Managing a redundancy programme

by Fluid

January 2010

Contents

3-4 Introduction to Fluid5-6 Identify fair criteria7-8 Selection of individuals9-11 Communication12-13 Alternatives to redundancy14-16 Avoiding redundancies17-18 Mitigating the damage to morale 19-20 Rebuilding trust and

engagement21-23 Discrimination24-25 Calculating the cost of

redundancy26-27 Preventing the tarnishing of the

employer brand 28-29 Keep outgoing employees happy30-31 Steps taken to minimise

compulsory redundancies32-33 Handling the process34-35 Factors influencing redundancy

decisions36-37 Exercise A38-41 Advice for individuals being

made redundant42-45 Survivor syndrome46-47 Exercise B48-49 Case studies50-51 Conclusion and questions

Page 3

Introduction

Page 4

Introduction to Fluid• Fluid Consulting Limited (Fluid) is a specialist

human resources consultancy headed by Tim Holden MCIPD

• 10 years in banking• 10 years in Human Resources consultancy• Fluid trading since 2006• The core services provided by Fluid are:

- Retention- Selection- Attraction- Remuneration & Reward - Outplacement- Training & HR consultancy

Page 5

Identify fair criteria

Page 6

Identify fair criteria

• Employers need to act and be seen to act objectively, to ensure employees are treated as fair as possible

• Identify the pool of employees from which the people to be made redundant will be chosen

• Decide on objective criteria for selection, which ensures those involved are chosen fairly

• Decide who should be made redundant as a result of applying the criteria to all the possible employees affected by the redundancy

Page 7

Selection of individuals

Page 8

Selection of individuals

• It should never be the case that the redundancy process is used as an excuse for the dismissal of ‘problem employees’

• Disciplinary matters should be addressed directly via the disciplinary route

• An employer in a position where the employee should be dismissed for an issue such as misconduct should avoid the temptation to label it as redundancy

Page 9

Communication

Page 10

Communication 1 of 2

• Failure to consult individual employees virtually guarantees a case for unfair selection

• Consultation is an easy and necessary requirement to fulfill and in some cases can provide helpful alternatives

• Where more than 20 redundancies are proposed there are specific requirements to consult laid down by law

• In all redundancy cases there is an obligation to consult directly with the individuals involved

Page 11

Communication 2 of 2

• COLLECTIVE REDUNDANCY CONSULTATION• Must start as soon as a strategic direction that

compels an employer to contemplate or plan for job cuts has been taken

• The point at which that duty begins is not straightforward

• An employer that clearly intends to make redundancies must enter consultation with an open mind on avoiding or reducing job cuts and mitigating the consequences of those redundancies

Page 12

Alternatives to redundancy

Page 13

Alternatives to redundancy

• The whole point of the consultation process during redundancy is to try and avoid dismissal altogether, or to reduce its impact

• Employers need to consider representations and suggestions that are made, alternative positions in the organisation and alternatives to redundancy altogether

Page 14

Avoiding redundancies

Page 15

Avoiding redundancies 1 of 2

• Plan ahead• Stop hiring• Cut overtimes• Target temps• Look for volunteers• Discuss it• Redeploy• Take a break

Page 16

Avoiding redundancies 2 of 2

• Seek volunteers• Trim hours, not jobs• Share the wealth• Get temps in• Don’t be shy of retiring

Page 5

Mitigating the damage to morale

Page 6

Mitigating the damage to morale

• Be prepared• Getting the message across• Provide support

Page 19

Rebuilding trust and engagement

Page 20

Rebuilding trust and engagement

• Input and commitment from the top is essential

• Talk, listen and be available• A chance to re-invigorate

Page 21

Discrimination

Page 22

Discrimination 1 of 2

• AGE• Need to use a variety of different criteria to select

employees to be made redundant• Selection criteria should not disproportionately

affect one particular age group• Length of service should not be the sole or main

criterion• Using length of service as one criterion in a

balanced selection policy is unlikely to breach the age regulations

Page 23

Discrimination 2 of 2

• GENDER• Women are susceptible to sex discrimination when

made redundant due to the way employers often view family-friendly policies

• Non-discriminatory selection criteria for redundancies can help employers avoid sex discrimination claims

• An employer directly discriminates against a female employee if they treat her less favourably than a male counterpart and that the difference is on the grounds of her sex; and if they apply a practice, provision or criterion to all employees, which puts women at a disadvantage in comparison to men

Page 24

Calculating the cost of redundancy

Page 25

CR=nR+xH+xT+ny(H+T)+Wz(P-n)

• CR, total cost of redundancy• n, number of people being made redundant• R, redundancy payments• x, number of people subsequently hired• H, hiring costs• T, induction/training cost• y, percentage quitting post-redundancy• W, average monthly salary• z, % reduction in output per worker caused by lower morale• P, number of people employed prior to redundancies

Calculating the cost of redundancy

Page 26

Preventing the tarnishing of the employer brand

Page 27

Preventing the tarnishing of the employer brand

• Consider the alternatives• Communication is critical• Tips for managers

Page 28

Keep outgoing employees happy

Page 29

Keep outgoing employees happy

• Be impartial• Be sensitive• Employee behaviour• Manager’s observation• Behaviour reinforcement

Page 30

Steps taken to minimise compulsory

redundancies

Page 31

Steps taken to minimise compulsory redundancies

• Natural wastage/freezing posts• Reducing use of agency and contract staff• Voluntary redundancies• Redeployment/retraining• Early retirement• Flexible working patterns• Short-time working/reduced overtime• Use of secondments• Pay cut across the board• Pay freeze across the board

Page 32

Handling the process

Page 33

Handling the process

• Document ‘fair’ reason• Justify selection criteria• Don’t discriminate• Consult employees• Build a flexible timetable• Gather ideas• Adhere to procedures• Look at employment options• Air any grievances early• Check contracts

Page 34

Factors influencing redundancy decisions

Page 35

Factors influencing redundancy decisions

• Reorganised working methods• Reductions in budget/cash limits• Improved competitiveness/efficiency/cost reduction• Plant/office closure• Lack of demand for products/services• Merger/acquisition• Automation/mechanisation/new equipment• Relocation of work overseas for example offshoring

Page 36

Exercise A

Page 37

Exercise A

Page 38

Advice for individuals being made redundant

Page 39

Advice for individuals being made redundant 1 of 3

• Decide whether to work out the notice period

• Seek written explanation of how the package as determined

• Check whether there is a pay in lieu of notice clause in the contract

• Know which elements in the package are tax-free

• Try and negotiate additional benefits

Page 40

Advice for individuals being made redundant 2 of 3

• Believe in oneself• Involve friends and family• Investigate retraining• Check the finances• Restructure one’s day• Keep socially active• Set targets• Develop a sense of purpose• Look after oneself• Boost the self-image

Page 41

Advice for individuals being made redundant 3 of 3

• Replace ‘should’ with ‘could’• Accept constructively what has happened• Take risks• Make use of facilities offered• Take control financially• Don’t keep the redundancy a secret• Spend time on a concise and honest CV• Look at one’s life• Plan the ideal job-go out and find it!

Page 42

Survivor syndrome

Page 43

Survivor syndrome 1 of 3

• Why him or her?• Why not me?• Why not him or her?• More for less• Fewer opportunities for advancement as

the organisation contracts in size• Budgets slashed

Page 44

Survivor syndrome 2 of 3

• Ensure employees are told that their roles are being considered for redundancy in the most sensitive and respectful way possible

• Make the communication clear• Equip managers with the skills to have potentially

difficult conversations about changes in the workplace

• Provide a second opportunity, possibly the next day, for one-to-one conversations

• Support any conversations with written materials that employees can look over at their leisure and share with friends and family

Page 45

Survivor syndrome 3 of 3• Be as transparent as possible• Consider bring in third party assistance to provide

specialist support from employees, some of whom could be boomerang hires in the future

• Provide space in the workplace for employees to meet with coaches and careers advisors

• Allow employees time during the working day to prepare for a new role

• Don’t forget those left behind, because whilst they may be relieved to escape redundancy they will feel unsettled seeing colleagues go-taking care of those leaving will reduce the impact on those who remain

Page 46

Exercise B

Page 47

Exercise B

Page 48

Case studies

Page 49

Case studies

Page 50

Conclusion & Questions

Page 51

Conclusion

• Summary• Questions