Managing Redundancy - Adopting a 7-Step Approach

Outplacement is a valuable and effective tool in redundancy management. Corporations who choose to provide outplacement services to employees are seen to value and respect the contribution made by individuals during the course of their employment. There are 7 key stages to good redundancy management.

Stage 1 - Strategy:

There are many factors that influence an organisation and result in a review of process and people with the aim of reducing costs to improve effectiveness, productivity and competitiveness, often as a result of market downturn; falling profits; funding or cash flow crisis; outsourcing; company merger; or loss of a major contract.

Involving senior HR professionals in the earliest stages of the downsizing process is an important part of the planning phase. All the organisation’s leaders should be trained both to manage the process and to deal with their own emotional reactions to change.

When redundancy is under consideration, whether one employee or several, having a clear strategy for consultation, implementation and communication is crucial. Developing strategies to support those employees who are leaving, but equally those who remain is considered best practice, and has a number of benefits:

• It gives you control over what, when and, most importantly, how information is released.
• Communicating the issues fosters an environment of honesty, trust and respect.
• It reduces damaging rumour and innuendo and lessens the shock and the reaction, if and when retrenchments have to be made.
• It allows for a period of adjustment and personal change with regard to work role, interactions and post change environment.
• It often unites staff and senior management in a common fight for survival.

Clearly the process needs to be carefully managed to avoid any additional damage to the company or panic amongst the staff. Organisations need to put in place measures to reassure, motivate and reward their key people. Retaining talented employees is critical, yet they are the people most likely to find work easily elsewhere. Those employees 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.

Stage 2 - Minimising Redundancies:

Having developed a plan, in consultation with all key stakeholders, the next phase is to carefully examine all avenues for minimising job cuts and the damaging effects of redundancy. With this objective in mind, the following methods have all been used successfully by a variety of organisations:

• Building flexibility by re-evaluating working hours.
• Redeployment into other areas of the business.
• Flexible work practices such as job sharing schemes and part-time working arrangements.
• Early retirement, natural wastage and voluntary retrenchments.
• Voluntary pay cuts.

An approach which is honest, and as open as possible, not only reduces the devastating effect on the staff, but also benefits the management and the success of the plans for recovery, streamlining or downsizing. Organisations need a clear strategy to retain key staff long term and retain others until the organisation is ready to let them go. Financial incentives often in the form of long-stay or retention bonuses, communication and good management are among the most successful methods used.

Stage 3 – Selection:

Having worked through stages 1 & 2 above, care and attention needs to be given to selecting the positions and people. Key actions include:

• Aligning your consultation and notification obligations with current legislation.
• Establishing the criteria to determine which positions should be selected.
• Giving individual consideration to each position. Consider whether this position will be needed again in the near future, how the work will be managed or dispersed, and the impact on staff in a similar position.

Stage 4 – Notification:

One of a senior manager’s most unpleasant duties is to announce their restructure and redundancy decision, taken with the organisation’s best interests at heart that results in a valued colleague being forced to look for new employment.
Consider the manner in which you would wish to be treated and how you would respond to a threat to your livelihood - care and empathy is essential. All the organisation’s leaders should be trained both to manage this highly sensitive event and to deal with their own emotional reactions the change represents. Redundancy can be one of the most stressful life experiences. Even when generous redundancy packages are involved this can still be a devastating blow. As a manager:

• Look into each individual's personal situation beforehand so that you have some understanding of the problems they may face.
• Aim to provide appropriate support, either via an outplacement service or directly. Explain the process and procedure carefully and follow this up in writing.
• Remember, 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.

Stage 5 - Selecting an Outplacement Provider:

A good organisation 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.

If required, outplacement consultants will work with the organisation through the entire process, at certain stages of the process or in the identification and provision of an appropriate outplacement program. The outplacement consultant can also be available on site at the time of the announcement.

In selecting an outplacement service provider consider the following:

• Location: Does the outplacement provider have offices and facilities available within a reasonable travelling distance?
• Budget: Does the outplacement provider have a range of viable solutions to fit your budget?
• Timing: Can the outplacement provider respond and be available at the right time for your organisation?
• Expertise: The service needs to be 'fit for purpose'. When contacting a prospective outplacement company speak with one of the consultants. The company should be able to provide you with a proposal and program outline at the appropriate level and in line with your budget.
• People: Most outplacement consultants are empathetic and experienced, and good outplacement companies will be able to provide profiles of their people demonstrating their collective experience.
• Method of Delivery: Can programs be provided on an individual or group basis? Is there a face-to-face, electronic or manual based method of delivery?
• Content:

Does the outplacement service provide:
A comprehensive career assessment
Psychometric testing
Strategic career planning
Access to extensive databases
Office facilities and computer resources, including internet access
Draft résumés and marketing letters
Expertise in working the hidden job market and networking
Interview skills and mock interviews
Fit to advertised positions
Remuneration advice & salary negotiation
Communicating with referees
On-going mentoring

• Post Transition Support: Support for the individual normally continues for some time after your contact has ceased – what are the terms of the program?
• Guarantee: Does your outplacement provider guarantee to work with, support, coach and mentor your former employees until they are placed in a suitable role?

Stage 6 - Stabilisation: Evaluation:

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 on whom the future of the organisation depends. Their emotional reaction to the change needs to be considered and promptly addressed. A complex, emotional response is often displayed by those left behind, shock and relief, but also anger and anxiety. By implementing redundancies you will have sown the seeds of doubt about the security of their position. Those remaining need to feel confident that the crisis is over and the company is doing all it can to avoid any further redundancies.

Good communication during this period of uncertainty is crucial and goes hand in glove with management presence and visibility. In your initial planning, ensure that you have included measures to cover this period of transition. Ensure the organisation’s actions support the reasons for the upheaval. Do not suddenly burden remaining staff with a departing colleague’s workload.

Open all lines of communication both formal and informal so that any grievances or concerns can be expressed and dealt with; check individual understanding of the reasons for redundancy and establish how staff feel about the manner in which the situation has been managed.

Stage 7 - Evaluation:
Managing redundancy is never easy. However the adverse effects can be substantially reduced through adopting this 7-step approach to managing retrenchment. Essential to the process is good communication; careful analysis and planning; effective consultation; sensitivity in approach; and the provision of appropriate support, assistance, and good on-going support.

Evaluate the process and delivery with remaining staff and develop a clear policy for the organisation going forward.