Firms may rue ‘knee-jerk’ redundancy decisions

Companies that made ‘‘knee-jerk’’ decisions to fire staff or cut pay and benefits because of the recession will struggle to attract staff in the future, according to new research.

It said that companies needed to examine how they were rewarding, motivating and training their staff now. This would have an impact on the type of employees they could attract once the economy started picking up.

PwC said that pay and promotion freezes, changes to pension schemes, cuts in recruitment and slashed training budgets - combined with poor communication - had eroded the ‘‘bonds of trust’’ between some companies and their employees.

Mark Carter, human resources services partner with PwC, said that some companies appeared to have panicked and made decisions based on short-term gain that would have long-term repercussions. The PwC research, called ‘‘Managing tomorrow’s people: how the downturn will change the future of work’’, showed that the recession had resulted in ‘‘knee-jerk reactions’’ for some companies, such as redundancy programmes and hiring freezes.

‘‘Some employer brands have suffered hugely as a result of their people management decisions," according to Carter. ‘‘It has been proven that how you engage with and reward key talent is critical to ultimately retaining them, even in a recession."

However, he said that other organisations were doing more with less to ‘‘reward, engage and develop their employees in an unstable employment landscape where many individuals view their career prospects as stagnant or diminishing’’. These companies would be the winners in the ‘‘war for talent’’ in the future, Carter said.

‘‘It is clear that those who continued to focus on investment and employee engagement are emerging as clear leaders.

‘‘Those who continued to offer their employees new opportunities and invested in their people pipeline are now at a competitive advantage," he said. He added that one of Ireland’s key attractions for foreign direct investment had been its skilled workforce.

‘‘The report highlights that this workforce of tomorrow will have different attitudes and expectations, and it is important that Irish companies create the right conditions to motivate, develop, reward and retain their key talent."