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The right approach to managing redundancies

For many business leaders, the past year has been a matter of holding our breath and waiting for the economy to recover.

However, the latest economic and jobs data suggests this downturn will be protracted: the latest corporate earnings season has revealed lower profits, while the Aussie dollar continues to fall.

It’s not surprising, therefore, that the latest Manpower Employment Outlook Survey shows hiring optimism is in the doldrums. In 2011, employer confidence was almost back to pre-GFC levels. However, as the miming boom tapers off, global conditions remain weak and business investment flatlines, hiring intentions have fallen too.

As a result, business leaders are having to make hard decisions. Announcements from major companies reveal that redundancies are on the agenda, and small to medium businesses are not immune either. Indeed, as companies close out the financial year, some may decide that staffing costs are no longer sustainable.

If cutting employee numbers really is the only option, it’s never an easy thing to manage and a restructure can reveal an employer’s true colours. Those who do not plan very carefully, while they may achieve short term salary savings will often cause themselves long term damage.

Change executed carelessly can pile on work for remaining employees which not only damages their employer brand – they ultimately see a drop in productivity, engagement and retention.

In this context, what are the keys to getting it right and ensuring the people who go are treated well, and the people who stay remain productive?

Plan ahead

Reducing staff numbers isn’t just about taking cost out of the balance sheet: the work and tasks they were doing needs to be redesigned, streamlined or stopped. It’s important for leaders to map the workforce to identify the critical roles/skills that must be retained and the strategies needed to keep them.

A failure to do this will affect productivity and increase the chance that valuable staff make the decision to resign.

Communicate well and often

People will assume the worst if they aren’t given enough information; they will also resent insensitive methods of communication, such as announcing redundancies by email or reading about it in the media. Create a plan that sets out what you will say, who will say it and the timeline for doing so.

Ensure your managers follow up regularly and check in with their teams to see how they are coping.  Remember, managers who have been planning the change are often well ahead of the curve – sometimes they don’t spend enough time familiarising their people with the change because they are “over it.”

Don’t assume it’s ‘business as usual’

Employees will need time to deal with the process, and the business will need to realign and reaffirm its strategy.

The leadership team needs to be active and visible to employees, and put in place initiatives to re-engage those who remain. People and performance management systems must also be used to monitor the effect of the change, so you can keep a close eye on progress and respond when needed.

Provide support to departing staff

Good corporate citizens provide help with career transition; it also sends a message to remaining staff that the company cares about its people.

Don’t forget about the ‘survivors’

Those who stay may feel guilty for doing so, and will need help and time to re-engage with their normal work and changed workplace. Change affects individuals differently, so ensure you follow the basics of good change management, including ongoing communication and a clear explanation of the company’s vision going forward.

Overall, the most important thing is to treat any downsizing exercise with care and thought. The way you approach the process will have a big impact on the way individuals deal with redundancy, on the company’s reputation among consumers and employees, and on the productivity and engagement of the remaining staff.

Bridget Beattie

Bridget Beattie

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