During periods of economic uncertainty, human resources spending is often the first area cut, but creative thinking by astute HR professionals could produce more effective results for a business than reducing employee numbers.

Richard Lee, partner and head of Wragge & Co's Combined HR Solutions (CHRS) team said: "Some company directors may immediately advocate redundancies, but the canny HR professional knows that this is not the best long-term commercial solution. People are both the biggest asset and biggest expense for any company. Continued investment combined with creative thinking should offset the need for redundancies and limit staff-turnover."

In leaner times, wage increases may simply not be viable because of the direct cost implications. Employers should consider offering additional benefits with no immediate direct cost implications such as increased life cover, more childcare vouchers, or more training and career management opportunities. Introducing flexible working schemes and increasing unpaid leave allowances or sabbaticals are creative and cost-effective solutions. Another possibility is to propose more long-term and less short-term incentives. This has two important advantages of staggering the financial business liability as well as increasing the retention of staff through difficult times.

Brenda Msi-Manzini, a solicitor in Wragge & Co's CHRS team said: "In a difficult economic climate, good staff communication is essential. Employees who are anxious and stressed because of job insecurity and financial worries will be prone to absenteeism. Employers in the US offer financial management seminars which are a cost-effective way of reducing finance-related employee stress, and can make for good PR."

Wragge & Co's five-lawyer CHRS team is the only one of its kind in the UK. Providing a total HR, employment and pensions solution, its lawyers provide high-end, strategic advice and day-to-day operational guidance on cross-discipline HR issues. Clients including HSBC, University of Nottingham, Toyota, Emap, Steria, Sanctuary Housing Association, Cemex UK, CB Richard Ellis and NIAB have all been advised on the practical and legal challenges facing employers in uncertain times.

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For further information about this press release, contact Kathryn Hobbs on +44 (0)121 213 2397, Alexa Highfield on +44 (0)121 213 2396 or Amie Ryalls on +44 (0)121 213 2360

This press release may contain information of general interest about current legal issues, but does not give legal advice.