Don’t Panic ….. Don’t Rush to Make the Wrong Redundancies
Restructuring and redundancies are not new concepts. We are all familiar with the strategy of reducing headhunt to lower business costs as an obvious measure most businesses consider first. Whatever the circumstances, an organization has a responsibility to safeguard as many jobs as possible.
We are in unprecedented times and the end is far from sight with the reality that there continues to be a snowball effect on job reductions everywhere. We should not underestimate the impact of redundancies. Redundancies evoke a rollercoaster of emotions ranging from shock, anger, sadness, nervousness, desperation, depression, guilt and doubt.
There is a flip side to making redundancies nevertheless – in some cases it does improve organizational performance, productivity and price competitiveness. There is no doubt that at times, organizations carry individuals who have outgrown their role and have not been able to reskill and therefore do not add any significant value to the organization’s performance. This is particularly evident is roles where digitization is transforming business models.
I should clarify that people are not made redundant – roles are made redundant so before an organization makes someone redundant, they should look at the role and see if it is still required or needs to be enhanced. If the current incumbent is not capable of performing the role, the role should not be eliminated, it should be filled with the right capabilities.
Steps to Navigate Restructuring and Redundancies
The most productive way to make redundancies is to consider all options and implement a strategy, communication plan and support system for everyone involved including those that have not been made redundant.
If redundancies are necessary and inevitable, the best solution is to explore what other options are available before considering letting go of people. All decisions should be based on facts and not on emotions or a knee jerk reaction.
Assess the current situation – understandably, with the current economic situation being relatively glum for many industries, and redundancies a necessity, it is important to consider whether the organization’s financial situation can weather the storm and if this is a just a short-term downturn with a likely recovery.
Leadership and vision – a strong, empathetic leader with integrity is paramount to restructuring and redundancy programs. It is critical in tumultuous times to hold an organization together and create an environment of trust, motivation, engagement, positivity and support. There must be some level of vision and clarity that is shared amongst the workforce to encourage everyone to make reasonable compromises for a more hopeful future.
Adapt your operating model and products or services – consider adapting your products and services to minimize the impact of lower production or service delivery on specific lines or underperforming ones. This may be a blessing in disguise as it could open up new business opportunities that you may not have considered previously.
Retain critical skills – it is difficult to replace valuable skills, knowledge and capabilities and you will need these skills when the crisis is over. It may not be possible to hire back the skills that you let go off as those employees could have found alternative employment, relocated or most likely, they do not wish to work for you again as they feel that you have been disloyal to them for letting them go in the first place.
Where possible eliminate contractors and distribute the work or put non-essential projects on hold until the situation improves.
Bring outsourced activities inhouse if these were outsourced to save costs. Perhaps now employees are willing to be redeployed to earn some salary rather than no salary at all.
Think long-term – since redundant roles cannot be filled for a set duration of time in most countries as stated by labour legislation, you may find yourself having to forgo a critical role because of a hasty decision. There should be a cost-benefit analysis carried out for each potential redundancy role as often the estimated cost saving for some roles is insignificant compared to the disruption to business.
Implement business continuity plans to safeguard the business for future situations like the recent pandemic.
Cost savings on non-essentials – if redundancies are the last resort, a workforce will more readily understand the need for job losses if management can demonstrate that they have taken every measure to reduce costs throughout the organization and that reducing headcount was genuinely the very last option available.
Transparency and honest communication – an organization contemplating redundancies has a moral obligation to be transparent and credible with their workforce as redundancies affect everyone, whether you are staying or leaving. It also helps to set expectations, avoid rumours and scaremongery. People will be more inclined to support and buy into the rationale, plans to move forward and ultimately the new future. The upside of any genuine consultation is that great ideas and solutions are generated. Be open minded with the input and feedback you get from your teams. You never know who has a winning idea!
Modify working arrangements – implement practical solutions such as no overtime, reduced hours and pro-rata salaries, temporary pay cuts or unpaid or extended leave to all levels of employees. Employees who see their senior team also adapting are less likely to feel resentful as it builds a community of “togetherness”. Often, people are happier adopting these working changes as it suits their personal circumstances. For some, it means that they can spend more time at home or with their children and reduce their childcare costs. It is a win-win when you can mutually accommodate each party’s requirements to meet the business needs.
An option for a more multigenerational workforce is offering voluntary redundancy or early retirement for those that may feel this is an interesting option for them.
Whatever the changes in employment terms must be consensual and in writing with clear intent expressed such as duration, number of hours, salary and benefits. Informal and verbal arrangements tend to become contentious later.
Recognition, reward and celebration – it may not be possible to reward employees when company funds are limited but it is always possible to recognize and celebrate achievements. In difficult times, good news is always welcome. Deferred rewards can be made for objective based achievements and the right behaviours. This instills a culture of ownership, continuous improvement and solidarity.
Invest in the workforce – employees feel nervous about the stability of any organization that is undergoing restructuring and often the most skilled are the first to find alternative employment. You should consider investing in them through career development, empowerment, upskilling, additional responsibilities and more decision-making authority. They will feel valued, motivated, engaged and loyal.
During challenging times, there is a tendency to be fearful and panic. By staying focused with vision, short- and medium-term strategies, transparency and a proactive approach, an organization has a higher probability of a turnaround and survival.
“Taking care of your workforce is by far by the most important part of this process as it is no secret that businesses are only as great as their people.” – Deepa Sud
Unsure how to restructure your organization or deal with possible redundancies?
Contact us or call +971 552 167567 for HR expertise on how to approach your restructuring and redundancies. We will guide you through assessing the current situation, strategy, selection, employee engagement and retention and a brighter future.