In the article entitled "Planning for redundancies – A legal perspective" Dr Maria Tabone, Senior Business and Corporate Advisor looked at the minimum obligations on the part of the employer and the legal parameters within which redundancies can take place. Whilst the law is unequivocal on some considerations that employers need to action, it provides little guidance for those leading people and teams on how to best communicate redundancies with the least damage to employee engagement, productivity and employer brand.
Several articles appearing in the last ten years on online platforms such as the Financial Times and Harvard Business Review, discuss the high costs of making employees redundant. The most significant of these costs is not related to those actually made redundant but attributed to the repercussions and challenges the company faces after the redundancies – particularly the productivity and engagement of 'surviving' employees. This is not surprising. Once a company communicates that one or more employees will be made redundant, the morale of the workforce will automatically shift to one of heightened anxiety which dampens productivity. Even if an employee is not impacted directly, job security is put into question as one's strong performance may not be sufficient to ward off job loss. What is generally observed in such situations is that in addition to those employees made redundant, a percentage of employees leaves the company voluntarily due to this insecurity – and those with the strongest skill set are typically the ones that leave first. Re-hiring for the unplanned turnover adds further costs. The new talent will need time to pick up the level of skill, speed and client knowledge that those who left possessed. Not to mention the time lost to recruit, agency fees and potentially increased salary cost for these new hires. In addition to this, all of these elements have their knock-on effect to the employer's brand reputation which will do little to inspire those on board to stay or those needed, to join.
Whilst there is no perfect way of carrying out redundancies, there are some key considerations that can make a bleak situation slightly less painful for all parties concerned.
- Planning and preparation – understandably not all companies may have the luxury of whole weeks of advanced notice before redundancies need to take place. However, where possible, it is worth to plan how best to communicate and execute the redundancies based on the knowledge of your company. Think ahead on what reactions you might expect from specific teams or members, where productivity might be impacted the most and how you can alleviate some of the stress and uncertainty that such a situation will provoke.
- Have a communications strategy – Who will communicate, where and how? Whilst there may be a limit to how transparent a company can be in some situations, the more genuine, clear and transparent the message, the less room for uncertainty it leaves behind.
- Think of retention – executing redundancies absorbs a lot of energy and it's easy to forget to think of those who will be staying on board. Have a strategy in place on how to retain the strongest members of your workforce that you depend on for business continuity after the redundancy period.
- Execute with empathy and efficiency – being made redundant is one of the top stressors in anyone's life and nothing will change that fact. It is therefore more respectful to give employees clear facts while showing genuine empathy and care. The person communicating the redundancy has to have a level of fortitude to be able to answer questions clearly and compassionately, giving guidance on the next steps and representing a solid point of reference in a situation which feels volatile and out of one's control.
- Redundancy aftercare – Employees may come to understand why redundancies needed to take place and with time, things may go back to resume a new normal. But employees also carry a collective memory of how they felt during that period and how the company took care of those made redundant. Was there someone that employees could go and speak to in confidence? Were those made redundant helped to deal with the psychological impact of suddenly being unemployed? Were they helped to find new employment? The answers to these questions are pivotal for the engagement of the 'surviving' employees and what will inform the opinion of the employer brand for months following the event.
- Post mortem of the redundancies – sometimes the situations that lead to redundancies are external factors beyond one's control but others may not be. Could the company learn to operate in a leaner manner and thus avoid a situation of surplus staff in some departments? Can the finances be managed better? These are some questions that top executives are obliged to look into, to avoid redundancies becoming a regular safety valve which can then see cyclical turnover and instability across longer periods of time.
Restructuring and redundancies are sometimes inevitable in order for a Company to remain competitive, particularly in the face of unforeseen external factors. However, it is a costly undertaking which needs to be managed strategically. Business leaders and HR professionals leading teams in such situations need to move from 'crisis-mode' to thinking strategically on how to communicate, execute and carry-on as an enterprise after the redundancy period. Whilst there is no perfect way of executing redundancies, the considerations that an employer takes in such circumstances may make the difference not only to the employees but also to the future success of the organisation.
Originally published 15 May, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.