Redundancy Best Practice Phil Griffiths The Connect Team
Redundancy • The impact on people and performance • Two studies: • 89 companies in the UK • 500,000 employees in US companies
89UK companies surveyed in 2004: • 87% had made redundancies • 54% had asked for volunteers;75% compulsory; 40% both • The impact: • 66% admitted there had beenno productivity improvement • 62% reportedlower morale among employees • BUT… • Most HR Managers said they thought the redundancy programme had been managed well.
Sirota survey of 500,000 US employees, 2000 – 02 Sirota interviewed employees in 2000 and again in 2002, comparing reactions of those whose companies had made redundancies. 2000 2002 Feel secure in your job? 69% 61% Feel valued at work? 66% 44% Teamwork / cooperation is good? 69% 40% I have too much work. 28% 33% I can develop in my job. 50% 39%
Redundancy More evidence of the impact on people: Study by Cary Cooper et al, Wolverhampton University, 2000 “The Psychological Effects of Downsizing and Privatisation”
Power Company – “Downsizing and Privatisation” • During the study the workforce was reduced by 70% • “No compulsory redundancies” announced at the outset • But – at the end, some people were made redundant… • Regardless of “voluntary” or “compulsory” the study found psychological effects on those who remained that were damaging to: • organisation morale • commitment • job satisfaction • stress levels
Power Company – “Downsizing and Privatisation” Researchers found a predictable range of reactions among those who remained – the “survivors” • Shock, disbelief, never happened before. Unprepared for this. Company had felt like a family; the threat of job losses hit the community. • People worried about their skills – too specialised? How to find new jobs? • Will I have to move away? • ‘It was terrible, those of us who had friends leaving were very bitter.’ • ‘A lot of people went off sick, they just didn’t care anymore.’ • Real insecurity – ‘it will be us next.’
Power Company – “Downsizing and Privatisation” Summary of power company survivors reactions Level 1 Unfairness, Mistrust, Shock, Demoralization. Level 2 Worry, Stressed, Devastated, Disgusted, Threatened. Level 3 Overworked, Fear, Pressurized, Bitter, Hurt, Undervalued, Angry, Lack of Sleep Level 4 Uncertainty, Unmotivated, Traumatized, Panic, Disillusioned, Guilty. Level 5 Isolated, Happy (to go), Disbelief, Low Self Esteem, Strange, Powerless, Depressed, Frustrated, Sarcastic, Suspicious, Aggressive, Tired
Well managed redundancy? Following the privatization and redundancies the Power Company was clearly going to be faced with an unhappy workforce - which, we would argue, is not the type of workforce needed if the organization was to become competitive in its new working environment. A masterful piece of understatement!
Key factors found to influence survivors’ reactions to downsizing: • the way in which redundancies had been decided (i.e. the way that individuals were selected); • the way that individuals had been notified, • the effectiveness of communications (or lack of adequate, clear, believable information) throughout the process; • the perceived fairness of the selection criteria; and, • the aftercare of leavers and interpersonal treatment received from line management.
How to get it right… • Be clear about the reasons for redundancies and what happens next • Use a visible, fair and equitable process to deal with redundancies • Make sure line managers have the appropriate skills to deal with redundancy • Provide visible support for those who have to leave • Speak with remaining employees on a one-to-one basis - listen to their concerns • Communicate a positive vision of the future for the company and its people
How to get it right… Be clear about the reasons for redundancies and what happens next Your CEO can screw up years of Employee Relations hard work in one sentence.
How to get it right… Use a visible, fair and equitable process to deal with redundancies Don’t behave like the Accident Group
How to get it right… Make sure line managers have the appropriate skills to deal with redundancy Don’t let untrained managers give the bad news There are some managers you simply cannot trust with this task!
How to get it right… Provide visible support for those who have to leave I would say that, wouldn’t I? Outplacement support need not be expensive Make sure it is tailored to people’s needs and the company’s budget
How to get it right… Communicate a positive vision of the future for the company and its people The “survivors” are the future of the company Don’t fall into the traps we have seen If you want the company to thrive after this tough time – shouldn’t you be investing in your people?
A question… To paraphrase Jack Welch: “No company ever failed by cutting too deeply…” So… Is a Big Bang more acceptable than Drip, drip, drip?