Managing the credit crunch (1)

Since the term “credit crunch” entered common use during the autumn of 2007, businesses have been assessing the effect which the economic slowdown is likely to have on their operations.

Inevitably, some companies (particularly those in the financial services sector), have undertaken downsizing exercises. In contrast, other organisations have sought to avoid redundancies. There are a number of reasons why organisations faced with changing economic circumstances may strive to avoid making people redundant. In addition to the reputational damage which laying people off can cause, a significant redundancy programme can be an extremely expensive exercise, especially if the workforce is entitled to enhanced severance terms.

One of the ways in which firms are avoiding redundancies is by refocusing their businesses. Some examples of this are estate agencies who are de-emphasising sales in favour of lettings and firms of accountants and lawyers who are concentrating less on mergers and acquisitions work