Redundancy: The matrix – adding a different dimension to redundancy decisions

Vanessa Webster, principal adviser for EEF, the manufacturers’ organisation, explains how a matrix-based approach to making redundancy choices is not only fairer to staff, but also protects an organisation’s skills base and future viability.

Across the UK, in these early months of 2009, about 25,000 people a week are losing their jobs. It’s a traumatic experience for each and every one of them, of course, but it can be almost as tough for the employer that makes the decision to let them go.

Accepting the need for a redundancy programme, frequently after all other options have been exhausted, is a difficult step. But the next step – actually selecting who will stay and who will go – is harder still.

In recent weeks the pundits have been telling us we are living through ‘economic history’ – a recession so particular in its origin that its length and ultimate impact are almost impossible to predict. And this fact presents a challenge for any company pressured into a redundancy scenario.

There may be a pressing need to reduce the workforce today, but how long will it be before a turnaround makes those workforce skills desirable again? Companies must protect themselves by making sure they retain individuals with the skills needed to survive the immediate crisis, and ensuring they are well placed to take advantage of the recovery when it comes.

The matrix

A matrix-based approach to the problem eases the redundancy selection process by imposing much-needed discipline. It allows the organisation to identify the skills criteria it needs to retain, then measures every employee accurately against it. Because the matrix provides a framework for rational and objective decisions, it’s a defensible process that can be shared openly with employees to demonstrate fairness. Most vitally, it reassures retained staff on two crucial points. First, that the organisation has treated them and their colleagues with respect and second, that there is a viable future for them to look forward to.

Staying within the law

The first point to make about creating a redundancy selection matrix is that, by enforcing objectivity, it can protect against the discrimination or unfair dismissal claims that so often follow in the wake of a redundancy programme. It’s vital to be clear at the outset about the difference between objective criteria, which are genuinely measurable, and subjective criteria, which depend upon the opinion of the individual responsible for the scoring exercise.

Objective criteria – quantity of production, for example – should form a core part of the selection matrix. Then, providing sensible precautions are taken, subjective criteria can be incorporated – such as the quality of the individual’s relationship with customers. In our experience, tribunals are tolerant of some subjectivity, as long as decisions are substantiated by evidence sourced from robust performance management systems, or based on the views of at least two managers who are familiar with the employee’s work.

It’s equally vital to be careful of criteria that undermine protected groups. Relying heavily on length of service, for example, may disadvantage younger employees and may well be viewed as discriminatory, unless the business is able to justify it as a reward for loyal service.

Similarly, applying a negative ‘score’ for absenteeism is likely to be viewed as discriminatory, unless careful steps are taken to ensure that disabled people are not being penalised.

One final point on legal matters: remember that an organisation making 20 or more redundancies over a 90-day period will have to consult its workforce about it through their representatives. Getting the matrix right – and being able to explain its purpose in a way your employees can rationally accept – will be invaluable in this process.

Dependence on data

The most obvious source of selection criteria is within existing employee records and business data. At the most basic level, this will include attendance, timekeeping and disciplinary records. Next on the list should be job descriptions and person specifications, which articulate the key skills, experience and knowledge needed for every role in the organisation. For example, if certain qualifications are important to the business, they might be included in the selection criteria and the person specification used to determine the desirable level of qualification.

Performance management systems will provide invaluable help, since they will already be familiar to employees and managers alike and, if they’ve been deployed well, will already engender their trust. However, trouble arises if their robustness is questionable – ie, if they haven’t been properly aligned to business needs, and don’t accurately capture the skills and job knowledge valued by the organisation.

In this case, it will be necessary to rely on performance-related criteria that can be measured objectively, such as quantity of production. Failing that, it will be wise to select criteria that can be evaluated by at least two managers who know the employee well, and can score them independently.

Creating differentiators

It is important to prioritise those criteria that will be used to differentiate between seemingly similar employees in the group. This should be done in light of the organisation’s future requirements.

For example, let’s assume an organisation has a group of machine operators with relatively similar levels of experience and skill, and the business has a clear objective to boost productivity. In this scenario, we would advise that a weighting be applied to productivity-related criteria – timekeeping, attendance, quantity of work (output) plus quality of work (number of rejects).

Matrices work on a points system, so to prioritise or ‘add weight’ to a particular criterion it will be necessary to multiply the points by a factor of two or three. However, caution is needed. It will be important to ensure that the weighting system can be clearly explained and doesn’t render the other criteria in the assessment worthless. Remember, too, that it may be necessary to introduce a tie-breaker to be used in cases where employees achieve the same score.

The scoring mechanism should also be defined with sufficient clarity to prevent ­double-counting. For example, if timekeeping is one criterion and the disciplinary record another, an employee may score badly twice over if they have been disciplined for bad timekeeping. The law considers this to be unfair as the employee is, effectively, penalised twice for the same issue. Instead, choose just one of the criteria, or take steps to remove the double-counting.

Remember, too, that one size is unlikely to fit all, and it will be necessary to build different matrices for different employee groups. For example, product knowledge might be a key differentiator for customer-facing staff, but not for machine operatives. Similarly, timekeeping is likely to be very important for machine operatives, but less so for professional employees.

Setting the score

Wherever possible, line managers should complete employee scores based on performance­-related criteria. HR staff should then complete the scores based on employee records, such as absence, disciplinary records or length of service. This gives employees less scope to argue that their performance-related scores were manipulated to ensure they were selected.

In instances where scores aren’t based on objective records or robust performance management systems, it is essential that they are assessed and agreed by a second manager who knows the employee’s work. A score should then be agreed between the two managers.

Even when the scores are based on objective records or robust performance management systems, it is still useful to have a second manager review the score. In this instance, it is less vital for them to have a close knowledge of the employee’s work, and their role will be slightly different. Rather than being a ‘second assessor’, they are acting as ‘critical reviewer’, looking out for scores that are markedly out of kilter.

I would recommend that managers responsible for the scoring exercise should be trained to undertake it. Their confidence – as well as their competence – will have a powerful influence on how well a redundancy programme is accepted.

Survive and thrive

I started out by saying that a good redundancy programme, with good selection criteria, will help an organisation not only to undertake a difficult task, but create a more sustainable future. When good times come round again, organisations that have retained a nucleus of skilled people from which they can build will recover faster than those that, in a knee-jerk reaction, have shed jobs with no clear plan.

About EEF

EEF is the manufacturers’ organisation. Everything we do is designed to help manufacturing businesses evolve, innovate and compete in a fast-changing world.

Our specialist teams of employment lawyers and HR consultants work with around a quarter of the UK’s manufacturing businesses to help them create, manage and sustain a healthy and productive workforce.

Find out more about EEF’s three-month campaign to help you survive and thrive in recessionary times at http://www.manufacturingyourfuture.co.uk/

Reader offer

EEF has just published a new online Redundancy Toolkit. Written by EEF’s HR and legal specialists, it tells you everything you need to know about successfully managing a redundancy programme.

EEF’s toolkits are usually only available to its members but, on this occasion, it is hosting a prize draw that will give 20 Personnel Today readers unique access to this valuable online resource.

To enter, go to www.eef.org.uk/prizedraw before 14 April and register your details. The first 20 names drawn out of the EEF hat will receive access to the toolkit.

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