Finding the Right Balance: Redundancy Support and Cost Pressures

With 1 in 4 businesses looking at redundancies this year according to CIPD’s Labour Market Outlook, HR is under pressure to do more with less in 2025, and redundancy support is becoming an essential service for businesses facing tough decisions.

These are two separate themes we are in danger of confusing:- 

1. Increase in redundancies.

1. Businesses needing to cut costs, including potentially HR spend.

“Rising employment costs, driven by National Insurance contribution increases and the reduction in the ‘secondary threshold’, are forcing many businesses to rethink their workforce strategies. Employers anticipate higher costs, and intend to respond by increasing prices, scaling back recruitment and reducing investment in business growth and training.” (CIPD Labour Market Outlook, 2025) 

When times get tough financially, businesses look for areas to cut costs. And inevitably, HR and other corporate functions often find themselves in the spotlight (this isn’t just limited to HR; all non-revenue generating functions typically come under scrutiny). 

Increased efficiencies will be sought in operations, production, or sales—the areas directly generating revenue. However, it is those parts of the business where impact on revenue and customer service is harder to measure that typically face the most scrutiny. 

HR is often seen as a particularly soft target.

Senior Leaders start questioning every budget line item: “Where are we spending money, and is it really essential?”  

The areas that tend to come under fire first?  

Training and development, employee benefits, and recruitment.

 

The Training Budget Squeeze 

 

As my old boss used to say, “Every time there’s a recession, the first thing to go is the training budget.”  

Training is often an investment in the future, not an immediate return. When budgets are tight, organisations start asking:  

• Do we really need this?  

• Can we do it cheaper – e.g replace classroom learning with e-learning?  

• Can we cut the “nice-to-have” and focus only on regulatory or compliance-driven training?
  

Ironically, while businesses are focused on savings in the short term, they’re potentially building up problems – and costs – for the future. 

Time and time again, our exit interviews tell us the number one reason employees leave is lack of training and development.  

And when the economy returns to growth, employers complain about skill shortages. Shortages that are often exacerbated by cutting back on training and development budgets during a slow-down. Those skill shortages in turn fuelling wage cost inflation. Save today, pay the price tomorrow. 

So, while HR is being told to cut costs, businesses serious about talent management will also be asking: How do we do that and retain our top talent and grow pipelines for the future? 

 

Employee Benefits: A Target for Cost-Cutting 

 

Another common area under scrutiny is often employee benefits. When the economy tightens, businesses start asking: Where can we squeeze costs? 

Company car schemes, private healthcare—anything that’s seen as a “perk” rather than a necessity inevitably gets questioned.  

The focus of procuring HR services can be pushed towards focusing on the cheapest deals, rather than quality or value for money.  

Employees often detect that switch.  

They see it in the quality of user experience. Or increased bureaucracy or less choice. Unintended it may be, but cutting back may be interpreted as also valuing your people less. Don’t be surprised if that impacts engagement. 

 

The Recruitment Slowdown 

 

Businesses start asking: Do we really need to replace this person?  And even if they answer is ‘yes’, cost-per-hire comes under the microscope. 

Hiring freezes, slowed recruitment processes, and even cancelled roles become common.
And for HR, this means a potential shift in workload. Less hiring, more restructuring, and in some cases, dealing with redundancies. How many recruitment teams can pivot quickly from hiring to off-boarding? Very different skill sets are often required. Not least the resilience to deliver bad news… 

 

Redundancy Support and HR’s Own Headcount Cuts 

 

At the same time, HR itself isn’t immune from job cuts.  

While demand for support increases—organisational design, restructures, employee relations—HR teams are being asked to do more with fewer people. 

Only last week, I was speaking with a Chief Executive who hired an HR Director 18 months ago to support planned growth, looking for redundancy support. A business of 60-70 employees, looking to grow well past a  hundred in the next year. 

But now, as the company potentially shrinks rather than expands, is an HR Director really required? Even the top jobs in HR aren’t immune to changing circumstances. 

 

The Shifting Role of HR in a Tightening Economy 

 

In tough times HR often has to pivot. That can mean less long-term strategic activities like talent management to here and now employee relations priorities like restructuring and redundancy consultation.  

Outplacement was once described to me as “guilt money”. Employers buying services as they felt guilty about letting individuals go. In tough times, redundancies can become a day-to-day HR activity. That same sense of “guilt” is mitigated when you are trying to save a business unit or organisation from failure. And if the whole point of an exercise is to save money, outplacement budgets get much more scutiny. 

Things also need to get done with smaller budgets. We saw this during the 2008 financial crisis. Back then, the volume of redundancies increased rapidly. We handled twice as many delegates each year BUT employer spend per individual fell significantly.  

 

Finding Better Value Redundancy Support

 

We’re seeing the same pattern now. Businesses still want to support their people, but the challenge is delivering that support in a cost-effective way. That’s no doubt why many new clients with larger projects are drawn to our JetStream product. Great support but at an all-time low price. 

If you’re feeling the pressure to do more with less, we’re here to support you. 

👉 Contact Chiumento today to find out how JetStream, our volume outplacement service, can help you support your people in a cost-effective way.