In our recent article on “Change Management and the Management of Change” we talked about the varying situations in which change occurs, the majority of which are positive and are necessary because of a healthy, growing business.
However, there are three situations in which the reasons for change are or can be perceived as negative and unhealthy. The most negative of these is redundancy.
The other two are TUPE and merger and whilst these may come about in a growing, healthy business, the way in which they are handled will determine whether the general effect is negative and damaging when they should be positive and creating excitement.
Today’s article is about the management of change that comes about from the need for redundancy.
Redundancy is a significant change brought about usually, but not exclusively by a diminution of business need for staff performing particular work. It may be that a contract has come to an end and is not being renewed, or an expected order has not been filled and therefore the need for the skills that perform the work is no longer necessary. Good human resource planning may be able to lessen the need for redundancy but it can’t always be avoided.
But whatever the reason, redundancy will affect the morale of the entire staff, not just those who are at risk. The loss of jobs causes fear and uncertainty amongst those will remain in the business and it is as much a part of the planning to ensure that key staff are retained as it is to make the redundancy process as compassionate as possible for those who will not be retained. As the CIPD says:
“Redundancy can be one of the most distressing events an employee can experience. As such, it requires sensitive handling by the employer to ensure fair treatment of the redundant employee as well as the productivity and morale of the remaining workforce”
Redundancy should be final choice of actions, after having considered redeployment, vacancy management, less use of subcontractors and temporary / agency workers, stopping overtime, etc.
There are, of course, legal aspects to carrying out redundancy and these will form the subject of a separate article but a shrewd Company will ensure that it has considered every aspect of the law and be ready and prepared to mitigate any claim that might arise against it. This article is about anticipating, preparing for and being able to manage the wider changes.
As with any change, the basic common denominator is people.
How they will react, how they will act.
Taking time to consider potential outcomes and how to deal with them should again part of the planning process.
Communicating the Change
As soon as the plan is sufficiently robust it will need to be made public. The first thing that people will want to address is the rationale, followed immediately by the unspoken questions that will be in everyone’s mind: “How will this affect me?” and “when is this going to happen; how much time do I have?”
A good communications plan that takes into account what people will need as well as what the business needs will help to alleviate some of the fears.
It’s important that the rationale explains, along with the business reason, that redundancy is a last consideration, a final choice.
Who to Address with the Communication?
There is only a need to speak to the whole business when the potential redundancies will be made across the business. If it is a discrete area that is to be affected, then that area should be informed first. Part of the planning process should include when and how to inform the whole staff that redundancies will be taking place in areas that do not affect them personally.
When announcing the redundancy to the affected staff the Company will be giving the overall picture; the “helicopter” view. There is little more distressing to a group of people than to publicly find out that their roles will be affected when those of their peers present in the room will not.
As a redundancy must involve a period of consultation, following up with something in writing is essential. An explanation of the rationale behind the decision should be the starting point, followed immediately by an outline of the timetable and the process. Also, who is overall in charge of the process and where questions can be answered ahead of formal consultation meetings will be helpful.
The most important part of managing this process is NOT to leave a void. If it’s possible to have the written comms ready to distribute on the same day as the announcement, this will help consolidate what has been said. When receiving difficult and disturbing news people tend to remember only certain points. This leads to discussion about what was actually said and could include something that was not said, only assumed.
When planning, the Company should consider a budget. Is there a need to consider re-training, if redeployment is an option? Is there room for outsourced support and mentoring to help the affected staff adjust and find a new role?
In many mass redundancies that have taken place in the past, no thought was given to staff and workers who had been in one job for their entire working lives. They had no other skills, but nothing was offered as a replacement. This situation has changed somewhat, but if the Company can help by preparing the affected staff for a new working life, then it should consider doing so. For example, if there is going to be financial hardship, could the Company provide a financial advisor to help with planning?
Not only will this help to alleviate some of the stress and fear, it will show those remaining that the Company is keeping to its stated ethical standards and values by ensuring that the process has been carried out respectfully and fairly.
And don’t forget the Managers. They are going to be at the forefront of managing people with a range of emotions, both leavers and remainers. It can be hard going and they need to know that there is someone they can talk to. An HR expert can be invaluable in this situation, not only advising on process, but on handling difficult situations and emotions. The expert can help them to understand that attacks on them are not personal and that there are ways to continue communication that avoids confrontation e.g. the layout of room side by side, not across a table; breathing exercises for calmness before the meeting; body language that is open. Resilience is a huge factor in helping to cope in such situations.
This is now a recognised psychological phenomenon of the outcome of a redundancy exercise. The psychological contract will be damaged. Those who remain in the business can feel as badly as those who are leaving. What can the Company do to alleviate this? Again, frequent and voluntary communication is a good part of the answer. And managers remaining close to staff and being open and honest will help to rebuild trust.
There is evidence that turnover increases in the wake of a redundancy exercise, as the remainers strive to ensure their own security, the image of which will have been dented by what they have seen and heard happening to colleagues and friends. Work provides a sense of purpose and belonging, but that will have been damaged.
Keeping in touch with the remaining staff is vital, perhaps giving them more information than usual about the business and its plans. Consider if there is some way that they can be more involved than usual in business planning, perhaps asking them what tasks could be discontinued, or what new working methods could be introduced. No-one can ever guarantee a job for life, but helping people to understand that the business has a solid future can nudge a ‘stay/leave’ decision in the Company’s favour.
Whereas those being made redundant will ask “why me?”, those who are staying may ask “why not me?”. The use of a qualified Counsellor is also worth consideration, if there’s a budget. If there isn’t, then consider team building exercises that can be carried out in-house.
All of the above are intended to help the Company to keep business moving and productivity as high as possible until the redundancy situation is over and there is a new “business as usual” atmosphere.
But, in conclusion,
fair treatment and open communication and respect are the most important ways a
Company can bring its staff back together and get on with its climb back to
full engagement and greater motivation and productivity in the new world.
 CIPD Factsheet April 2019