Businesses may be faced with tough decisions about headcount as economic instability continues. Research shows that minority groups can be more adversely affected during a restructure, so how can managers ensure they take an inclusive approach? Sandra Kerr explains.Â
The UK economy has gone through an uncertain few years, from the pandemic to the cost-of-living crisis.
Even as recently as February, it was reported that the UK was officially in a recession however, a few weeks later, the Office for National Statistics reported that the economy grew by 0.2%. All of these ups and downs make it tricky for businesses to plan, especially when it comes to finances.
The challenges of an economic downturn can impact businesses in many ways. Organisations are grappling with decreased demand for goods and services as people’s disposable income is increasingly being spent on essential goods and services due to rising prices.
At the same time, business costs continue to remain high, making it a tough time for businesses trying to grow or even stay afloat.
Tough decisions
Off the back of all of this, employers could be faced with restructuring their workforce to reduce the number of employees on their payroll. This is never a decision that any employer wants to make, but sometimes, they are left with no choice.
Restructuring
Research found that one in three UK businesses are planning redundancies in the next 12 months, showing that many employers are unfortunately facing difficult workforce decisions.
However, even with one in three employers planning redundancies, it is still astonishing how many businesses do not take the steps needed to ensure that they restructure responsibly.
In today’s world, when news travels faster than ever before and employees hold considerably more power in how, when and where they work, there is a risk of creating long-lasting negative impacts of handling a restructure from poor employee relations and negative employer reputation and brand.
Some of these issues are hard to measure when reporting on the impact of a restructure, but there is another element to restructuring that always gets missed that is easy to report; the impact on an organisation’s diversity, equity and inclusion (DEI) agenda.
Impact on inclusion
Research has shown time and time again that people from ethnically diverse backgrounds are more likely to lose their jobs from redundancies than other groups. Research also shows that when the economy picks back up, those ethnically diverse people who are unemployed are the last to find employment.
For all the great work that has been achieved on DEI over the last number of years, this research shows that we still have a long way to go to ensure black, Asian, mixed race and other ethnically diverse people are supported in the workplace whether the economy is booming or not.
Protecting the great work that has been done so far on this agenda is not only the right thing to do, but also essential to ensure that we don’t inadvertently step back in time.
Employers must understand that poorly handled redundancies have the potential to rip up all the good work that has been done to close the inequalities gap, resulting in businesses needing to start from scratch to build a diverse and inclusive workforce.
Responsible approach
During economic downturns, employers need to balance difficult decisions alongside remaining competitive, and we know that having a diverse workforce gains tangible business benefits such as better decision-making and problem-solving.
So, if an employer has no other choice but to make redundancies, there are things leaders and HR professionals can do to ensure that they restructure as responsibly as possible.
For example, the number one thing that leaders can do to minimise the impact of redundancies is to use data to make decisions.
It’s so important that employers understand the demographic makeup of their workforce and conduct equality impact assessments across all groups to ensure that none are unfairly impacted by a restructure.
There is a reason why black, Asian, mixed race and other ethnically diverse employees are disproportionally impacted by redundancies more than others, and that is because not enough employers use data to make decisions.
The number one thing that leaders can do to minimise the impact of redundancies is to use data to make decisions
Capturing and using robust data, that is free from any bias to make workforce decisions is essential to build and maintain a diverse and inclusive workforce that is representative of the population. Using data from appraisals and performance, for example, could be perceived as biased and unreliable, as some people may not have opportunities in work to receive high ratings.
Gone are the days when employers could make decisions without facing scrutiny, therefore employers should ensure that they have the evidence to back up how and why decisions were made.
Data and transparency
Accountability and transparency are also essential during times of workforce uncertainty. Ensuring that all employees have a voice, either through union representation or through employee representatives is essential to opening up conversations and providing a space for honest feedback and new ideas.
This is where the importance of employee networks comes in, so employers can truly understand how to best support the needs of different groups within your workforce.
Once the roles that are impacted have been identified, employers should consider the wellbeing of those who could potentially lose their jobs, alongside those people who will remain employed.
The impact of redundancies on people’s wellbeing can never be underestimated, so having a clear plan of how to support people’s wellbeing will be crucial, particularly when trying to build back trust with the employees who remain.
It’s easy for leaders to think they are making the right decisions for a business when restructuring, but are they always the right decisions to help the business in the long term?
Sometimes, the business decisions made today have long-lasting impacts that last way beyond a financial year, especially when it comes to Black, Asian, Mixed Race and other ethnically diverse employees as research shows.
Using data will help organisations make the best decisions for their workforce and ensure that they restructure responsibly. This is not only the right thing to do, but it will go a long way in helping to maintain the progress made to give people from all backgrounds the opportunity to reach their full potential at work.
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