Clearing the ‘deadwood’: Voluntary vs forced redundancy

by Stephanie Zillman19 Apr 2012

During any planned downsizing, a question for HR and employers is always whether to opt for a voluntary or forced redundancy process – but for one HR expert, opting for voluntary redundancies means “you’ve got rocks in your head”.

Voluntary redundancy is a process common in the public sector, and can have the benefit of taking less of a toll on workplace morale. Yet, it comes at the cost of reduced control over the process and many claim it is fundamentally flawed because those who are confident they will quickly find a new job – ie. the best performers – will leave. “In my view, if you go ahead with voluntary redundancies you’ve got rocks in your head,” Tim Roche from HR consultancy Right Management said. “I saw it a million times in the early ‘90s dealing with public sector privatisations; they’d conduct these voluntary redundancies and all the talent would take the money and walk out the door because they backed themselves to find another job, and in the meantime you’re left with the deadwood.”

According to Roche, in all but exceptional business circumstances, forced redundancy is the smarter business move.

Toyota defends redundancy conduct

In the case of Toyota, the redundancies of 350 workers this week was the result of all its workers undergoing an assessment process, and those with the lowest scores in behaviour, skills and knowledge were given a redundancy notice and severance package.

While workplace lawyers have speculated that for all intents and purposes Toyota appears to have followed the letter of the law, the car manufacturer has taken a PR sledging for the manner in which it went about the process – employing a strong security presence and escorting workers off their premises.

In response to the strong criticism from unions and workers, a senior company executive said it was an unfortunate situation but one forced on it by the high value of the Australian dollar and falling exports. Matthew Callachor from Toyota told reporters on Tuesday that the company had tried to show the ‘utmost respect’ to those who had lost their jobs. “We had a selection of criteria for each of the 350 that were actually chosen,” Callachor said, adding that the company does not believe there is anything it could have done differently at this juncture.

 

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COMMENTS

  • by Peter Macdonald 19/04/2012 2:10:00 PM

    The "legal" dilemma for Toyota if challenged is to prove that their rating scale is so accurate that it can accurately determine the difference between a worker who is last on the list to be sacked and the next one on the lit who just scrapes in. If I were one of the unlucky ones I would be talking to my lawyers right now.

  • by David 19/04/2012 3:48:28 PM

    The PR sledging appears to be coming only from Unions who do not want performance to be a factor in the workplace. I hope the broader public can see through this as the alternative, as outlined in the above article, limits businesses of the opportunity to be successful.
    Plus, the government subsidies that the car industry receives are already too high; forcing them to maintain a sub-optimal workforce will only cost the broader community more.

  • by Sarah 19/04/2012 4:56:38 PM

    It is also important to note that many businesses Enterprise Agreements state that in the event of organisational change, that there will be no voluntary redundancies - something many unions fight to have included in an EA....yet they also don't want forced redundancies to be based on performance. EA's refer to redeployment being the best option, but in the event of a downsize, this is usually not possible therefore it comes down to roles that are no longer required, and id there are multiple people in those roles - sorry but businesses will always choose based on performance.

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