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What are the most essential points a company must cover at the outset of a redundancy process?

First of all, it’s important to note that companies don’t go into redundancies lightly. About 20 years ago, when I was involved in my first-ever redundancy programme, a colleague told me the sobering stat that for every employee who is made redundant, at least five, additional people are affected. That doesn’t just include members of the individual’s immediate family, but other people in their personal supply chain – for example, if they decide to cancel their childcare, the provider loses income.

On an organisational level, the amount of disruption that redundancies cause and the costs they impose are both significant. So, in many cases, companies would explore other avenues to make cost savings before taking this course of action.

With that in mind, the starting point for leaders is to understand, in its fullest detail, the business context behind the decision – because that will make you think very carefully about what you are doing. For example, imagine a firm that had a superb year of growth last year and recruited additional people to manage the surge of business – but then market forces changed and sales significantly reduced.

Does that company really need to consider redundancies? Could the situation be temporary and be turned around with some great sales-team hires? Could the firm consider short-time working, seek opportunities for financial or operational efficiencies or carry out a very small, self-contained programme of voluntary redundancies? There are those options.

Often, redundancy planning can begin as a financial or operational decision. When focused on the numbers, a company can underestimate the impact redundancies can have on the whole business. HR being included in the decision-making group, rather than just in the delivery group. will ensure that even though you are bearing bad news, you can still create a good-quality redundancy programme. That will be one where HR can ensure that people are treated with dignity and respect, and will have an influence on the timing, approach and communications – as well as the impact not just on the people potentially losing their jobs, but those remaining afterwards who will have been equally unsettled by the process.

Which priorities rise to the fore when the actual process gets underway?

No matter how big or small your organisation is, the two most important points to cover are communication and stakeholder management, which are closely related. In those areas, one example of poor practice that really stands out is P&O’s move last year to make 800 people redundant without warning or consultation. The widespread criticism that attracted provides plenty of lessons.

Amid a redundancy process, a company must consider its stakeholders to include not just customers and investors, but trade unions or employee representatives – local MPs, too. And you have to be on the ball with all those parties straight away to ensure there is clear and consistent messages, as rumours and speculation can be very harmful.

Adding into the mix further layers of communication between the company and its employees – such as trade unions or employee representatives – creates an interesting dynamic, and can show just why clear communication so important. During one redundancy programme, we held a jobs fair as part of our mitigation process with the potential that some of our leavers would be able to walk away with a redundancy cheque and go straight into a new job. But a trade union representative urged staff not to go, on the entirely false premise that the company would keep note of whoever attended and automatically select them for redundancy.

To fend off those sorts of rumours and urban legends, we held regular myth-busting sessions, and ensured that all of senior staff were consistent on the underlying rationale for the process and repeated that message over and over again.

What do you consider to be an underappreciated area of best practice?

While leaders have a reasonable knowledge of the statutory elements of redundancy, there’s a human element that just can’t be legislated for. But for me, honouring that element is the difference between an employer doing a good job, or not. Communicate regularly and openly, and give people as much information as possible and as much support as you can. And you can do so many extras that really aren’t very expensive.

For my team, the best redundancy we ever worked on was for a company based in the North East, where we made 80 people redundant – about half the workforce, which sounds really severe. But out of those, every single person either walked straight into a new job, or had financial advice indicating that they were ready to retire. There were no compulsory redundancies. No one was left having to sign on at the end of the process, and everyone was at peace with how it turned out.

The things we did weren’t complicated  – like showing people how to write a good-quality CV and prepare themselves for interviews. We convened a room with a laptop and newspapers in it that people could visit to look for jobs. We secured some funding through a local union and paid for people to do forklift truck driving and security qualifications, so they could go into warehouse jobs or work the doors at pubs or clubs. Essentially, we invested to ensure that people would continue to be employable.

Redundancy is a horrible thing to go through – but when someone who has experienced it can look back 12 months later and say that the people behind the process did all they could to create opportunities for those who left, that reflects extremely well on the leaders involved.

How should the post-redundancy phase play out for the business that has shed staff?

At this point, leaders will end up thinking right back to the very beginning of the process. Essentially, the question they must ask themselves is: “Did we get the organisation we wanted?” And, perhaps even more crucially: “Did we let the right people go?”

Quite often in redundancies, there will be a group of employees who are fairly close to retirement and will either volunteer to go, or be selected because they seem to be low-hanging fruit – but then, a few months later, you realise that no one knows how to use a certain piece of equipment, or follow a particular process. So, you’ve either wittingly or unwittingly cast off a chunk of organisational memory – knowledge that can be hard to quantify, but may nonetheless go to the heart of how key parts of the business work.

This reminds me of a thought experiment that’s appeared in various forms: a train breaks down and the rail company hires a mechanic who comes along and taps the engine twice with his hammer. Straight away, the train starts up again. The rail boss asks, “What do I owe you?” and the mechanic says £1,000. “Nonsense,” says the boss. “I’m not paying £1,000 for you to just turn up and tap the engine twice.” And the mechanic says, “No – you’re paying £1,000 for the 50 years of experience it took me to know where to tap the hammer.”

All of this demonstrates why leaders must have the future picture firmly in mind before they even start the redundancy process.

Another point to stress here is that companies often forget to go into recovery mode once the dust has settled. Your communication efforts shouldn’t grind to a halt just because the process is over. Some employees may be suffering survivor’s guilt, because close colleagues whose talents they respect have gone and they’re left behind. At the same time, there may be others who are disappointed that the firm decided to keep them on and their hoped-for redundancy wasn’t signed off. In addition, there will be a need to redesign people’s jobs to reallocate tasks, as the work would not have reduced in line with the headcount.

As well as requiring communication-based and practical input, those issues may also call for an element of mental health support to help staff work through their feelings about the process and adjust to the new structure.


Voices from our community: Penny Jones is Founder and Human Resources Director at Penny Jones HR, specialising in people-related transformation for businesses and individuals.

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