Staff at the heart

The lesson from history of independent schools and tough financial times shows that difficulties for schools begin in earnest two years after the onset of a recession. Simon Bevan sets out a strategy to manage one cost centre

The schools that demonstrate strong leadership and can effectively manage their costs are the ones that are most likely to sail out of the other side of the storm. Key to managing costs in line with fee income is an audit of staffing structures, staff numbers and terms and conditions.

Robust management of staff, and staff numbers, is needed to maximise the educational return for pupils while minimising costs and motivating staff. Practical examples of good management include:
• making better use of probationary periods so that expectations are clearly identified and underperforming or unsuitable new recruits are managed out of the school. Properly drafted contracts of employment should allow for a short notice period during the first year of service and disapply the non-contractual procedures as well;
• identification of underperforming staff more generally through an annual appraisal system that allows early intervention to maintain and improve the standard of education for pupils;
• changing the culture by managing and reducing regular short-term absence which can be so disruptive to management; and
• supporting staff with health conditions, which could potentially lead to long-term absence, by getting early occupational health reports to support their return to the workplace. By demonstrating a commitment to staff to returning them early to work, absence levels will reduce and the delivery of continuous education improve.

The significant increase in the number of HR managers and directors in the sector has provided schools with the resources to implement employment policies and procedures which ensure that rigorous systems support a culture of high performance and improving standards.

Of course, a forward-thinking business plan and effective staff management will not address every concern. There are times when cost-cutting may be inevitable but understanding the staff and a staff audit should ensure that redundancies can be avoided.

Last chance to retire
A staff audit would also identify all employees approaching, or over, the age of 65, which is important as this is the last academic year in which schools are able to use the statutory retirement procedures. The default retirement age of 65 will be abolished in October 2011, after which dismissal by the employer on the grounds of retirement will be unlawful, unless it can be objectively justified.

For schools that have identified that retirement is an option, 28 February 2011 is the last date to notify someone of the intended retirement date of 31 August 2011. Effective management of this process will avoid the need for headcount reductions by alternative means at a later stage. The Government is publishing its Code of Practice on managing staff in a regime without a default retirement date.

The process is likely to be more time-consuming, risky and costly, where staff will be subject to capability and ill-health procedures to achieve a departure that can currently be achieved through a dignified process using the statutory retirement procedure. Effective management will consider the ability to retire now, rather than risk an uncertain legal framework in the future. It is clear though that it will be more difficult and expensive to reduce staff costs later without the ability to “retire”, so act now if it is appropriate for your school.

Challenge the way we do things?
Whenever staff costs are reviewed, consider what you do now and whether it can be done better, in a different way, by different people, with different skills on different salary levels. Restructuring is not the same as redundancy and can achieve efficiencies and improvements without a headcount reduction.

Changes often start near the top and can cascade down an organisation to where the greatest inefficiencies will be apparent. Restructuring, reshaping, the synonyms abound, but what is clear, the message in the community is not necessarily “redundancy”.

Redundancy
Even after considering the range of available strategic and reorganisational measures available, it is inevitable that some schools may still need to resort to redundancies.

Early recognition of this fact, through the production of a realistic business plan, should be considered a sign of strength by protecting the business and assets of the school rather than an indication of failure. Schools should be applauded for recognising their market circumstances and taking timely action to manage costs accordingly, thereby securing the majority of jobs.

As much consultation as possible
The key is to initiate and maintain dialogue with affected employees at an early stage, and to keep them informed of developments throughout. Many a time, staff will recognise when a department is at risk of overstaffing for the next academic year (helped by early management discussions), and will be likely to accelerate a decision to move elsewhere to avoid being at risk of redundancy later. It is when someone’s income stream evaporates that they start to think about employment tribunal claims. If they get another job and resign, they are a good leaver and claims should not be a concern.

Communication with trade unions is recommended as they appreciate the courtesy which can stand you in good stead later down the line. Don’t “recognise” trade unions in the strict legal context, but likewise, don’t ignore them. They have been through this process many times before and can help to ease staff tension and concern.

Pools for selection
Schools must have clear and justifiable reasons for determining which employees will be included in the redundancy pool. Commercial considerations are paramount as you seek to put at risk of redundancy as few employees as possible as you go from being a good to a great school.

Staff views on pools and on objective selection criteria should always be sought but, remember, this is consultation and not negotiation. Getting legal advice protected by legal privilege is never more important than at this stage to ensure that you can have open and frank discussions about the school’s objectives. Advice from HR consultants does not receive this protection.

Alternative employment
Independent schools are good employers within a positive and supportive working environment. Never underestimate the lengths to which individuals will go to remain in employment. There is a duty to consider alternative employment for someone who is provisionally selected for redundancy. Don’t just consider it, demonstrate on paper that this step has been considered.

The most transparent way is to create a paper-trail of emails to managers to establish if there are any vacancies, current or anticipated. You do not have to create a role for someone, merely consider it. Woe betide the school that fails to consider this crucial step, when in the witness box the redundant employee claims they would have done anything to stay at the school.

Cut to the chase
Sometimes a procedure can seem to be delaying the inevitable. Employment law is about transparency and consultation. If you know the outcome you would like to achieve and would like to seek to avoid the agony to an individual and the management of protracted procedures, there is always the option of a compromise agreement. If it is in the best commercial interests of the school to secure an early departure, structure redundancy payments tax effectively. With an uplift for the time and costs of avoiding procedures, an employee will appreciate this opportunity for a more dignified departure.

Effective management will help you to steer a course through challenging times. While change is often resisted, everyone will appreciate the benefits in the longer term as the school is on a stronger financial footing and its business model is fit for the future.

Simon Bevan is a partner and the head of the Education and Charities Department at Veale Wasbrough Vizards. Simon can be contacted on 0117 314 6238 or at sbevan@vwv.co.uk. 

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