The Last in, First out Myth

I’ve been meaning to write this article for a while and now seems a pertinent time to do so. We are certainly having more conversations with people who are frustrated where they are but have some trepidation about looking due to concerns about the current climate around Brexit.

The first thing to say (date: 15th November 2018), is I’ve never been so busy! The life of a recruiter usually sees us chasing someone - whether that be candidates or clients. But honestly, at the moment, my mobile feels like the Bat phone for clients! I am getting calls daily from existing and new clients asking me to support them finding people. The point being is that my profession is a great barometer of market confidence. If businesses are actively trying to recruit people, then it doesn’t just mean they are confident about right now, but also the year ahead. The majority of my clients have secured fee / workload for most or even all of next year. Will some projects fall victim to Brexit fears? Maybe, but it sure doesn’t feel like we will see a huge nosedive in work at the moment. It is worth also adding that this isn’t just London – the regions are equally as busy.

So, onto the main subject of this article; will the last people into a business be the first out should there be a downturn in work? Categorically NO! Lets look at the logic of the last in, first out myth;

• You haven’t built the strong relationships internally so you’re more likely to be let go
• You are cheaper to get rid of
• You are less hassle to get rid of

Quick caveat before I debunk the above concerns – I am not an employment solicitor or HR Professional – I think I am accurate in what I am saying but if you have specific questions, then consult with a professional in employment law.

With that caveat over, it is also fair to say I have ran my own businesses for 20 years (which obviously has included hiring and firing people), counselled many people going through redundancy, had a Step Dad (sadly no longer with us) who was one of the country’s leading employment solicitors and have spoken to many HR professionals over the years – so I would say I have a pretty decent handle on things.

So, how long does it take to build a strong working relationship? I would argue, not much more than 3 months. I think you personally click with someone (in any relationship, personal or work), pretty quickly, equally if you don’t get on with someone, it’s unlikely (though not in every case) that you’re ever going to become best mates. Lets look at this another way. I am sure you all have (currently or in a previous business you’ve worked) a colleague that frankly you and most of your colleagues just don’t get on with. They’re awkward, bad mannered, not a team player, etc. I’m betting they have also been with the business a long time. If a business had to make redundancies, would it be a fair bet that individual would be top of the list? Of course!

So, because you don’t have years of service, you’re cheaper to get rid of. Well yes and no. Here’s the reality, the vast majority of businesses do not have really good redundancy policies; most in fact default to the government’s standard statutory practice – so you get your notice pay plus statutory redundancy pay; follow this link to see an explanation - yes its tax free, but is capped above a certain salary level and capped at a maximum of 20 years. You are not due any redundancy pay until after 2 years’ employment, but even at 5 years’ employment the maximum a company (on top of your notice) would have to pay out is ￡2,540, 10 years’ employment - ￡ 5,080 – we’re talking the equivalent of one month’s salary or less in most cases - do these sound like the kind of sums that would stop a business making you redundant? No! Also consider the other element – what are they paying you? If you are being paid way above market rate for your position and don't have a long term fee revenue attached to you, a business may be happy to take a hit on redundancy pay to get you off the long term pay roll.

You are easier to get rid of if you haven’t been there long. Ok, firstly, to have any real degree of protection from an employment standpoint, you need to have at least 2 years’ service; yep that’s right, whether you are employed for six months or 1 year and 364 days – they can pretty much get rid of you without much explanation. To terminate employment of an individual with over 2 years’ service is certainly more complicated and involves going down a disciplinary route, however what people fear is being made redundant. If a business is going down the redundancy route, then they enter a consultation and if they are making multiple people redundant then frankly this is a relatively straight forward process if they can justify why – which usually they’ve already gone to great lengths to work out before instigating the process – so in short, length of service doesn’t really afford you anymore protection than your other colleagues. I would add that removing someone who is perceived as a problem individual who has had long service is a damn site easier through redundancy than it is through the disciplinary route.

OK, so that’s the technical overview for want of a better phrase. Here’s the cold hard reality of what happens in a downturn where companies have to (/choose to) let people go.

So, in theory companies have to follow strict processes when entering a redundancy consultation period to decide which individuals unfortunately have to be made redundant. The reality? They produce the criteria to ensure they let go exactly who they want to.

Having witnessed first hand the bloodbath that was the 08/09 recession, I can categorically assure you it wasn’t last in, first out that was the criteria businesses used to decide who to let go. Here were the priority factors they used when assessing who to make redundant;

1. “Lets get rid of the Dead Wood”
2. Who are the ones we don’t need to support?
3. Are they on a continuing fee earning role where they are embedded with the client?

Yes, it was as simple as that! Let me explain further.

The cold reality is that most (probably all) businesses (the one exception being when it is a whole office or department being made redundant), use a downturn and redundancy consultation to clean out the dead wood in their organisation, certainly in the first waves of redundancy. They select those who are considered sub-par in their eyes; not very good, not part of the team, difficult characters who cause them constant issues or those who simply don’t get on with the management team. They are not bothered if the individual has been there six months or 10 years; they just want to lose the weak team members and leave the strong. If they have hired someone only six months ago, whom they consider to be a superstar, or even just a very safe pair of hands, they would happily keep them over someone they consider isn’t very good, whose work rate is too slow or shoddy for example. If you put yourself in a business owner’s shoes, the honest reality is that makes sense.

Secondly, rather sadly most businesses (not all, there are some great businesses who continue to invest at grass roots level in all times) look at reducing things like training budgets in a downturn. They don’t (rather narrowly minded in my view) want to spend their time or money on training people; they want people who can just get on with the job. So who are often the causalities? The trainee and grad level group.

Once they have cleaned out the “dead wood” and removed any they feel are too much of a burden to support, they then, if they still need to make more redundancies, start to look more closely. Whose embedded on a client project, whom the client likes? Ok, those individuals are secure for now; after all the last thing we want to do is lose a commission by taking the key people away from a client. Those who aren't? Goodbye.

There you have it, that’s the criteria used. Pretty clinical? Yes. Doesn’t loyalty count? Only if you bring them value going forward.

Rather than worrying about last in, first out, I would personally be looking over my shoulder at the business I am in, and be asking the following questions;

• Do I believe I am considered in the inner circle of this business?
• Am I confident about the future workload and business plan of the business?
• Am I working on a secure client commission and am I considered integral to it?
• Am I well overpaid compared to the market?
• What was the history of my business in the last recession?

On those last two points; if you want to know about salary levels and you are a UK based QS or PM (at any level) working for a consultancy; drop me a line and I will ping you a detailed salary guide – email me at [email protected]; alternatively message me via Linkedin. On the last point, some businesses in the last recession, in my opinion anyway, behaved incredibly poorly; making significantly more redundancies than they needed to in order to protect greedy shareholders’ profits. I fear they will do the same again. Some still exist, others no longer, but the ones at the head of those that no longer exist are now leaders of other businesses. If you want some advice on the history and behaviors of your current employer, drop me a line, happy to let you know confidentially.

I hope you have found this useful.

This will become part of the Pegasus Briefing Guide series; want to know what the existing ones are? Drop me a line.

If you like this article you may like my weekly email industry newsletter; the Pegasus Report; sign up here;

https://www.getrevue.co/profile/Pegasus

Lastly if you want a confidential chat about your career, drop me a line and we can arrange a chat.