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Blaire Palmer

That People Thing

Author, speaker, agent provocateur for senior leaders and their teams

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KPMG redundancies: Looking under the bonnet at company culture

Redundancies aren’t always the result of short-sighted decision making or a culture problem, but they can be.
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Probably all of us have had to make redundancies, been involved in the redundancy process, been personally made redundant or experienced it happen to colleagues. I’ve personally had to let people go from my business in the past.

When times are tough and you’ve tried but failed to bring in enough business to keep everyone in their role, there might be no other choice.

However, there’s something about KPMG’s announcement of job cuts and pay freezes which is worth a closer look.

Taking accountability

For one thing, the firm is citing a ‘softening’ in the market, making no references to the reputational damage that their auditing ‘issues’ may have had on their ability to retain clients and win new ones.

This a week after the firm was required to pay a £21m fine for its ‘textbook failures’ with outsourcing firm, Carillion, so that’s a lot of money to pay out which, presumably, has to come from somewhere.

At a time when people find it hard to trust the sources of information we are acutely aware of whitewash. It is vital, if we want to stem growing levels of global distrust, that businesses show some awareness and culpability when their own behaviours and what it has cost them might have something to do with the need to make cuts.

And, for another, this is a firm that, like so many, claims their priority is their people. In fact, their company values are ‘Integrity, Excellence, Courage, Together and For Better’.

A company’s true culture has a tendency to leak out. Let’s not forget that KPMG was in the news in 2021 when then UK Chair, Bill Michael, resigned after telling staff in a virtual meeting to ‘stop moaning’ about the impact of Covid and also called the concept of unconscious bias ‘crap’.

It is vital, if we want to stem growing levels of global distrust, that businesses show some awareness and culpability when their own behaviours and what it has cost them might have something to do with the need to make cuts

The true value of corporate values

What is the point of corporate values if they don’t force leaders to live in accordance with them? Values should be hard to uphold and they should force difficult decisions that have a price…not a price that employees have to pay but a price that business leaders have to pay.

A company that really values people, does everything it possibly can not to let people go. And that doesn’t mean just the obvious stuff like trying to win new business. It means thinking out of the box about how people might be able to stay in roles.

For instance, a business I know shut down one of its plants because new technology meant they didn’t need as many people.

The business decided to buy some new businesses so they could provide work for everyone who used to work at the closed plant. They simply were not willing to let anyone be made jobless as a result of decisions made at the top.

A culture of trust respects employee feedback

Many companies now trust their employees enough to share financial challenges openly and seek ideas from their people. Simply cutting jobs feels very 1990s. Surely, today, we can be more creative?

In a healthy, open, high-trust culture, leaders can ask their smart, hard-working, dedicated employees what options they can think of to ensure no one has to lose their job.

Perhaps they would offer to take a small, voluntary pay cut to ensure no one was made redundant. Perhaps they would recommend executives take a salary cut. Perhaps they would notice where money was being wasted or where a change in behaviours could cut costs.

As someone who goes around the house turning off lights after my teenage daughter but frequently drives past office buildings at night that are lit up like Christmas trees, there are some obvious places to look.

Values should be hard to uphold and they should force difficult decisions that have a price…not a price that employees have to pay but a price that business leaders have to pay

The repercussions of redundancies

Why, today, when we’ve seen over and over that redundancies destroy trust that can take years to rebuild, would a big business which reported, in January 2023, record revenues of £2.72 billion, feel its best option was to cut jobs and salaries?

We also cannot ignore the huge cost of re-recruiting if and when business picks up. Job and salary cuts are often an attempt to keep EBITDA steady and convince the city that the business is doing the responsible thing.

In fact, according to profitability studies, firms that conduct layoffs do not see improved profitability. Staff left behind tend to react with lower motivation and effort. And the city isn’t impressed either. Job losses intended to cut costs tend to lead to drops in share price.

Redundancies aren’t always the result of short-sighted decision making, a culture problem or a gap between the stated corporate values and the real corporate values.

A closer look

However, they can be. And, as professionals who are sometimes the only voice of employees in the organisation and the only voice charged with ensuring the values are part of the conversation, every conversation, we should be alert to that possibility.

The truth is, by the time you have to worry about your company culture it’s too late. I tell my clients that they won’t notice the bottom-line cost of an unhealthy company culture until at least 18 months down the line, by which time it is too late to turn the tide.

Any business can hit hard times. Markets do ‘go soft’. But when a business announces job losses and salary freezes, I suggest a look under the bonnet at the culture. Because the seeds were probably sown years ago.

If you enjoyed this, read: Five ways to mitigate redundancy anxiety

 

Author Profile Picture
Blaire Palmer

Author, speaker, agent provocateur for senior leaders and their teams

Read more from Blaire Palmer
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