Many practices are facing the need to rebalance costs with lower fees. There are some bear traps in approaching this exercise that you need to be aware of.

I have recently been advising a firm who had decided to make some selective redundancies by identifying staff that they had previously failed to manage out of the firm for poor performance. Leaving aside the legal rights and wrongs of this approach, the real problem was that the resultant savings would not have gone far enough. If this had been allowed to happen the “poor performer cull” would have had to be followed up in a few months by another round of redundancies – bad, bad, bad for morale.

What was really needed, and what is being done, is a proper look at how much money should be saved and from which parts of the firm. One round of redundancies rather than two is better for morale. Properly identifying activities that should be protected as well as those that can be cut helps to underwrite the firm’s future.

How is your firm approaching this difficult task?

For a little more on this see my article in the June edition of RIBA Journal:

 http://www.ribajournal.com/index.php/feature/article/balancing_act_JUNE09/

Engage in the debate with financial management advisor John Toppin MA FCA and strategic advisor and business coach, James Cooke.

John Toppin is a specialist consultant finance director and ned for marketing,creative and professional firms.

You can check my credentials at http://www.linkedin.com/in/johntoppin

You can read my personal blog at http://finance-director.blogspot.com/

 John Toppin at www.nomizon.co.uk 

 James Cooke at www.jamescookecoaching.com

1 Comment
  1. Hi John,

    I never had to make redundancies but I have been made redundant and I think this is true, companies find it difficult to plan for it properly and maybe for understandable reasons too (personal connections and relationships; especially when I practice had traditionally a low turn-over of staff). As a result redundancies either happen late in the day (architects are optimists afterall) or, as you mentioned, in more than one round (which destroys morale, correct).

    Something else to be avoided is this: during the restructuring the new structure still needs to be some kind of pyramid (senior, middle-rank, and junior staff). And not a reverse pyramid with more senior staff than junior (a recipe for disaster when tendering for new work, can’t be competitive) or a structure where some layer of staff is completely removed.

    It is not an easy task though, it is one of the most difficult decisions practice owners will ever have to make.

    George

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