Getting redundancy right
Maintain your business' health while giving employees the boot.
Standing in front of hundreds of his employees at his
headquarters in New York, Vikram Pandit, CEO of Citigroup, decided
to announce the redundancy of 52,000 members of his global staff by
using a PowerPoint slide. Its title was "Getting Fit - Fast!"
Not exactly the most tactful way to cut a seventh of your
workforce. But in current climes, with six in ten employers
currently considering slimming down their workforce according to
The Times, what is the right way to tell someone they've lost their
job? And how can an employer make redundancies without damaging
staff morale? Or even decide who's going to go?
The remaining employees will be over the news in 24 hours
Though redundancy might seem like a huge, threatening
storm-cloud of confusion and guilt looming over businesses, there
is a ray of sunshine peeping through. Switched-on employers
determine to take control of the situation and use it as best
possible. True, it's never going to be fun, and it's never going to
be as easy as handing out promotions and pay-rises. But reducing
overheads and removing the dead wood from a company can't be all
In fact, done right, it can even improve the health of a
business. So exactly how do you get something so delicate
When to do it
Gareth Chick, a former CEO who now runs business consultancy
Spring Partnerships, felt that making 50 employees redundant on the
same day was far preferable to dragging out a redundancy programme.
"You owe it to people to get it done as quickly as possible," he
The speed of the process, he explains, allowed the business and
its remaining employees to move forward from the redundancies as
soon as possible. "You can pick people up very quickly. The thing
you must do is remind them why it's been done, but then it's,
'Right, come on - let's honour the colleagues. The best way we can
do that is to make this business work really well.' "
Farzana Baduel, founder of taxClaim, overlooked the importance of
speed - and her business suffered as a result. Overwhelmed by
guilt, she allowed an employee to keep working in the office for a
couple of months after being made redundant because she was having
trouble with a visa.
"It was the worst mistake because she stayed in the office with
her resentment festering and it just poisoned the whole atmosphere.
As a consequence other people left because they felt it was very
upsetting for them."
She now advises taking immediate action when it comes to
redundancies. "Instead of them walking around like the walking dead
you get them out of that office ASAP before it infects the rest of
Picking the right people
But knowing how to do it isn't quite as tough as deciding who
should actually lose their jobs. Every employer has people that
they're not so keen on, but that's not to say they can legally just
get rid of everyone they want to. Or is it?
There are certain legal obligations that employers must abide by -
sending the employee a letter telling them of the possibility of
their dismissal and outlining reasons, and meeting with them to
discuss things further before making a final decision.
But canny employers manipulate the selection process from the
end backwards, weighting selection criteria according to the weak
spots of the people they are least worried about losing. As Helen
Duffy, an employment solicitor at SA Law, points out: "It's not
just about being fair, it's about being seen to be fair."
To be seen to be fair in a legal context, Duffy explains,
employers need to pick from a group of employees. To then narrow
down the group to the individual(s) the employer is looking to get
rid of, there are two ways to go and still stay on the right side
of employment tribunals - interviews or measuring criteria.
According to Duffy, interviewing is usually better for effecting
a targeted removal in the short term - as employers can simply say
the employee in question didn't answer in the way they wanted - but
using carefully chosen measuring criteria is safer if it gets to
Duffy recommends using previously evidenced metrics for criteria,
such as appraisal records, output, disciplinary records, attendance
and timekeeping - then laying more importance on the areas the
target employee is weakest in.
She does advise caution, however. The process must be seen to be
"objective and fair, and transparent." The employees must be given
a chance to appeal the decision and discuss things before the final
decision is made on them.
She also warns of certain high-risk selection situations -
measuring the timekeeping and attendance of a pregnant woman or
disabled person, for example, who may have good reason for poorer
records - pointing out that discrimination compensation can be
Whether an employer is subtly targeting certain employees, or
just deducing who should go by fair and straight-forward
comparisons, explaining what's going on to both the individuals and
the business as a whole can make or break a redundancy programme -
and an employer's reputation.
"The key to all of this is just telling it straight," says Chick.
"It was making a very, very clear statement of what was happening
and why it was happening and exactly what the numbers were. They
might not like it, they might be in shock about it, but at least
nobody can say they misunderstood."
He put in place the infrastructure to deal with people's
questions, which were still coming weeks later, by giving everyone
as much information as possible, as many times as needed, and
making sure that managers knew all the ins and outs of the
redundancy programme and were free to talk with employees.
When it came to actually telling specific employees they were
being made redundant, Chick told as many people in person as time
would allow. He made sure managers who had to handle the other
people were clued up on exactly what to say and how to say it - he
didn't want anyone to feel side-lined.
He feels that, although he faced some legal restrictions over
what he could tell the employee, it was worth defying them when it
came to maintaining good relations and being fair.
"I would say, 'I'll share that information with you, but I
really would ask that you then keep that in confidence. But you
need to know that and that's a fair question.' I've never been
bitten by taking that risk."
Once telling all the individuals was out the way, he immediately
got the rest of the company together who were left and told them
the redundancy programme was over. "It's amazing how there was a
collective sigh of relief. People are in survival mode at that
He feels that it's very important to admit any personal
responsibility for what has happened - but not to allow guilt to
infect leadership from then on. "Communicate the best possible
decision you can and be proud of the decision you're making for the
health and survival of your business."
The remaining employees, he says, will be over the news in 24
And with that short a recovery period, the employer in control of
a redundancy situation can simply move the company forward, without
feeling guilty, to become a stronger and leaner business.
Which means that next time recession bites, redundancy won't
need to be an issue.
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