The three dimensions of redundancy

by 18 Jan 2012

Increased economic volatility has put redundancies back on the agenda and Australian companies need to avoid repeating the mistakes of three years ago.

With finance experts predicting global economic conditions will worsen on the back of the European debt crisis, a number of our industries have already experienced a slow down and even shrinkage.

The danger is that companies faced with laying off staff will repeat many of the mistakes made during the last global financial crisis, doing irreparable damage to their brand at the same time.

Companies tend to panic when faced with having to restructure and downsize and that leads to a variety of problems.

Some companies are still trying to recover from the extensive damage they did to their brands and their employer reputations. Many also caused unnecessary trauma to their employees.

While they may have ticked all the legal boxes, many failed the social test by not protecting their own brand nor ensuring that departing employees received proper support.

Companies should look at redundancies as a three dimensional puzzle: first you have the individuals being made redundant (who should be any organisation’s first priority); then there are the workers (or survivors); and finally, the organisation itself.

1st dimension – Individuals made redundant

  • Be prepared for a wide range of emotions as employees can react in a variety of ways.
  • Ensure you have psychologists on hand at the time to assist employees through the process.
  • Know the details and definitely don’t try to ‘wing it’. 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).
  • It is crucial to have other support mechanisms in place to help both the employee as well as those who have to deliver the news.

2nd dimension – Survivors

  • Don’t ignore them – there is a tendency for companies to assume those who survive cutbacks will simply be so pleased to have kept their jobs they will just get back to work and not ask questions. They will be grieving as well, so allow time for conversations and help them through these difficult times by showing support and care. If not, they will either actively look to leave or worse, stay in the business but undermine it.
  • Communication – while it is important to communicate with the general population about your plans it is vitally important that you communicate with your workforce. These are the people who can really damage your reputation and brand, not to mention productivity. Good, open communication will help keep the workers on side and limit the amount of gossip and innuendo that inevitably surrounds lay-offs. It is a good idea to hold concurrent meetings with those who are leaving and those being left behind to avoid office gossip taking hold.
  • What do you require from them? – this is a very important step in the process. Again it is easy to expect that the survivors will simply go back to work and pick up the slack. However, without telling them what is required and by whom, gaps will appear and productivity lost.


3rd dimension - Organisation

  • What is the impact on the brand – you need to consider how the redundancies will impact on the company’s established brand and ensure you are anticipating and mitigating any risks, it could takes years to recover the lost ground.
  • Cost impacts – consider the legal implications of what you are doing both in advice and any potential legal challenges. Workers know their rights and if this part isn’t handled well the implications can be extensive (and expensive).
  • Ensure you know the regulations - the Fairwork Act contains new conditions for redundancies, so best you know what you are doing so you don’t end up in court.
  • Productivity in the workplace – it is important to ensure the workplace remains productive and you communicate clearly to those left behind about what the future looks like. Keeping people focused on moving the business forward ensures they have some sense of purpose in their lives which can be challenging in times of changes.
  • Communication – it is vital that companies are as open as they can be. People might not like what they hear, but they will appreciate being informed. The more you can explain ‘why’ the change is occurring, the better credibility you will have as an organisation.

While it is a fact that redundancy is sometimes inevitable it can also be a sign of lazy leadership. Often redundancies can be avoided in the first instance through good management of performance when times are tough. Too often companies end up with the pain of redundancies when they could have better managed their business months before.

There are many potential pitfalls, so experience and expertise counts. Seeking professional advice is crucial in these unusual times.

It never ceases to amaze me that 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.

About the author

Jeremy Nichols is the national head of consulting for Chandler Macleod and has more than 19 years consulting experience specialising in strategic planning and organisational development


  • by Nola Charkos, ipac 18/01/2012 3:19:39 PM

    An excellent article. Of particular interest to me is the note on being precise. Ensuring impacted employees have access to all relevant information is vital. Employees need to be informed of the impact that redundancy has not only on their immediate finances (ie pay packet and budgeting), but also on employee benefits such as insurance, superannuation and LTIPs in order to make informed decisions within often limited time frames.

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