Recession
Managing Redundancy
By Kenneth Buchholtz, Chartered FCIPD, MBS
May 25, 2010 - 3:21:00 PM

Redundancies are never easy and cause major stress for all involved both managers and employees. However, redundancies are a sign of the times as companies re-align themselves to make sure they are viable for the next couple of years. Today even the most successful company can undergo a redundancy situation.

There are a number of points to consider when managing redundancies and number one is not to panic and resort to crisis management. A cool head and good planning are essential for any company to survive a redundancy situation.

If a company has the time there are preventative measures, which can be put into place such as: -

• Recruitment freezes – effective for reductions with long run down periods. No new staffs are recruited and slowly the number of employees will go down.
• Stopping overtime – can be effective if there is still a good amount of overtime used in sections of the company.
• Re-deployment – should always be considered and is more cost effective than compensation, recruitment and induction of new employees. However, check before hand if retraining is feasible for employees.
• Terminating temporary contracts – However this can result in insecurity for workers as they see employees leave the company.
• Part Time work - Offering the opportunity to work part time can give reductions in numbers and keep a satisfied and motivated workforce.
• Sabbaticals – be flexible in sabbaticals and give people the opportunity to leave the company for some time either to travel or study and come back when hopefully the dip has passed.

If the situation is such that redundancies are not to be avoided by the aforementioned measures then it can be advantageous to offer a voluntary redundancy package. Specify criteria and packages offered and then seek willing redundancy volunteers with no commitment on either side. Before making the final list of candidates check as an organisation that the people who may possibly leave are not your most important asset and so leave the company with employees with an incomplete skill set.

If redundancies have to be made and voluntary redundancy does not solve the problem then set out criteria for selecting candidates for redundancy. ‘Last in - First out’ is an accepted selection method. However, it does not always have to be used and can be a very unsatisfactory way of retaining the most competent employees.

Announcing the redundancies needs to be done with care and should be well organised. The notice period, which needs to be given, can be up to eight weeks and needs to be included in the planning. Furthermore, a good plan on how to implement the communication of the redundancies should be set up.

The announcement if possible needs to take place face to face especially with the section of the company, which is affected. Alternatives need to be found for employees who cannot attend the announcement and ensure that they hear the news first hand and not on the local radio station or read it in the newspapers.  The announcement needs to be made with clarity and sympathy. The statement should take place in the middle of the week to give employees a chance to talk about it and to understand what has happened.

An announcement on Fridays will give the employees no chance to really get to grips with it and ask questions. All the frustration, anger and misunderstandings have to wait until the following Monday and the company has no opportunity to handle these issues before they become too set in people’s minds.

Don’t make the mistake of the company that decided to make a clear clean cut and surprised a section of their workforce on a Friday by serving redundancies, which were immediately implemented. They not only lost the workers who were made redundant, but also lost the trust of their workforce. In the following months they lost more employees than necessary as they decided that their future was not with this management and company.
 
Important points for management when announcing redundancies are:

• Develop honest two-way communication; give a clear but sympathetic message. Give the selected employee time to react and let them blow off steam.
• Give the entire workforce a full explanation of the situation and explain the policies and practices adapted to those made redundant.
• Demonstrate the necessity for change.
• Give an appraisal of future employment prospects and details in changes in working arrangements
• Handle redundancies in a responsible, fair and effective way
• Do everything possible to minimise redundancies and support those who lose their jobs
• Ensure managers have the necessary personal skills and attitudes to operate during the period of stressful change.

Employees who are being made redundant need help and assurance. Employees can be badly affected by redundancy and need support to accept the reality and mount an effective job search. A well-designed redundancy programme should enable employees to refresh their interview skills, write and polish up CVs and reply to job advertisements and search for vacancies.

The immediate priority is the fair and sensitive treatment of employees who are loosing their jobs. During the redundancy period and afterwards the company’s effectiveness in today’s competitive market is largely dependent on the morale of the remaining employees.

A ham-fisted handled redundancy can result in a demoralised workforce, anxious about job security and critical towards management of the company. This can result in quality issues and more staff leaving voluntarily because the trust between employee and employer has been broken. Management should provide a forward-looking positive attitude for the future and reassure the remaining staff of the value of their role in the future. Managers should conduct where necessary, individual discussions with remaining key workers to reassure them of their importance and employment prospects.

If you want to talk to Kenneth Buchholtz, Chartered FCIPD, MBS, about Human Resources issues then give him a call at 065 7071933.

Kenneth Buchholtz,
M.B.S. HRM
Chartered FCIPD
Campbell International,
Human Resource Consultants,
Cloncoul House,
Ennistymon,
Co Clare.

Telephone 065 7071933

E-mail Info@campbellinternational.net

Web: http://www.campbellinternational.net/