Redundancy: The Worst Job in Management?

A redundancy situation presents an organization with many problems including reduced morale, workplace tensions and bad publicity. People are key to organizational success, and redundancies can have a negative impact on the psychological contract between employee and employer and the organization’s culture. It is therefore important to plan ahead and take appropriate measures to combat these impacts.

Strategic HR planning helps determine current and future staffing needs, thereby giving greater job security and minimizing the risk of redundancies. However, even the best laid plans cannot guard against unexpected events. Therefore, the development of a comprehensive redundancy policy can help to ensure consistent and legally compliant treatment of employees at risk of redundancy.

Key Elements of a Redundancy Policy

Redundancy is a complex process, which should be implemented through a robust redundancy policy. A comprehensive policy will normally comprise the following elements:

• an introductory statement of intent stating the aim of the policy and outlining the organization’s commitment to protecting job security wherever possible
• consultation arrangements for individual and collective redundancy situations
• any plans or measures to avoid redundancy, including details of the options which may avoid the need for redundancies, e.g. freezing recruitment, plus information on arrangements for voluntary redundancies and/or early retirements
• selection criteria for redundancy, e.g. standard of work performance, which should be objective and fair
• the process for obtaining suitable alternative employment for staff, and the redeployment procedure
• details of the appeals procedure
• employee entitlements, including statutory redundancy payments, and provision for any enhanced statutory payments
• a range of support mechanisms such as counseling, outplacements, time off for job searching and provision of relocation and traveling expenses

Measures to Avoid Redundancy

It is good practice for organizations to consider measures which will help minimize, or possibly avoid, the need for compulsory redundancies. A range of interventions exist which can allow changes to the workforce without resorting to redundancy, as follows:

• discontinuing the use of temporary workers and/or contractors
• consideration of flexible working arrangements such as job-sharing and part-time working
• freezing recruitment and advertising to limit costs
• stopping overtime
• retraining and redeployment of employees to other parts of the organization
• use of lay-offs (when employees are unpaid) and short-time working (where salaries are reduced to less than half a week’s pay)
• asking for volunteers for redundancy and/or early retirement

Selection Criteria for Redundancy

Unfortunately, there will be times when the above measures will not be enough to prevent job losses. In such cases, organizations need to consider what criteria will be used to determine compulsory redundancy, and who will be selected. Selection for redundancy is often grounds for unfair dismissal, therefore employers should use a range of consistent, objective and non-discriminatory selection criteria. The main types of selection criteria are:

• skills and competencies
• experience and qualifications
• standard of work performance
• attendance or disciplinary records
• flexibility and adaptability
• length of service/’last in first out’[2]

Selection decisions should not be based on the opinion of the person making the selection. A more balanced approach involves using a combination of the above factors to create a redundancy selection matrix. Employees at risk of redundancy are scored against the matrix, and a rank order of those at risk is produced.

Effective Management of the Redundancy Process

Communication

Poor management of the redundancy process can lead to a demoralized workforce which is bad news for business. The earlier the communication begins the better, as this can help control rumors and anxieties. At the beginning of a redundancy program, a clear and honest communications strategy to guide the process and provide employees with timely answers should therefore be developed. At the outset, employees should be told the reason(s) for the redundancies, given full details of the process to be followed and the support measures that will be provided.

Support for Managers

Managers may feel apprehensive about the process, and some might lack the necessary skills to approach redundancy sensitively. The ability to listen is paramount, as is an appreciation of various emotional reactions. Managers should be encouraged to show care and compassion for employees throughout the redundancy process.

Managers should also be equipped with the information needed in order to communicate redundancies properly. This would normally include the reason(s) for the decision, when it will take effect, the procedure to be followed, details of entitlements and the support mechanisms available.

Support for Employees

The provision of counseling and career transition outplacement support should be considered as a means of helping people cope with the emotional upheaval of redundancy. Outplacement support can help individuals focus on the future, and on the practical steps they can take to move forward.

Emotional Impact of Redundancy

The news of redundancy can be one of the most distressing events an individual will ever experience. Employees may feel shock, denial, self-blame and resentment. A person’s financial situation, family circumstances and length of service can often have a strong impact on their behavior, invoking feelings of betrayal and anger. Therefore, prior knowledge of the individual’s employment history and their personal circumstances can be helpful in dealing with their reactions. Whatever their response, individuals should be given time to express their feelings and concerns in a sympathetic and supportive environment. An awareness of potential emotional responses and the ability to listen and show compassion can greatly ease the process of communicating the news.

After the Redundancies

Redundancy can create feelings of job insecurity for those left behind. As the redundant staff leave, gaps are left. Where a colleague sat, there may now be an empty desk, and responsibilities can become ownerless. The future of the organization depends upon those who are left behind, and it is essential to reduce the negative consequences for the ‘survivors’.

Effective survivor management involves ensuring that remaining staff do not feel neglected or overloaded with work. Remaining staff may experience feelings of guilt and uncertainty. Employers should therefore take steps to ensure that a clear vision for the future is communicated, and always be ready to listen to individual concerns. Investment in the training and development needs of the surviving workforce can demonstrate commitment to them and the future of the business. Above all, looking after remaining employees should not be viewed as a short term issue, as they will need time to recover and adapt to any changes.

Conclusion

Managing redundancies is undeniably a difficult process with many adverse effects. However, these can be reduced through good communication, careful planning, a sensitive approach and sympathetic aftercare. An evaluation of the redundancy program will help determine where lessons can be learnt and the process improved, in the event that redundancies may be necessary again in the future.