The Confederation of British Industry (CBI) is set to lay off a significant number of employees in an effort to reduce its wage bill by a third.
The decision comes as the organization – the leading business lobby group in the UK – faces a crisis stemming from multiple allegations of sexual misconduct.
At an all-hands meeting on Thursday morning, staff members were informed of the need to cut costs, with voluntary redundancies being initially considered.
A spokesperson for the CBI, which currently employs 300 people, said the organisation needed to make“difficult decisions.”
These include cutting its salary base by a third, along with other “cost-saving measures”.
They said: “It will be a smaller and refocussed organisation in the future.”
“With our prospectus for a renewed CBI now published, we will work with our staff and members on our core mission to help UK business succeed.
“We believe there is a strong basis for our members to continue to back us at our EGM.”
The lobby group recently opened a confidence vote on its future and released a prospectus outlining plans for a reformed culture and governance.
The result of the vote is expected to be announced shortly after an extraordinary general meeting with members on June 6.
Rain Newton-Smith, the CBI’s new director general, expressed awareness of the necessary lessons to be learned and emphasized the importance of establishing a strong environment for reporting misconduct.
However, the CBI faces an uncertain future as more than 50 of its high-profile business members have already terminated or suspended their ties with the organization following the allegations of sexual misconduct.
Membership fees constitute a significant portion of the CBI’s income, with £22 million out of the total income of £25 million in 2021 coming from memberships.
While some staff members anticipated cost-cutting measures due to the loss of members, the scale and pace of the redundancies have surprised many.
Sources within the organization revealed that employees have been demoralized by the handling of the misconduct scandal, which involved incidents of sexual harassment, assault, and drug use.
The impact of individuals’ actions affecting innocent employees has been described as unfair.
Rebuilding support for the CBI, particularly in terms of regaining the government’s attention, is considered a challenging task.
The suspension of engagement from government entities and the Labour party due to the misconduct allegations has made it difficult for the CBI to regain trust.
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However, there remains a business community that may require a platform to voice their concerns and opinions, presenting an opportunity for the CBI to reinvent itself.
The CBI’s board has sought legal advice on restructuring options, including the possibility of insolvency, in recent weeks.
The spokesperson for the organization emphasized the need for the CBI to become smaller and more focused, with the board responsibly considering restructuring options.