The UK’s most prominent business lobby group, the Confederation of British Industry, is to lay off a swathe of its staff as it fights for survival amid a crisis prompted by multiple sexual misconduct allegations.
The CBI needs to cut its wage bill by a third within months, staff were told at an all-hands meeting on Thursday morning, according to sources with knowledge of the discussion, with management aiming to initially use voluntary redundancies to trim costs.
A spokesperson for the lobby group, which employs 300 people, confirmed it had to make “difficult decisions” including cutting its salary base by a third, along with other “cost-saving measures”. “It will be a smaller and refocussed organisation in the future,” they said.
On Wednesday the CBI opened a confidence vote on its future and laid out a prospectus detailing plans for a reformed culture and governance. The result of the vote is expected to be released shortly after a 6 June extraordinary general meeting (EGM) with members.
“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,” the spokesperson said. “We believe there is a strong basis for our members to continue to back us at our EGM.”
The organisation’s new director general, Rain Newton-Smith, (pictured) said on Wednesday: “I have my eyes wide open about what we need to learn.”
She added: “People need to know the code of conduct and we need to lay the foundations for a strong speak-up environment.”
The CBI faces an uncertain future after more than 50 of its most high-profile business members quit or suspended ties with the body after claims of sexual misconduct, first reported by the Guardian.
Memberships make up the bulk of the CBI’s income. Its total income was £25m in 2021, of which £22m was from membership fees.
While staff had expected some cost-cutting after the loss of members, the pace and scale of the redundancies still came as a surprise to some.
Sources claimed staff have been left demoralised by the handling of a misconduct scandal, which has included revelations of sexual harassment, sexual assault including rape, and drug taking.
One insider said: “It’s been awful, and it feels unfair that some people’s behaviour will cost others, who have done nothing wrong, so much.”
Another said employees were trying to support one another through the aftermath of news reports and the process of applying for new jobs.
The toughest sell to regain support, according to one senior figure at a company who is still a member of the group, is for business to believe that a CBI in a new form can “win back the ear of government”.
But that would be a “leap of faith” for members as central and local government and the Labour party suspended engagement after misconduct allegations, the industry leader added. “There’s still a business herd that may need somewhere to go, and it hasn’t found a home yet.”
The CBI’s board has sought legal advice in recent weeks about a range of options to restructure its activities, including the possibility of insolvency.
A spokesperson for the CBI said: “Following a series of member resignations, we know the CBI will need to be smaller and refocused in the future. The board has sought advice on matters of restructuring as may be appropriate, as any responsible board would.”