Redundancy – managing the impact on your business

2 December 2008

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Last month, we looked at some of the key legal issues involved in redundancy and the importance of proper consultation. Whilst the legal framework is of paramount importance in a redundancy situation, there are practical HR considerations which, if handled properly, will help to minimise the negative impact of redundancies on both your company and your employees.

Effective communication is important throughout all stages of the process, from the initial announcement right through to the redundancy discussions with the individuals concerned. Good communication ensures that all employees know what is going on and don't have to rely on the grapevine for information. Getting it wrong sends a powerful, but negative, statement about the organisation's values. You need to consider:

The announcement – This sets the tone for the whole process and must be thought through very carefully. The choice of words can be crucial. If people are sceptical or feel aggrieved in some way it can make it much harder to achieve your objectives. Getting the message right for your other employees is also very important.
When you communicate – Legally the earlier the better, especially in the case of collective consultation. However, businesses will often want to delay announcements because of the impact on the organisation. Take advice if you are unsure about the most appropriate strategy.
Who will communicate? – Decide carefully who the best person to get the message across is. Ensure, as far as possible, that all decision makers are involved. It is a question of 'ownership' and standing up to be counted. Ensure managers are properly briefed to ensure there is a consistent message. It can be helpful to prepare a script, particularly if your business has more than one location.
How you communicate – Be sincere about the fact the decision is not set in stone and that you will genuinely listen to any issues raised. The key is using the right terminology, such as proposed, envisaged and intended. Also make sure everyone is included. This can be an issue with shift patterns and those who are absent or work away from the workplace.
Individual discussions – Be clear and firm but try and see things from your employees' perspective. Redundancy and/or risk of redundancy is not just about the individual but their families also. Be empathetic. Consider what support you will offer to help those affected. People will respond in different ways. Often individuals just want certainty and the process to be concluded. Managers may require training to deal with these issues.
No go Friday! – Try to avoid Fridays for announcements and particularly individual discussions. People are left to worry over the weekend without the support of colleagues or management. They may return on Monday stressed and bitter and far less open to any sort of dialogue.

Avoid the drip, drip effect

It is usually better for employee morale to announce redundancies in one swoop than to have to keep revisiting the issue. For this reason, it is important to plan and prepare carefully so that you have a real understanding of the issues and what sort of cost reductions are required to achieve your objective.

The selection process

The most important consideration is the future viability of the organisation and maintaining a balanced workforce. Once the climate improves it may be difficult to recruit staff with the skills that you need. Business will also be improving for your competitors and you may find that you are unable to meet the demand for your services and take advantage of a rising market. If it can be avoided, try not to lose staff whose skills could be critical in six to twelve months time.

Identifying the right selection criteria is critical. Whatever criteria are chosen, you must ensure that they are 'justifiable' and neither directly nor indirectly discriminatory on grounds of race, sex, disability, sexual orientation, age or religion or belief.

Commonly used criteria include:

Skills or experience
Standard of work performance or aptitude for work
Attendance or disciplinary record

Having accurate, objective and measurable evidence is fundamental. Ensure the scoring is done by more than one person and there is some form of objective moderation.

Look after the survivors

Whilst the immediate priority is the fair and sensitive treatment of the employees who are losing their jobs, the ongoing effectiveness of your business will require survivors to be well motivated. Ensure you:

Communicate openly and honestly.
Handle redundancies well.
Be positive about the future.
Make people feel valued.
Equip managers to provide positive leadership.

Before embarking on a redundancy programme it is always best to discuss the issues first with a solicitor or HR adviser.

About the author

Mace & Jones provides advice on all aspects of redundancy and can provide training for managers, which is tailored to suit your organisations needs. For further information contact Chris Ellis or Sue Ensall at christopher.ellis@maceandjones.co.uk; sue.ensall@maceandjones.co.uk or visit our website www.maceandjones.co.uk Tel: 0151 236 8989.

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