Large scale redundancies have been in the press very recently. While redundancy programs may be one (but not the only) answer to short term profitability issues, they are not necessarily the hardest decision that you should be making for the long term viability of your practice.
The need to make wide scale redundancies can often result from poor performance management practices ie where there is a lack of appropriate monitoring and management of key drivers in the business relating to the performance of both individuals and departments.
If you need to make redundancies as a result of a decline in profit over time, or mediocre returns for a long period of time, then chances are that you need to look at doing two things:
- making the redundancies you have identified; and
- reviewing your firm culture and management practices ie you need to ask yourself how you got into your current position in the first place.
Only if you change the enablers to poor performance will you increase your long term profitability. The journey to do this is often confronting but is absolutely worth the initial pain. Redundancies made on a timely basis, due to the loss of a major client or a sharp downturn in economic conditions may suggest that your management systems are proactive and healthy. Firms who are able to quickly identify the need to make difficult decisions, and who are prepared to actually make decisions and act on them, are in control of their profitability, culture and management systems.