As the government starts to wind down its furlough scheme, executive teams across the country are facing the agonising decision of who should go and who should stay in order to keep their firms afloat.
Officially 240,000 people lost their jobs in the months preceeding June 2020, new analysis by the Institute of Employment Studies suggests that redundancies could top 700,000 over the coming months.
It’s easy to think of redundancy as a short period of pain that must be endured for the long-term survival of the company, but if you’re not careful it can be the beginning of a whole new set of problems.
Rosalind Searle, chair of HRM and organisational psychology at the University of Glasgow’s Adam Smith Institute, is the co-author of a study looking at how companies handled redundancies in the wake of the last global financial crisis.
Searle explains that as well as affecting a firm’s wider reputation and ability to recruit in future, a bungled process can have a draining impact on the staff that remain, resulting in low levels of morale and motivation and high levels of mistrust and cynicism. In the most extreme cases it can result in disgruntled employees posing an ‘insider threat’ by stealing or turning a blind eye when colleagues misbehave.
The most common mistake: Miscommunication
Companies that get redundancy wrong often fail to reduce uncertainty and fail to ensure that everyone left in the organisation is clear of the long-term plan, including why the restructuring was necessary. In other words they fail to communicate enough.
“Telling people stuff is not the same as communication,” says Rob Briner, professor of organisational psychology at Queen Mary University of London.
When it comes to crisis comms Briner highlights the coronavirus briefings of Anthony Fauci, the USA’s director of the National Institute of Allergy and Infectious Diseases, as a good example of how leaders should communicate during the process. “Communicate what you know, what you don’t know and the levels of uncertainty."
Leadership teams that mishandle the process tend to lose grip of the emotional consequences of the redundancies - not just the fear and anxiety felt by staff during the process, but the guilt, burnout and disengagement that can be felt by the survivors.
“My opinion of the company has changed,” says one former staffer of a global concierge company who was made redundant 24 hours after the leadership team assured staff that their jobs were safe. To make matters worse, internal communications emails then circulated messages from the CEO celebrating recent successes in other departments of the business without even mentioning the mass redundancies.
Communications throughout the process were confused. Some employees who were made redundant were wrongly told that they were being kept, while others were sent redundancy terms with the wrong names and title.
“That was just a kick in the teeth,” says the former employee, who adds that the resultant animosity even led some staff who were offered retrospective furlough to turn it down over how their colleagues had been treated. “They’ve shown how they’re prepared to treat their employees. What’s to stop them doing the same thing when the next crisis happens?”
How to get it right
Many businesses are concerned above all to carry out redundancies by the book, but even if the process is legally compliant it does not prevent feelings of unfairness setting in, says Adrian Wakeling, senior policy advisor for The Advisory, Conciliation and Arbitration Service (ACAS) a non-departmental government body that helps employer-employee relationships.
Although employers are not legally bound to regularly update the wider company throughout the consultation period, Wakeling says that it’s essential to ensure the process is as open as possible to build trust and prevent uncertainty setting in.
“The way to protect the values you have is to communicate and consult early,” says Wakeling. “Follow the spirit of the law, not just the letter.”
Nothing should be a shock to a member of staff. If someone is surprised by anything a manager is not doing their job right, Wakeling adds.
Employees should also be fully involved in the process by being allowed to offer suggestions of alternative solutions. The ‘envoys’ tasked with delivering the news and managing the consultation period should be accessible; Searle recommends ensuring that their diaries are kept clear of other responsibilities throughout the process.
The role of the leader during the redundancy process also cannot be underestimated. They should be visible, able to have adult conversations and not try to sugarcoat the situation, adds Searle.
Ultimately the level of trust between employee and the employer - and how it is maintained - is the real litmus test as to whether the process is handled successfully or not, and how quickly the company will be able to move on.
As the saying goes, trust arrives on foot and leaves by horse. Even if there was a historically high level of trust between a leadership team and its staff, that goodwill is not guaranteed to last a poorly-handled process. If there were already poor levels of trust then this will be hard, if not impossible to repair, believes Briner.
Ultimately this requires leaders to be authentic and compassionate. “Ask staff how they feel, treat them as a human and admit mistakes if you have got it wrong,” says Briner. “It’s about how you behave, not about values or mission statements.”
One last thing: Do you really need to make redundancies?
Before you put the finishing touches on your restructuring plan, make sure that it’s actually the right thing to do, because you can’t undo it.
The speed with which the pandemic has hit has already led many executives to rush into redundancies without considering the viability of other options - a pattern Searle noted in her research from the financial crisis.
“Businesses tend to think in a very black and white way when it comes to redundancies,” says Searle, “which could end up costing them in the long-term, for not much gain in the short-term.”
This short-term thinking is for example one of the reasons why women and BAME employees have already been unfairly hit by the coronavirus job cuts, which Searle and Wakeling argue makes it doubly important that employees are given a genuine opportunity to communicate their views during the process.
“Think creatively, know who has the skills and adaptability [among your staff] that you will need in the organisation going forward,” says Searle. “It may be the case that mass redundancies are not the best or only option.”
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