Flexible unemployment

BT is following the lead of several other employers in an attempt to find ways to keep staff on the books even though they are not needed during the downturn. Their creative solution is to ‘lend’ their staff to competitors rather than make them redundant. This is part of a much wider cost cutting scheme, and involves offering ‘placements’ outside the company, initially on a voluntary basis, but BT have not ruled out making them compulsory if too few people volunteer. While the new company would pay their salary, staff remain members of the BT pension scheme. The scheme seems to mirror the way that a Premiership football club will lend players to other clubs for all or part of the season as part if the player’s ‘career development’ – the new club pays the wage, but there is an understanding that the player is expected to return to the ‘parent’ club at the end of the period.

Some employees might find the temporary change stimulating while others may feel that fitting in with a different corporate culture and working style is very stressful, especially if they don’t volunteer for the move. On the other hand they will have a job, and the hope that BT will be able to take them back in the future. How much of a risk this poses to BT in terms of the possible loss of corporate information and secrets to competitors remains to be seen – I suppose we can assume that they won’t choose to send anyone with commercially sensitive information to work for a rival, and BT may benefit in the end from the extra experience the employee brings back with them. A premiership club is unlikely to send a player on loan to another club in the Premier League – they will go to a club in the Championship or lower leagues, and gain valuable experience of playing every week, which they wouldn’t be getting at Chelsea, Arsenal, Manchester United – or even Sunderland!

We know that this is just one of many companies trying to avoid making staff redundant, during a period of retrenchment for some many businesses. Many of the car manufacturers closed down earlier in the year for anything from two weeks to four months, to allow time to shift old stock while demand is perilously low. BA has asked staff to follow the lead of Willie Walsh and work for nothing, or to take unpaid leave, in the next few weeks, and says that over 3,000 staff have applied for the scheme. KPMG has offered staff the option of working a four-day week in return for a 20% pay cut, or taking sabbaticals of between four and twelve weeks on 30% of their normal pay, and 750 of their 11,000 UK staff have volunteered. Why are the employers going to such lengths to keep staff when they can’t afford to pay them, and have to cut capacity? Firstly, because of the cost of redundancy, which will significantly reduce the cost-benefits of reducing staff numbers, and secondly because businesses are reluctant to get rid of staff in whom they have invested, with training and development, and who might be snapped up by rivals at the first sign of an upturn. They are hoping that the need to increase output and return to a healthier capacity utilisation will come soon, and that they can then avoid the delays and costs of recruitment by having a ‘stock’ of trained, trusted, experienced employees waiting to begin work again. Some critics suggest that this is simply delaying the inevitable, and that one of the benefits of recession should be to create businesses which are ‘leaner, fitter machines’. On the other hand, it may be a great example of ‘soft’ HRM policy which truly recognises people as the most important resource a business has. Which of these turns out to be the case probably depends on how long it is before they are able to increase output again.