Lessons from GFC redundancies

by 13 Dec 2011

The uncertain economic outlook and ongoing market volatility has put redundancies back on the agenda, prompting leading workplace consultants to warn Australian companies not to repeat the mistakes made during the GFC.

Workplace consultancy firm, Chandler Macleod, has released its annual Workplace Barometer showing how Australian leaders view the current hiring climate, and the major challenges heading into 2012.

It was found that many finance experts believe global economic conditions will worsen on the back of the European debt crisis, and a number of Australian industries are already experiencing a marked slowdown.

Jeremy Nichols, national head of consulting at Chandler Macleod, said there is a danger that companies looking to make redundancies will repeat many of the mistakes made during the last global financial crisis.

“Many did extensive damage to their brands, their employer reputations and caused unnecessary trauma for their employees. While they may have done things legally, they failed the social test by not protecting their own brand nor ensuring that departing employees received proper support,” he said.

Nichols added that while redundancies are sometimes inevitable, it can also be a sign of lazy leadership, and the biggest mistake companies make is not planning ahead or seeking professional advice when appropriate.

“Organisations allow a manager with little or no experience or training to take on a role that can quite literally make or break a company and its reputation. Considering the damage that can be done, it is worth being guided through the legal, business and social minefield,” Nichols said.

To get through the ‘shock’ period, Nichols said it was important employees seek help and guidance, develop a plan for the future and find ways to see the positive side of the change. The following guidelines for employers making redundancies were offered:

Do:

  • Plan carefully to ensure the business is set up for success.

  • Ensure you are fully aware of your obligations under Fair Work Australia legislation and have in place the correct legal advice.

  • Be precise about the reason for redundancy, the date and any severance arrangements (when do they have to vacate the building, can they purchase phones/laptops etc).

  • Choose the meeting place carefully and ensure there is a witness, preferably an outside consultant.

  • Provide immediate professional assistance for those being made redundant.

  • Hold a concurrent meeting with remaining staff where possible to advise of the decision.

  • Debrief managers and witnesses and follow-up on the wellbeing of affected staff members.

Don’t:

  • Ad lib or go into the meeting without a plan and checklist.

  • Use terms such as ‘I know how you feel’, ‘things will work out’, ‘it’s not the end of the world’, as the reaction will often be negative.

  • Make promises about future job prospects or leads you don’t intend to or can’t keep.

 

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