Changing Terms and Conditions

Loss making

The business was a loss making organisation that was acquired by the parent as an opportunity for growth. The parent invested in the organisation but in the difficult economy of 2008 – 2012, the company continued to make a loss and understandably the parent required that the financial situation had to be addressed and a move towards break-even must be evident.  As part of a cost saving exercise, Ruth Gawthorpe and the HR team proposed a strategy to the CEO which would reduce employment costs by £1.6m. The CEO supported the strategy and the team designed, consulted upon and implemented the following:

• new terms and conditions
• a new business competency model to drive talent management and achievement of business turnaround and objectives
• a new performance management system
• a reward, benefits and bonus system to drive high performance.

The company have moved the culture from one that is disparate to one that is consistent. Employees were able to understand the company’s loss making situation and know that the Directors were committed to driving through change. The new Performance Management framework highlighted the focus on performance and included a robust competency model to encourage the required behaviours. All employees were invited to participate in the performance related bonus scheme and 100% of employees signed up.

Finally, the business are educating employees to the benefits of being part of the larger parent organisation and building a team of people who are committed to future growth.

The results:

• Quantitative annual savings of £1.6m pa
• Qualitative savings included cost avoidance of redundancy costs of about £1m and productivity savings including a reduction in sick pay of £175k pa

 Cultural Change:

• Employees know that Directors do what they say they will do
• There is an ongoing focus on performance management to drive a high performance culture
• The company now reward high performing individuals and teams
• Employees display competences that link to the organisations strategic goals
• Employees accept change
• Employees want to be part of the parent organisation

Contact Ruth on rg@thechangedirectors.co.uk for proven methods in how to vary terms and conditions.