Specialist HR Solutions and Commercial Software Development

The 5 Phases of Good Redundancy Management

Sylvia Crossley, Principal Consultant at RMS International, writes about the phases of good redundancy management:

Redundancy is never a circumstance that anyone wishes to manage. However, when its unwelcome face first peers over the horizon it is time to take action and start working on damage limitation for the people who could be affected, the company, and the remaining staff. The first phase of good redundancy management begins when those initial warning signs of potential redundancies surface. Such early attention can sometimes fend off threatened redundancies altogether.

Phase 1 – Change Management

The reasons for threatened redundancies are many and varied: market downturn; company merger; falling profits; funding or cash flow crisis; outsourcing; loss of a major contract, and so-on. What each of these situations has in common is that it will require swift attention and lead to some form of change management before redundancies are decided. All the procedures and principals of good change management will apply. Strategies need to be revisited, trends need to be carefully monitored, new plans need to be drawn up, and above all people need to be kept informed. Where a collective redundancy situation (20 or more) is feared, staff representatives must be consulted within the statutory time frame. However, explaining the situation to staff members early is good practice regardless of the numbers affected and has a variety of benefits:

Clearly dissemination of information to staff needs to be carefully managed and controlled to avoid any additional damage to the company or panic amongst the staff. 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 is to carefully examine all avenues for minimising redundancies and the damaging effects of redundancies. Of all changes in the work environment, redundancy engenders the most negative response. Minimising the job cuts and being seen to be making every effort to avoid redundancies is crucial. The avenues open to you will of course vary according to the size, situation, and nature of the business. The following have all been used successfully by a variety of companies.

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

Phase 3 – Selecting the Jobs to be Cut & 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 staff to hear that they may face redundancy through outsiders, rumour, or the media, even when all the redundancies are expected to be voluntary.

Having worked through phases 1 & 2 above, a lot of care and attention needs to given to selecting the positions and people. Check the current legislation on your consultation and notification obligations. Regardless of legal obligations however, each position deserves to be given individual consideration. A conscientious approach to this will reap rewards for the Company as well as the individuals concerned. Consider whether this position will be needed again in the near future, how the work will be dispersed, 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 check sheet with set criteria to determine equitably which positions should be selected.

On notifying the individuals at risk, care and empathy is essential. 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 that you can aim to provide appropriate support, either via an outplacement service or directly. Explain the process and procedure carefully 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. Only last month I was working with a company which successfully implemented a consultation period for the second time, saving one job as a direct result (having saved 2 previously). Fanny Bradbury, Personnel Manager with SEOS Ltd. said “I also invited all the non-affected members of staff to comment”. This wider consultation was not a legal obligation as less than 20 staff were affected. However, this voluntary good practice paid dividends all round. “This proves that the consultation period does work”, Fanny added, “communication is the key; for everybody”.

Phase 4 – Managing the People Out

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

In selecting an outplacement service consider the following:

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, CAB, Financial Consultants, and so on. It’s also worth contacting local companies in the same business to see if they have any unadvertised opportunities.

Phase 5 – Managing the People Left

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

As the redundant staff moves off the scene, gaping holes are often left. Where a friendly colleague sat, there is now and empty desk and chair; tasks will be left ownerless; the old manager may be replaced by an unknown and more distant new 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:

Once your head is very clearly above the water again you may wish to 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 which provides benefits all round is Executive or Career Coaching. Offered to nominated individuals, or the top 10 performers, this 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 after care. Over 1/3rd of the companies voted into this year’s Times ‘100 Best Companies To Work For’ had needed to effect redundancies during the year. For both companies and individuals, good redundancy management can turn a crisis into an opportunity.

Sylvia Crossley, Principal Consultant, RMS International.  2002

RMS International offers FREE initial consultancy & advice regardless of whether or not outplacement is being considered.  Call 01625 438 888 visit www.rms-international.com or email sylvia@rms-international.com.