10,300 UK employees, in 2006. Under that scheme, 15% of its employees have requested flexible working over the last three years and, in 99% of cases, those requests have been granted. The firm’s scheme won a ‘City Award’ in 2007 for diversity and equality, in recognition of its contribution to the work/life balance of its staff.
With the arrival of the current economic downturn, many of KPMG’s competitors announced wide scale redundancies. Instead of making redundancies, KPMG was able to persuade more than 85% of its staff and partners to agree to a temporary flexible working scheme, called ‘Flexible Futures’, under which the firm could require any of those volunteering to reduce their working hours on a temporary basis. This could involve either a reduction in the working week by one day, or the taking of between four and 12 weeks sabbatical at 30% salary, or both.
Two City law firms have also announced very similar temporary flexible working schemes, following KPMG’s announcement.
The extension of flexible working in this way has enabled these firms to reduce the level of staffing in parts of the business that are quiet, whilst retaining its employees with their specialist skills, knowledge and contacts.
Reports suggest that staff in these firms have supported their employers to help work through the economic downturn and, in so doing, have remained focused and motivated. No doubt this has also brought benefits in terms of the quality of service that the firms are able to provide to their clients, thus maintaining a competitive edge during the downturn and for the recovery that will follow.
KPMG’s ‘Flexible Futures’ scheme was built on the foundations of its ‘family friendly’ flexible working scheme. It embraces the European approach to encouraging staff involvement in the running of the business, for their mutual benefit, rather than the UK’s traditional approach to employee relations, which is based more upon conflict and negotiation.
Wider adoption
It is not just the service sectors who have introduced temporary flexible working to reduce the number of redundancies. Several of the UK-based car manufacturers have used elements of flexible working (negotiated with the workforce) as a means of reducing the number of redundancies and thus retaining their skills base.
It remains to be seen how many more businesses will choose to use the flexible working approach, rather than the traditional redundancy approach, as economic circumstances force them to contemplate making salary savings. Our firm has worked with a number of clients where the flexible working solution has been adopted, with the consequent saving of jobs and retention of key skills for the business.
1See Sophie Whitbread’s article ‘More employees entitled to request flexible working’ in The People Bulletin, 21 April 2009.
2 See also the news item ‘Take a year off’ in The People Bulletin, 16 July 2009.