UK: THE UNWILLING SURVIVORS. - Voluntary redundancies can bring more than was bargained for.

Last Updated: 31 Aug 2010

Voluntary redundancies can bring more than was bargained for.

Voluntary redundancy schemes are, on the face of it, preferable to compulsory ones. But they can go wrong. If the take-up is too great, many of those who opt for redundancy will not be able to leave - and may end up disaffected. This is bad news, since the point of the exercise is to reduce the workforce to the desired size while maintaining the morale and commitment of those who remain.

There are no statistics showing how often voluntary schemes are oversubscribed but John McManus, author of The Perfect Dismissal, suggests that one in four might be a reasonable estimate. Recent examples of oversubscription include the restructuring of the Department of Health. Last year the department offered severance payments and early pensions to up to 1,000 of its 5,000 staff. In the event 1,500 volunteered and 500 had to be turned down. A similar scheme at the Ministry of Agriculture was also oversubscribed. The mismatch may have occurred because the package was too generous, or because the reasons for getting out (low morale brought about by Whitehall reforms) were too strong - or a combination of both.

Whatever the reason, the miscalculation could cause new problems for the two ministries. Shaun Tyson, professor of human resources management at Cranfield School of Management, agrees that people who want to leave during a downsizing, but who are not given the opportunity, may well be resentful. 'Also the management will know that these are people who wanted to go. The question then is: How committed is this person and should we actually bother about them for promotion? Should we give them interesting work, or should we look for a way of getting rid of them anyway?' McManus advises that, since there is a measurable chance that any voluntary scheme will misfire, the employer should always have a back-up procedure. 'Be prepared to be oversubscribed and think of inventive ways in which you can retain the best people. That might include extending the availability of the package or a terminal loyalty bonus or a subsidised early retirement.' Bill Robbins, a senior consultant with outplacement counsellors Drake Beam Morin, is sympathetic to people who are unwillingly left behind in a voluntary redundancy, but not to those who put them in this position: 'You should fire the human resources director for designing the policy inadequately'. One essential, says Robbins, is that the offer document in a voluntary redundancy package must always spell out clearly what will happen if too many apply. 'You make it clear that in the event of oversubscription it will be first come, first served; alternatively that we'll take people in descending order of age.' The benefits of the voluntary approach should not be ignored.

It is less damaging to the morale of those who remain; it is more likely to be accepted by the unions; and it reduces the chance of the company ending up in front of an industrial tribunal. But get it wrong and it can backfire with a vengeance.

Find this article useful?

Get more great articles like this in your inbox every lunchtime