Getting redundancy right

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 bad.

In fact, done right, it can even improve the health of a business. So exactly how do you get something so delicate right?

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 says.

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 the team."

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 tribunal stage.

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 "huge".


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 stage."

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 hours.

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.

Smarta Business Builder

To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website BuilderBusiness PlansAccounting SoftwareLegal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.

We use cookies to create the most secure and effective website possible for our customers. Full details can be found here