Five phases of good redundancy mangement

Although redundancy will always be an uncomfortable experience for everyone
involved, effective management can smooth the process and, in some instances,
can remove the need for redundancies altogether. Sylvia Crossley reports

Redundancy is never an event that anyone wishes to manage. However, as soon
as it appears on the horizon, it’s time to take action and start working on
damage limitation for those who may be affected, the company, and the remaining

Good redundancy management should begin when the initial warning signs of
potential redundancies come to light. Early attention can sometimes fend off
threatened redundancies altogether.

Phase 1: Change management

The reasons for threatened redundancies are many and varied. It may be due
to a market downturn, a company merger, falling profits, a cash flow crisis,
outsourcing or the loss of a major contract.

What these situations have in common is that each requires swift attention
and will lead to some form of change management before the redundancies are
decided. All the procedures and principals of good change management will
apply. Strategies will need to be revisited, trends must be carefully
monitored, new plans need to be drawn up, and above all, people will need to be
kept informed.

Where a collective redundancy situation (20 or more staff to be made
redundant) is feared, staff representatives must be consulted within the
statutory time frame. However, explaining the situation early on to employees
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

– Avoids damaging rumours and innuendo

– Rallies support for change and unites staff and senior management in a
common fight for survival

– Provides an opportunity for ‘grass-roots’ staff to offer cost-cutting and
efficiency suggestions

– Makes any subsequent efficiency and/or cost-cutting measures more

– Lessens the shock and reaction if and when redundancies do have to be made

– Fosters an environment of honesty, trust and respect

Clearly, communicating this information to staff must be carefully managed
and controlled to avoid any additional damage to the company, or panic among
the workers. 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 involves
carefully examining all avenues for minimising redundancies and their damaging
effects. Of all the changes that can occur in the workplace, redundancy creates
the most negative response. Minimising the job cuts and being seen to be making
every effort to avoid them altogether is crucial. The avenues open to you will
vary according to the size, situation, and nature of the business, of course,
but the following have all been used successfully by a variety of companies:

– Re-evaluating working hours – leading to greater flexibility on a weekly,
monthly or annual basis

– Retraining – 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 freezes (this needs careful management to ensure key positions
are covered)

– Voluntary pay cuts

Once again, an honest and open approach not only reduces the sometimes
devastating effect on the staff, but also pays dividends to the management and
success of the plans for recovery, streamlining or downsizing. Key staff
members are far more likely to stay and weather the storm if an environment of
trust and openness is nurtured. Those in positions that are critical to the
business should be reassured that their positions are not, and will not be, in
jeopardy, as early as possible in the process.

Phase 3: Selecting the jobs to be cut and 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
employees to discover they may face redundancy from rumours, outsiders or the
media, even when all the redundancies are expected to be voluntary.

Having worked through phases one and two, care and attention must be given
to selecting the positions and people to be made redundant. Check the current
legislation on your consultation and notification obligations. Regardless of
legal obligations, each position deserves to be given individual consideration.
Consider whether the position will be needed again in the near future, how the
work will be dispersed, and 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 checklist with set criteria to determine equitably which
positions should be selected.

Care and empathy is essential when notifying the individuals at risk. 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 you can aim to provide appropriate support, either
through an outplacement service or directly. Explain the process and procedure
carefully to them in person, and follow this up in a letter.

It is advisable to have a short consultation period to allow the individuals
at risk to put their case. However, this should not be included for cosmetic
purposes only. Consultation periods can and do work. At visual display
manufacturer SEOS the company found itself in a position where it had to make
15 people redundant. By consulting with the staff, that number was reduced to
13. Personnel manager Fanny Bradbury also invited all the non-affected members
of staff to comment, and this wider consultation, while not a legal obligation
as less than 20 employees were affected, paid dividends all round. "This
proves that the consultation period does work," says Bradbury.
"Communication is the key."

Phase 4: Managing the people out

Redundancy can be one of the most stressful life experiences. Those affected
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
any 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 detailed above if required, providing suggestions,
alternatives and pulling together a programme appropriate to the needs of the
individuals. When 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 desired.

– 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 out 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 as to why it would be in your interests 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. They should try to understand your situation and needs rather than
push to sell you the service. If possible, 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 some time after your
contact has ceased, so check whether this service is also provided.

– People – most outplacement consultants are empathetic and experienced, but
of course, there are good ones and bad. Try to speak with the consultants who
will be assigned to your organisation, 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, the Citizens Advice Bureau, financial consultants, and so on. It is
also worth contacting local companies in the same business to see whether they
have any unadvertised opportunities.

Phase 5: Managing the people who remain

Having provided support and assistance to those directly affected, you must
turn your attentions to those indirectly affected. In varying degrees, this
includes all the members of the workforce. By implementing redundancies, you
will have inadvertently sown the seeds of doubt about the security of their own
positions. 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 who remain need
to feel confident that the crisis is over and the company is doing all it can
to avoid any further redundancies.

As redundant staff leave, they often leave gaping holes. Where a friendly
colleague sat, there is now an empty desk and chair; tasks will be left
ownerless; the old manager may be replaced by an unknown and more distant one.
The empty void and confusion is exacerbated when senior management are hidden
away in meetings at a time when their visibility is most critical.

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 that have been made and feel
the situation has been managed fairly

– The implementation of any time and cost-saving measures is going smoothly

– The most talented staff do not feel insecure and leave

– Any grievances or concerns can be aired and dealt with

– Remaining staff feel visible and valued

Once your head is above the water again, 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 that provides benefits all
round is executive or career coaching. Offered to nominated staff, or the top
10 performers, it 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 aftercare. More than a third of the companies voted into
this year’s Sunday Times 100 Best Companies To Work For needed to make
redundancies during the past 12 months. For both companies and individuals,
good redundancy management can turn a crisis into an opportunity.

Sylvia Crossley is principal consultant, RMS International

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