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How are staff cuts worked out?

I have been put into a situation whereby I have been put at risk by my architectural practice, after half of all our work had been put on halt indefinitely. Apart from the company assessments on an individuals ability to meet company objectives, I am curious to know how staff cuts are determined if a salary based criteria is used.

Would gross salary be crudely used to make cuts? or perhaps charge out rates per person be used to calculate this? If anybody can enlighten me on this that would great.

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john toppin [ Editor ]

Fred, I sympathise with your situation which must be very difficult for you and all concerned. If half of the work has stopped and fees likewise, then the management team will have to respond by addressing costs. If costs are not addressed quickly then pretty soon cash would start to dry up and everyone would then be at risk if the firm became insolvent.

Staff costs will be a significant proportion of the firm's expenses so that is almost certainly the only place where enough costs can be saved to give the practice a chance of surviving. The management team will then be looking at the balance of the firm headcount in terms of juniors to seniors (including partners) needed in the immediate future and this is where salaries will effectively be a factor in determining where redundancies will have to be made. e.g. X junior and Y senior posts need to go to save £Z money.

Once the firm has decided that X junior and Y senior posts are potentially redundant then the company will use other predetermined criteria such as performance appraisals for example.

I hope this enlightens you but I guess it is no comfort.

Good luck

John

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