The art of managing staff redundancies

By Selwyn Parker

There's a lot of redundancy about these days. There's also a lot of hiring, but that doesn't make it easier on the employees. Here are a few dos and don'ts.

There's no ideal way to make staff redundant. But managers owe it to employees to do it as well as they can.

There is a bad way, which probably starts with the manager saying something banal like, "I know how you feel," and ends with a cheery, "Don't worry, you'll be all right."

In between, the company might compound its ineptitude by fast-tracking the redundancies, stuffing up the termination pay packet [see box], inviting a personal grievance action by not consulting properly, and neglecting the survivors, who are often shell-shocked.

Redundancy skills are worth acquiring because the process is a legal, public relations, human resources and commercial minefield.

Given the fast-paced commercial climate, it's highly probable that managers will, at some point, have to make staff redundant if they haven't done so already.

As Reece Notton, executive director of DBM New Zealand, a worldwide specialist in "outplacement" and career management, explains, the forces propelling the redundancy process are numerous and powerful.

"Change is consuming business today - economic uncertainty, currency fluctuations, mergers and acquisitions, downsizings, restructuring, new strategies, new cultures, new technologies, deregulation, privatisation and downsizing."

The management of redundancy requires two separate but related processes.

"There's a legal way and a moral way," says Eddie Mann of Auckland-based Employee Relations Advisors, which specialises in small and medium-sized businesses.

Mr Mann, who finds more examples of mismanaged redundancies than well-handled ones, explains that the legal way requires full and adequate "consultation."

There is no statutory period, but it must be at least long enough for employers to sit down with threatened employees to canvass all the alternatives to their imminent departure.

These can include re-training, reduced hours and other redundancy-averting strategies.

The Employment Court will also take a dim view of a "consultation process" that is a smokescreen for a pre-determined programme of redundancies. The law requires that any decision to cut staff follows a full examination of other options.

"Consultation cannot be a sham," says Opal Consulting's director of human resources, Muriel Noake.

And being candid with staff is vital. Says Morgan and Banks career management specialist Richard Thornton: "If people are kept in the dark, they don't know what to think, so they think the worst."

In the absence of fact, rumour runs rife. Muriel Noake says: "There's an unquestionable thirst for information."

Then there's the moral way, which is more complicated, but essentially requires integrity, plus a few skills. As Mr Mann, who was once made redundant by an American company in what he describes as a model exercise, says: "Be straight, avoid emotion and expressions of sadness, stick to the facts."

With the best will in the world, it's easy to get the face-to-face part wrong.

First, after all the consultation is over and the decision has been made, sit the terminated employee down, come straight to the point (this is no time for small talk), explain what is happening and why, and get it all over within 15 minutes.

Without exception, redundancy consultants advise managers to avoid anything that might lead to emotion.

This includes using humour, being apologetic, attempting to justify, argue or sympathise.

Just stick to the facts. Mr Notton says: "Clarify the separation date, give an overview of the separation package, explain the logistics for leaving the company, and provide appropriate written materials."

It is often a good idea to have others present for both sides. Memories can fail after emotionally charged circumstances.

And, if the employee is going home, provide a driver.

"We underestimate the shock of people whose income is about to be cut off," says Mr Mann.

After the axe has dropped, it's time to rebuild the body corporate.

Human resources experts call this "survivor counselling" lest the company fall "into a death spiral," says Mr Thornton.

The aim is to refocus, empower staff, and get on with it.

Managers should not neglect themselves either.

They are the lightning rods for this process but are often so involved they forget they suffer stress as a result.

Muriel Noake says: "Managers often need support too."

In business, as in life, however, there can be no guarantees. The healing process must be realistic in appraising staff fully of the risks of commerce.

In other words, it just might all happen again.

"Never say never," says Opal's Muriel Noake.