6.2 Avoiding redundancy through flexible futures

Faced with the economic global downturn in 2008/09, KPMG, the international professional services firm, introduced an innovative short-term flexible working scheme to preserve jobs and help retain talent. KPMG was unwilling to repeat the experiences of 2002/03, when the firm made redundancies which constrained growth when the upturn in the economy came, and in January 2009 launched a new scheme which provided for:

the redeployment of employees to other international parts of the business where more resources are needed – this also fits with the firm’s long-term aim of developing people to work across cultures and geographical boundaries (see Chapters 11 and 12)

retraining some employees so skills can be used across different parts of the business – this allows KPMG to build up ‘response teams’ comprising of individuals who have a mixed set of skills that can be used across different areas of work

implementing ‘Flexible Futures’ – a scheme which involves agreed changes in working patterns during times when the business is quiet.

The Flexible Futures scheme includes one or both of the following options:

a reduced working week (e.g. a four-day week or nine-day fortnight)

a sabbatical of between four and twelve weeks’ leave at 30 per cent of pay in 2009.

KPMG can invoke either option by giving one-week’s notice for reduced hours’ working or four-weeks’ notice for the sabbatical. The maximum salary loss in any calendar year is capped at 20 per cent of pay, and pay reductions are spread over a period of time (e.g. six months) to minimize the impact. Employees continue to receive full benefits throughout the period when they are on reduced hours or the sabbatical.

Following the launch of the initiative, employees had three weeks to decide whether to volunteer for the scheme and, by the end of the period, four out of five (85 per cent) of the 11,000 KPMG partners and staff had signed up. The changes required volunteers to agree to a variation in the terms and conditions of employees’ contracts for a temporary period of 12 months. Individuals who have signed up for the scheme can be approached at any time by their manager with a request to reduce hours or take a sabbatical.

The scheme allows KPMG to respond in a proactive way to changes in the market and to reduce its labour costs very quickly if needed, and is reported to have saved the company £12.5 million. It also retains intellectual capital and avoids the costs of redundancies (estimated at five or six months’ pay per individual). The firm also believes that motivation levels are retained and loyalty is increased.

Sources: Churchyard (2009); Wolff (2009)


1. On the face of it, this appears to be a win–win situation for employer and employee. Do you agree with this view?

2. What are the problems of implementing such a scheme?

3. What other flexible working arrangements could be introduced during a downturn to avoid redundancies?