The Complexities of a Redundancy

When we hear the word “redundancy,” we often respond in an emotional way. We’re immediately concerned about the employees who were let go—employees who are sometimes our friends. And compassionate questions race through our minds. Is there a redundancy or severance package; If so, how generous is it? Will their family be financially secure? When will they find another job?

We also consider the company making the redundancy—sometimes our own employer. And while there may be a degree of compassion for the company, it’s usually overshadowed by mixed feelings, from frustration to scepticism to concern. Is the company ok financially? Do they really need to cut costs by letting go of people? Will they make more redundant?

Redundancies trigger a palpable sense of angst, every time, even for those with the difficult job of making them.

While some degree of angst is predictable—let’s call it the expected, simple response—redundancies are often unexpected and anything but simple. There are many factors to consider, steps to take, and people to engage. Let’s look at some of the most inevitable complexities that companies face when letting go of employees, broken down by department (plus outplacement services).

Human Resources

Complexities for HR abound, perhaps more than any other department during a redundancy. While there are dozens of items to consider here, we’ll focus on two: communication and retention.

Communication – It must be consistent, unwavering from leadership’s agreed upon messaging. If that message is one of specific reason, gratitude, and sympathy, then it should be expressed in the same manner, from the top down, throughout the process. Inconsistent messaging can cause anger and distrust among employees, the last thing any company needs during such a trying time.

Retention – Keep in mind that it’s generally much more expensive to find a new employee than it is to keep an employee. During a redundancy, remaining employees can be offered chances to speak with leadership, their bosses, and even outside counsellors. It’s also increasingly common to offer them opportunities for skills development and a rebalance of their workloads. HR should devote as much time to their current workforce as they have to their redundant workforce, re-instilling a strong sense of confidence and camaraderie.

Legal

While organisations need to ensure redundancies are managed with care, respect and compassion they must also comply with the numerous regulations protecting employee rights and often making provision around consultation and entitlements. If you’re looking for further information, we recommend visiting fairwork.gov.au in Australia or employment.govt.nz in New Zealand.  

Advance planning to handle a redundancy sensitively is key and can make everyone involved feel better about a painful decision. The process ideally starts long before organisations reach the point of letting people go because leaders have been consistently transparent about the business’s health and performance. This ensures that people aren’t totally surprised when a redundancy occurs. It's even better when for some time they have been clear on the strategy and encouraged employees to upskill be agile and consider career longevity, this doesn't occur effectively during a redeployment period. 

Public Relations

For any company of significant stature in its community or industry, local and potentially national media will come calling. Again, while there are many considerations, we want to focus on two: the announcement and the reason.

The Announcement – It’s debatable whether a company should even announce a redundancy to the media. On one hand, why give them the option to shine a negative spotlight? On the other hand, why not be open and honest with all parties, including the media? This often comes down to history, reputation, and other factors such as the reason for the redundancy. In general though, if there’s a clear and justified reason, along with an objective degree of sympathy for those who were laid off, media relations shouldn’t be an issue.

The Reason – As we just mentioned, the reason for a redundancy should be clear and justified, as they usually are. If it’s a cost-cutting response to a recession, say that. If it’s because of an acquisition and shift in direction, explain that. Be thorough and transparent to the media. If a reason is ambiguous, it could be an open door for a painful interrogation or even a tarnished reputation.

Outplacement Services

In our last article, “The Uncomfortable Inevitability of Redundancies,” we mentioned that over 40% of companies offer outplacement services, a number that’s risen steadily since 2018. But outplacement services come in different degrees, so what exactly are companies offering? In short, career guidance. That can mean actual career coaches. It can also mean interview training, resume writing lessons, and even development and learning to facilitate career changes. Regardless of the level of outplacement services offered, it’s an increasingly common way—almost an expected way—of taking care of former employees and managing a reputation to attract future employees.

While we only scratched the surface of the complexities here, we did cover some of the more pressing ones. If or when your company experiences a redundancy, go in knowing the complexities. Embrace them. Because the most dangerous thing is to overlook them and not tend to them.

In part three of this blog series, we’ll take a look at the psychological roller coaster of a redundancy and how to manage it.