Redundancies set to continue finds CIPD report

Nearly
half of organisations that have carried out redundancies in the past 18 months
plan to make further cuts this year, according to the CIPD’s first-ever report
on redundancy workplace attitudes.

The
majority of organisations (52 per cent) also report a decline in staff morale
in the aftermath of redundancies. The report, Best of a Bad Job, sets
out the findings of a survey of 563 organisations which, during the last 18
months, have made at least one employee redundant.

The
CIPD commissioned IRS Research to undertake the study during April and May
2002.

The
CIPD’s chief economist John Philpott, said: "Organisations will continue
to carry out redundancies in the next year due to ongoing organisational
restructuring, irrespective of how well the economy performs. Organisations are
becoming more strategic in their operations and undertaking change to gear up
for domestic and international competition. So redundancy is no longer simply a
defensive cost-cutting exercise."

Philpott
continues: "The good news is that most organisations seek alternatives to
redundancy and recognise the adverse impact it has on employee morale. It is
also heartening to see that the majority of employers (72 per cent) have paid
redundancy compensation above the statutory minimum. Such a sensitive approach
may explain why many of those made redundant seemed philosophical about the
decision. Redundancy is not the threat it used to be, particularly among
younger people."

The
main findings include:


A large proportion of organisations (45 per cent) believe they will need to
make further redundancies over the next 12 months
• Redundancies are concentrated in general manufacturing (17 per cent),
engineering (10 per cent), retail (7 per cent) and financial services (5 per
cent)
• 37 per cent of HR professionals say organisations are too ready to make
people redundant to meet short-term changes in demand
• 53 per cent of HR professionals say younger people are less worried about the
prospect of redundancy, while 32 per cent believe employees do not see
redundancy as the threat it used to be
• 74 per cent of lay-offs are compulsory

The
main criteria used by employers for selecting people to be made compulsorily
redundant (where three criteria were selected by respondents) include:

1.
The employee’s role within the organisation (68 per cent)
2. Job performance (62 per cent)
3. Ability or flexibility (52 per cent)

Most
organisations (95 per cent) seek to minimise the number of redundancies. The
main alternative measures used include:

1.
Offering alternative employment to employees in affected posts (74 per cent)
2. Placing a freeze on recruitment (56 per cent)
3. Achieving workforce reduction through natural wastage (55 per cent)

The
majority of employers (72 per cent) pay redundancy compensation above the
statutory minimum. Fifty per cent of organisations provided counselling whereas
44 per cent provide access to a specialist outplacement agency/consultancy

Organisational
restructuring is the most common reason given for making redundancies by
employers

By Ben Willmott

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