A growing company is usually a desired outcome for most leaders. But there also needs to be a focus on managing growth in the right way. Tamsin Ashmore, CFO for Ultima, talks about how companies can ensure sustainable growth and the need for future business scenario planning.
In the first six months of 2023, there was an estimated 224,503 job losses across the tech sector from large and small businesses, including some of the biggest names in tech. There are signs of a rebound, with research published by Statista in July suggesting that by 2025 there will be over 678,000 additional jobs available in the UK’s digital sector. However, if we are to avoid the same scenario playing out again in the future and costing tens of thousands of people their jobs, there are important lessons that the industry must learn.
Businesses have a responsibility to grow and hire sustainably
Having lived the experience once, businesses now need to reflect on the need to grow at the right pace. Therefore, there should be as much governance around mass hiring as there is for sudden redundancies. Too much excitement at times of excessive growth can result in a slowdown and the need to make difficult decisions to future-proof your business; repeating this year’s cost-cutting playbook.
There is a huge responsibility when a business is in growth around future-proofing the organisation. This responsibility also comprises of a need to hire sustainably. In other words, the budget that is allocated to a new role needs to continue to exist in the long-term.
There is also the responsibility of organisations to continue to reskill and develop its people, both to future-proof them in their lives and to ensure that the business continues to develop in the way you want it to. A person who joins a company today may not be doing the same job in 10 years’ time as the world changes so rapidly. Above all, businesses need to recognise that each employee has the capability of personal development. This is the reward of having the commitment of that person in your organisation. There is a vast level of pride that you can attribute to growing a person into a senior business role.
Recently, we’ve rebuilt Ultima’s strategy so that it could exist in another 30 years’ time. We took the responsibility to adjust its strategy rather than taking the more convenient route which would have been hiring lots more people to fill new roles and getting rid of redundant ones. Sixty percent of Ultima’s senior leadership team has been with Ultima for 10-15 years. As a result, there is a mass of cross-functional value across the business. It’s both inspiring and sustainable to provide the capacity for a person to expand to different roles within a business.
Need for future business scenario planning
The tech layoffs that have been happening have been around future-proofing the organisation to reach the profitability it needs to exist. Many businesses in the tech industry had experienced excessive sales. In that state, it’s easy to get wrapped up in the excitement of growth. In a bid to deliver on it, these businesses hired lots more people which proved to be unsustainable.
There needs to be a move towards a responsible, sustainable growth trajectory. Future business scenario planning should inform all hire decisions. When recruiting, it’s important to understand if that role is going to be continuously needed or if it is a project role that exists due to significant growth.
You only need to look at the film industry to understand how this would work in practice. Here, staff are commonly recruited on a fixed term basis for big project deliveries as they know that they can’t commit to that level of sustained growth. Responsible hiring in this way eliminates the excited reaction to growth and avoids difficult decisions further down the line.
We live in an instant gratification world where hiring new is often easier to fill gaps. New blood is certainly a good thing, however, there is huge value to be gained from people being in an organisation over a long period of time and building on those skills.
Showing humanity in the face of layoffs
There is a level of compassion that’s needed when handling layoffs, especially at scale as it can be a horrible place for both parties to be. How you handle these situations is key. The only way you can do this is by bringing in a sense of humanity rather than handling it in a robot-like way. It’s not the easy way in any regard. Being compassionate opens the floor to the employee’s emotions, which can be uncomfortable. Nevertheless, the best way for that individual to walk out of the door is to have the conversation with compassion and for them to consider the organisation as one they’d like to go back to, albeit in better circumstances. That’s the real win.
This requires leadership development. After all, the ability to have a compassionate conversation without worries of being reported or sued is not something that a leader would have learnt at any other time in their career. They certainly don’t start their career with this knowledge, so it has to be developed over time.
It takes strength to deliver those conversations and to be eloquent about what’s not working and what’s best for the business. Leaders must remember that it is deeply personal to the individual. After all, we bring ourselves to work nowadays, and we take work home with us. Therefore, an organisation needs to trickle down leadership skills and treat people as people.
The big tech firms could also bundle together support for that individual to take their next step. This could take the form of CV writing or interview skills, perhaps even training. This investment in doing the right thing could be seen as cost neutral when taking into account the saving of losing that role, but for an individual to have that support from their exit company, it has a massive positive impact.
The scenario that many of the big tech firms have found themselves in is an undesirable situation, there is no question of that. However, it serves as a reflection period to ensure that the next steps that a business takes are toward sustainable growth.