Paying your top talent to leave the company and join the opposition is an
underestimated side effect of offering staff voluntary redundancy
Many cost-cutting employers are treading a well-worn path: they are offering
their staff voluntary redundancy. But it is a dangerous path to walk and
organisations should think twice.
The problem with voluntary redundancy is that it takes time. While people
are thinking about it, the organisation is not operating normally. Managers are
distracted as they try to unearth the 10 per cent of staff who are willing to
leave. As this goes on, the majority of staff have little or no business
direction.
It results in the organisation paying lump sums to staff who planned to
leave the company anyway. In the worst-case scenario, the organisation pays an
employee a redundancy payment who then promptly gets a new job with their
competitor.
Employees with industry know- ledge, willingness to take risks and who want
a new challenge in life are perfect candidates for the opposition. These are
the people any company needs to succeed, so why pay them to leave?
Many organisations think that reserving the right to refuse voluntary
redundancy for talented staff prevents a skills drain. But this usually
backfires.
Once an employee has spent the time thinking about taking voluntary
redundancy they begin to formulate a different future for themselves. Then the
employer turns round and says: "No we can’t afford to let you go". It
just makes employees feel cheated and resentful. This will affect their
productivity and, if the economy takes a further downturn, the organisation
will lose this talent anyway.
Furthermore, once employees start asking themselves whether they should
stay, management has to offer something to keep previously happy staff. This
does not make commercial sense.
HR normally knows which staff will opt for voluntary redundancy –
long-serving staff over 50 years of age who are already thinking about
retirement. For them and the organisation voluntary redundancy can be a good
deal. But the employer could identify these people without going through all
the problems of a voluntary redundancy programme.
There are ways of minimising the pain of redundancy and keeping the
organisation successful in the process. HR should focus on the job in hand. Cut
functions, locations, or subsidiary businesses that will not add value to the
future of the business. It is an opportunity to shape the business for the
future in a more competitive world.
It is worth remembering that it is the job that is redundant, not the
person. HR should find jobs for the talented people before the announcements
are made, or immediately afterwards.
Employers have to keep control of staff who ask to leave, and release those
not adding value to the business. Also, get everything done as quickly as
possible, work hard to get the functions closed, resources transferred and get
the company looking forward to the future. In short, get the pain over quickly.
The staff who are leaving have to be provided with as much support as
possible. Often the services of a professional outplacement firm are needed to
counsel employees and help them find a different future. This is also important
for those who stay, particularly when it comes to morale. It helps to reassure
them that their employer is treating their colleagues properly.
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Any organisation that elects for voluntary redundancy because it is less
painful has its priorities wrong. The best redundancy programme is one that
protects the interests of all the staff in the company – both those leaving and
those staying.
David Bebo is associate director of career management at Marton House
