Redundancy is never a circumstance that anyone wishes
to manage. However, when its unwelcome face first peers over the
horizon it is time to take action and start working on damage limitation
for the people who could be affected, the company, and the remaining
staff. The first phase of good redundancy management begins when
those initial warning signs of potential redundancies surface. Such
early attention can sometimes fend off threatened redundancies altogether.
Phase 1 - Change Management
The reasons for threatened redundancies are many and
varied: market downturn; company merger; falling profits; funding
or cash flow crisis; outsourcing; loss of a major contract, etc.
What each of these situations has in common is that it will require
swift attention and lead to some form of change management before
redundancies are decided. All the procedures and principals of good
change management will apply. Strategies need to be revisited, trends
need to be carefully monitored, new plans need to be drawn up, and
above all people need to be kept informed. Where a collective redundancy
situation (20 or more) is feared, staff representatives must be
consulted within the statutory time frame. However, explaining the
situation to staff members early is good practice regardless of
the numbers affected, and has a variety of benefits:
It gives you control over what, when and, most importantly,
how information is put across.
It avoids damaging rumour and innuendo.
It rallies support for change and unites staff and senior management
in a common fight for survival.
It provides an opportunity for the 'grass-roots' staff to offer
efficiency and cost cutting suggestions.
It makes any subsequent efficiency and/or cost cutting measures
It lessens the shock and the reaction, if and when redundancies
do have to be made.
It fosters an environment of honesty, trust and respect.
Clearly, dissemination of information to staff needs
to be carefully managed and controlled to avoid any additional
damage to the company or panic amongst the staff. However, there
are many success stories from companies who have involved their
staff members, including voluntary pay cuts initiated by staff
members. Peer pressure is far more compelling and effective than
management ultimatums, however couched.
Phase 2 - Minimising Redundancies
Having developed an outline plan in consultation with
all the pertinent managers and operatives, if redundancies are
required, the next phase is to carefully examine all avenues for
minimising redundancies and the damaging effects of redundancies.
Of all changes in the work environment, redundancy engenders the
most negative response. Minimising the job cuts and being seen
to be making every effort to avoid redundancies is crucial. The
avenues open to you will of course vary according to the size,
situation, and nature of the business. The following have all
been used successfully by a variety of companies.
Re-evaluating working hours - leading to greater
flexibility, weekly, monthly or annually.
Re-training - leading to redeployment in other areas of the business.
Job sharing schemes.
Moves to part-time working (temporary or permanent). Cost savings
here received a boost in the recent budget.
Temporary sabbaticals or agreed leave of absence (paid or unpaid).
Early retirement, natural wastage and voluntary redundancies.
Recruitment freeze (this needs careful management to ensure key
positions are covered).
Voluntary pay cuts.
Once again an approach which is honest, and as open
as possible, not only reduces the sometimes devastating effect on
the staff, but also pays dividends to the management and the success
of the plans for recovery, streamlining or downsizing. Key members
of staff are far more likely to stay and weather the storm if an
environment of trust and openness is nurtured. Those in business
critical positions should be reassured, as early as possible in
the process, that their positions are not, and will not be, in jeopardy.
Phase 3 - Selecting the Jobs to be Cut &
Notifying the Individuals
Having ascertained that some redundancies are inevitable,
informing the workforce first is paramount. The worst thing that
can happen is for your staff to hear that they may face redundancy
through outsiders, rumour, or the media, even when all the redundancies
are expected to be voluntary.
Having worked through phases 1 & 2 above, a
lot of care and attention needs to be given to selecting the positions
and people. Check the current legislation on your consultation
and notification obligations. Regardless of legal obligations
however, each position deserves to be given individual consideration.
A conscientious approach to this will reap rewards for the Company
as well as the individuals concerned. Consider whether this position
will be needed again in the near future, how the work will be
dispersed, what the impact will be on others in a similar position.
If you are reducing the number of people in the same or similar
roles, draw up a check sheet with set criteria to determine equitably
which positions should be selected.
On notifying the individuals at risk, care and empathy
is essential. Even when generous redundancy packages are involved
this can still be a devastating blow and poses a real threat to
the recipient's livelihood. Look into each individual's personal
situation beforehand so that you have some understanding of the
problems they may face. Try to get a good feel for all the pertinent
problems and issues so that you can aim to provide appropriate support,
either via an outplacement service or directly. Explain the process
and procedure carefully and follow this up in a letter.
It is advisable to have a short consultation period
to allow the individuals at risk to put forward their case. However,
this should not be included for cosmetic purposes only. Consultation
periods can and do work. We recently worked with a company that
successfully implemented a consultation period for the second
time, saving one job as a direct result (having saved 2 previously).
Fanny Bradbury, Personnel Manager with SEOS Ltd. said "I
also invited all the non-affected members of staff to comment".
This wider consultation was not a legal obligation as less than
20 staff were affected. However, this voluntary good practice
paid dividends all round. "This proves that the consultation
period does work", she added, "communication is the
key; for everybody".
Phase 4 - Managing the People Out
Redundancy can be one of the most stressful life experiences.
The affected individuals are likely to be ill equipped for positioning
themselves in the job market and often feel confused, isolated,
angry and afraid. Finding another position is a full time occupation,
the complexity of which is rarely fully appreciated. A good company
will endeavour to provide support and assistance to cushion the
blow and help their people to make the transition.
An appropriate outplacement service is a big advantage.
Studies show that an external outplacement service is better received
and far more effective than in-house measures. In addition, it provides
the 'spoonful of sugar' to help take away the bad taste, and makes
the task of imparting bad news less odious for the managers. A good
Outplacement Consultant will work with the Company, through all
the phases above if required, providing suggestions, alternatives
and pulling together a programme appropriate to the needs of the
individuals. In selecting an outplacement service consider the following:
Location: Some companies require the delegates
to attend their premises, others will bring the service to you.
The latter can also be housed at a nearby conference centre if
Price: An outplacement service is generally
most needed when the Company feels it can least afford it. However,
price need not be prohibitive. There are wide variations and many
companies have a flexible approach and will suggest viable solutions
to fit your budget, but watch for hidden costs.
Timing: The service needs to be provided at
the right time for you and your people. If you have left it a little
late, don't be fobbed off with bogus reasons why it would be in
your advantage to delay (to a time which suits them). Try elsewhere.
Quality: The service needs to be 'fit for
purpose'. When contacting a prospective company ask to speak with
one of the consultants not just the sales staff. He/she should
try to understand your situation and needs rather than push to
sell you the service. If possible (and appropriate) ask to see
the manual. This is a valuable tool for the delegates and a good
indicator of the content and quality of the programme. Support
normally continues for sometime after your contact has ceased
- check this out too.
People: Most outplacement consultants are
empathetic and experienced, but like everything else there are good
and bad. Try to speak with the consultant(s) who will be assigned
to your Company, by telephone or in person. Prepare a few questions
and informally 'interview' them.
If you cannot provide an outplacement service
you may be able to provide some local support through appropriate
agencies and companies such as the local job centre, careers advisers,
CAB, Financial Consultants, and so on. It is also worth contacting
local companies in the same business to see if they have any unadvertised
Phase 5 - Managing the People Left
Having provided support and assistance to those
directly affected, you need to turn your attention to those indirectly
affected. In varying degrees this includes all members of the
workforce. By implementing redundancies you will have inadvertently
sown the seeds of doubt about the security of their position.
Once again, good communication is essential. You need to ensure
that your rising stars and major players do not lose face and
change their focus of attention to the job market rather than
the task in hand. Those remaining need to feel confident that
the crisis is over and the company is doing all it can to avoid
any further redundancies.
As the redundant staff move off the scene, gaping
holes are often left. Where a friendly colleague sat, there is
now and empty desk and chair; tasks will be left ownerless; the
old manager may be replaced by an unknown and more distant new
one. The empty void and confusion is exacerbated when senior management
are hidden away in meetings at a time when their visibility is
In your initial planning, make absolutely sure that
you have included measures to cover this period. Managers should
spend time at the 'coal-face' to ensure that:
Remaining staff are not overloaded with work.
They understand the need for the staff cuts made,
and feel that the situation has been managed fairly.
The implementation of any time/cost saving measures
is going smoothly.
The most talented &/or critical staff do not
feel insecure and leave.
Any grievances or concerns can be aired and dealt
Your remaining staff feel visible and valued.
Once your head is very clearly above the water again
you may wish to think about how you can show your appreciation
to the loyal staff who helped to carry the company through. There
are a number of ways this can be achieved but one which provides
benefits all round is Executive or Career Coaching. Offered to
nominated individuals, or the top 10 performers, this also provides
a useful incentive scheme.
Managing redundancy is never easy. Managing to avoid
redundancy can be even harder. However the adverse effects can
be substantially reduced through: good communication; timely intervention;
careful analysis and planning; effective consultation with your
people; sensitivity in approach; appropriate support and assistance,
and good after care. Over a third of the companies voted into
last year's Times '100 Best Companies To Work For' had needed
to effect redundancies during the year. For both companies and
individuals, good redundancy management can turn a crisis into
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