The Natural Wastage Trap
Authors: Stephen Bevan
26 May 2010
There’s something reassuring – even benign – about politicians announcing that they expect that job cuts can be achieved through ‘natural wastage’. There’s been a lot more use of this term in recent days as Mr Osbourne starts the process of reducing the deficit. It’s ‘reassuring’ because it means that headcount can be reduced by freezing recruitment and then not replacing leavers. ‘Benign’ because it involves no sackings as it relies on a ‘natural’ process of attrition caused mainly by voluntary resignations and a few retirements. Rather like an organic approach to redundancy. There’s only one problem, natural wastage never results in as many job losses as managers or politicians hope and they often end up having to make redundancies after all to meet their targets. Why is this?
Well, people who resign (the main driver of natural wastage) tend to be those with short service – especially in the public sector. If an organisation stops recruiting then it is cutting off its supply of short-service staff and, over a period, the average length of service of staff grows and the chances that resignation rates will remain steady diminishes. In fact, resignation often dries up completely as people keep their heads down, not wanting to risk either an uncertain labour market or losing out on a redundancy package. The other problem is that, with resignation, it’s often the best and most marketable people who leave first – the organisation has very little say about who goes or stays.
So beware the apparent allure of ‘natural wastage’. Instead of sweetening the pill of job cuts in the short-term, it will almost always lead to more bad-tasting medicine in the long-run.
All blog posts for this author