Redundancies Revisited – Practical Do’s and Don’ts

Our feedback from last week’s article on redundancy tells us that many businesses are looking for practical advice on how to manage the current economic pressures on employment costs.

The Human Capital Institute, a US-based think tank which looks at management, HR and recruiting, has talked to business leaders around the globe and identified 10 DO’s and DONT’s for employers forced to downsize.

MST’s Workplace Relations Team explains each of these points below.

Best Practices in Downsizing:

1. Identify the roles that are core to your business success. The importance of each role to the company’s profit and its value in the business’ future plans should be evaluated, as opposed to the employee in each role. Eliminate less critical business units, rather than making across the board reductions in staff.

2. Identify competencies needed to execute goals. Retain and engage top performers within core functions. Transfer star performers to roles where their skills and experience are best utilised. Now may be a good time to engage high performers retrenched from your competitors.

3. Protect your bottom line and brand. Remember that your public profile may be affected by poorly handled redundancies. Make sure redundancies are part of an overall business strategy. Treat exiting employees as fairly as possible. This may involve ongoing support such as good references and counselling services.

4. Communicate constantly. Treat employees with dignity by advising as soon as possible of developments which may affect their employment. Explain the situation truthfully and listen to their concerns and suggestions.

5. Pay attention to the survivors. Take steps to rebuild the confidence of your surviving workforce. Again, communicate directly and truthfully and allow grieving and questions. Reassure survivors of their positions or they will look elsewhere for security.

Worst Practices in Downsizing:

1. Don’t cut with a hatchet; use a scalpel. Don’t lay-off too many workers, as you may quickly be under-resourced. Over-reacting may harm your brand and your capacity to respond to an economic up-turn.

2. Avoid “death by a thousand cuts”. Lay-offs should be carefully planned and coordinated. Carry out the process as quickly as possible and reassure remaining employees that their jobs are secure and that the cuts are over.

3. Avoid lay-offs before the weekend or holidays. Lay-offs should occur early in the week, so that employees can react immediately by lining up interviews and making other arrangements. Don’t let survivors or exiting employees dwell on the decision over the weekend.

4. Don’t shoot from the hip. Half-baked and badly executed terminations can damage your reputation and increase the chance of disgruntled employees taking legal steps against the business. Get advice and carefully plan for each meeting and every step in the process.

5. Don’t keep employees guessing. If you have a redundancy policy in place, make sure it is available and reassure employees it will be followed. Communicate openly and as soon as possible and offer support to the newly unemployed.

Following these tips and seeking professional advice from MST’s Workplace Relations Team can help minimise the risks of litigation that flow from the decision to make redundancies.

Author: Richard Scougall