The R word strikes fear into the heart of any employee. Many will be wondering if their jobs will be safe, and what sacrifices they should be making to ensure they and their colleagues are protected. By Vicki Sanderson of software provider Agresso

Employers will also be wanting to know what measures they should be taking to ensure that savings can be made. This includes introducing pay freezes and shorter working weeks, as logic has it that this will save money in the short term and therefore help protect jobs.

British Airways fired debate in this area with their decision to ask staff to take a voluntary month without pay. It led to many questions being raised about how businesses should deal with recession, and how far employees should be asked to help with the effort. By asking staff to do this, BA argued that they would be staving off having to make a larger swathe of redundancies that would otherwise be necessary. Indeed, it is this reasoning that has also motivated the CBI to issue a proposal that businesses who are facing tough times should be able to freeze staff salary for six months, and instead pay them double Jobseekers Allowance. Several large companies are introducing combative measures. Toyota have negotiated with their trade union a wage cut of 10 percent, KPMG are discussing the prospect of staff working a four day week, and JCB have agreed a 25 percent pay cut across the board.   However there is a danger in adopting such measures, as the involvement of ACAS to conciliate between BA and staff highlights. It has the potential to cause friction between both parties and is a scenario that needs to be avoided. The chief economist at the CIPD also said last week that pay freezes and shorter working weeks will actually only delay redundancies being made.

So the question is –how do employers balance on this tightrope?   It’s clear that the recession will mean fundamental change occurring in the way that employees are rewarded, employed and managed, but it should be viewed as an opportunity to put more focus on employee engagement and implement better and stronger long-term management strategies. Some boards who are looking to take pay freezing steps have consulted staff in ailing departments, enabling them to decide whether the team will take a 20-30% pay cut, or if a certain amount should be made redundant.  This sort of employee engagement will ensure that they feel part of the decision making progress, and will lessen the possibility of bad feeling arising between staff and management.

From a technical point of view, Businesses need to start asking themselves if they know the true cost of their recruitment, training, absence and poor performance practices, as lack of knowledge in any of these areas can contribute to unnecessarily high expenditure.  There has to be greater clarity about strategic vision and organisational wide goals so that departments and individuals are aware of targets they should be achieving, and efficiencies they should be making.

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