Redundancies harm small businesses

Small businesses are being warned by the Australian Centre for Retail Studies (ACRS) that redundancies can cause lasting damage to the business and long-term harm to revenue.

In an attempt to cut costs, small businesses have been turning to redundancies, but this can cause employee morale to stoop, a loss of trust in management, whilst affecting the bottom line, says ACRS research fellow, Sean Sands.

“While redundancies may seem like a good way to cut costs in the short-term, the direct and indirect costs of downsizing can paralyse your company’s long-term revenue generating streams.”

Dr Sands has suggested small businesses seek out alternative methods to reduce business costs including pay cuts, reduced benefits, unpaid leave or incentives for volunteer departure.

He also believes that in order to boost staff morale post redundancy and to ensure staff feel a sense of belonging and control over their future, managers and business owners should “show leadership, accept responsibility, over-communicate and express compassion and empathy.”

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