November 2008 – Flexible working in a recession

Joe Macri, a senior marketing manager at Microsoft holds regular meetings with his European management team from his office in Dublin. Up to a few months ago they used to meet at Amsterdam airport, the easiest venue for face-to-face meetings. Now they get together for a handshake and back-slap no more than once or twice a year.

All other meetings are “virtual,” using Microsoft’s “unified communications technology” – a multi-camera system that allows team conferencing enabling everyone in the meeting to see everyone else at the same time.

“Now, if anyone falls asleep – and it has been known in past phone conferences – we can all see who it is,” says Mr Macri, general manager for business marketing in Western Europe. “It saves money, increases productivity and reduces our carbon footprint as a company,” he adds. “And from a personal point of view I no longer have to get up at some God awful hour to catch my flight to the Netherlands.”

A growth in this kind of conferencing is just one way that companies are making economies on staffing budgets during the downturn. Where once managers would have been sizing up the head count from the first hint of recession, there is evidence, even among the string of job cutting announced in the past two weeks, that companies are trying where they can to hold on to people in the knowledge that competition for good people will be fiercer than ever in the upturn.

So what kind of practical choices are available to people managers in a recession short of cutting jobs? One option is to investigate possibilities for flexible working such as job shares and shorter working weeks.

Some companies already engage a proportion of temporary and contract workers. Most of these workers understand that they are in the vanguard of corporate job reductions since their work and pay reflects fluctuations in supply and demand more acutely than that of full-time employees.

British Telecommunications announced a week ago that it had cut 4,000 mainly temporary and contract jobs already during the downturn and planned to cut another 6,000 before the end of the financial year.

Within the contract market, however, the news was received with a sense of pragmatism. The Professional Contractors Group, representing more than 18,000 freelance workers in the UK, described the cutback as “real flexible labour at work in a downturn.”

John Brazier, managing director of PCG said: “BT’s announcement is not good news for any contractor who may be affected by the cuts. However, when you choose to go freelance you opt for the benefits, such as being your own boss, making more money and having the freedom and variety, as well as the pitfalls which include less security and less certainty.”

As John Philpott, chief economist at the Chartered Institute for Personnel and Development, points out, temporary staff usually bear the brunt of an economic downturn. “But contract staff will also be first in line to be hired when the economy eventually recovers since employers will at first be reluctant to recruit people on permanent contracts,” he says.

Uzair Bawany, spokesman for the Forum of Professional Recruiters, agrees. “We have seen some aggressive cost cutting in the City. Previously companies have used temporary workers to reduce their costs but we’re not seeing that this time. When they do begin to hire temporary staff again I think that will be a sign of the economy improving.”

While temporary and contract staffing remains an option, some companies are trying to use their full-time staff more flexibly. BT has some 14,500 employees who work solely from home and 80,000 who have the choice to work part of the time from home.

The company says that home working has increased productivity, saving office overheads and improving staff retention particularly among women who value the opportunity to organise their work around domestic responsibilities.

“We can see the difference now at BT centre,” says Bill Murphy, managing director of BT Business. “Mondays and Fridays are quiet but on Tuesdays, Wednesdays and Thursday’s the building is packed. That’s a classic example of people working elsewhere on Monday and Friday.”

This kind of flexible working, he says, has led to new challenges in management where employees need to be assessed on their output and the quality of their work rather than on time spent doing a job.

Significant savings can be made in overheads from a greater use of home working according to Work Wise UK, a not-for-profit organisation set up by the IT Forum Foundation. It has calculated that the average cost of running a desk in a UK office today is £7,000 a year. In central London it is something approaching £10,000 because of higher overheads.

“If you employ 100 people and can withdraw 20 desks in a ‘hot desking’ arrangement, that’s a saving of £140,000 a year,” says Phil Flaxton, Work Wise chief executive. “Employees can also benefit financially from regular home-working, saving on commuting time and travel-to-work costs. Such savings are going to make a difference in a recession,” he says.

The potential for such cost savings is leading to increasing numbers of business start-ups eschewing the fixed costs of offices all together. One that has done so is Business HR, a consultancy without offices that employs 30 home-based consultants.

“The business is visible through our web-site while our consultants are based all over the country, accessible through a reception number just as you would speak to anyone in an office,” says managing director David Lennan. “We meet together a lot, often on clients’ premises but also in hotels and coffee shops so everyone knows what is happening.

“Our experience running a virtual business means we wouldn’t manage any other way but we recognise that it is difficult for some managers to change their approaches to concentrate on the output of employees rather than on where and when they do their work.

While the business is often consulted on alternative ways of working he has noticed an increase recently in clients seeking more information on redundancy procedures.

Established flexible workers such as interim managers are sometimes hired to make the hard decisions in restructuring, including job cutting, admits Paul Botting, chairman of the Interim Management Association.

“They bring an independence and objectivity in to the workplace. An experienced interim will have worked in many different sectors and is familiar with the kind of restructuring that happens in a recession,” he says.

Flexible working seems here to stay but there is little room for sentiment in the employment of contract and temporary staff. Wolfgang Clement, Chairman of the Adecco Institute, a research institute established by the Adecco staffing group, says that while qualified and skilled employees remain in demand, temporary work prospects for semi-skilled and unqualified workers are declining.

“Flexible labour markets help get over a crisis more quickly,” he says. “But in this kind of market people shouldn’t be in doubt that qualifications and skills are the best protection for the worker and the most reliable guarantees for job security.”

See also: A flexible future