The R Word: how to avoid the pitfalls of redundancy
The R word: how to avoid the pitfalls of redundancy Unfortunately, in today’s uncertain economic climate, redundancy is becoming a more frequent occurrence in both small and large companies – statistics show that we are now likely to be made redundant 2.7 times in our lives!* However, this does not make the reality any easier to bear, whether you are the one having to make the redundancy, or on the receiving end. It not only takes an emotional toll on both parties, but it can be financially disastrous for an employer if you get it wrong – if you are taken to an Employment Tribunal for unfair dismissal you can face having to make a compensatory award of up to £65,300* to your former employee, together with the associated legal costs. In this article we have attempted to lay out some important points to bear in mind, to help both parties minimise the potentially negative consequences of this highly stressful event. An Employers perspective: Making redundancies is clearly not a decision to be taken lightly. But increasingly some businesses feel they have no alternative. Most employers want to be seen to be fair, and to “do the right thing”, both for themselves and the employees. Also, they don’t want to find themselves facing a claim for unfair dismissal ! So, it’s worth considering the following points before you go down this path: 1. Is redundancy the only option? Work out what it is going to cost you – both in monetary terms as well as the effect on your other employees, and your customers. Redundancy can cause anger and resentment amongst both those on the receiving end and also those left behind, meaning both motivation and productivity can be affected. Can you cut costs anywhere else? 2. Get the right advice from a professional HR Consultancy or a legal professional who specialises in employment law. Most people know their rights, so don’t leave yourself open to a tribunal – is it worth risking your business for the sake of a few hundred pounds? 3. Have the correct procedures in place: in our experience, many small businesses do not always have redundancy procedures in place. It’s obviously much easier to do this prior to the event, when you can be more objective. Ensure that your procedure is fair as well as legally compliant. 4. Remember that redundancy is not the same as terminating someone’s employment. A job role is made redundant, not the person. If you are dissatisfied with an employee’s performance, this needs to be dealt with in a different way. It’s not unusual to find that some SME’s lack some basic HR systems and procedures (such as no or incomplete contracts of employment, no or unclear performance objectives, nor unclear/out of date job descriptions, and a lack of formalised appraisals), all of which leave an employer severely exposed in the event a tribunal investigates your systems. 5. Consider carefully how you will tell the employee – bear in mind that one survey of UK workers rated redundancy as more stressful than either divorce or moving house! Also, of those who have been made redundant, 60% are more likely to be prescribed anti-depressants compared to the rest of the population. It’s never going to be a nice job, but you owe it to your employee and yourself to be as sensitive as possible. As HR Consultants we can give you advice, and even sit with you and help you carry out this delicate and challenging task. 6. Consider offering a few sessions of outplacement support. This need only cost a relatively small amount in terms of money, but can have a hugely positive effect on the people involved. If they can move smoothly into another job with minimal disruption or negative feelings, this will impact well on all concerned. 7. Don’t underestimate the affect on your existing staff: The loss of a colleague can leave the remaining employees feeling angry and resentful, and fearful for their own jobs. They may worry that the business is going downhill, and may start looking elsewhere for employment. Again, consider carefully how you will break the news to them, and keep them motivated. An Employees perspective: Redundancy might have been looming on the horizon for a while, or it may have come completely out of the blue – either way, it’s a very stressful and confusing time. It’s important to find a way through this difficult time, so that the disruption to your life is minimised. 1. Don’t underestimate the effect of being made redundant: there is still a stigma attached to being made redundant, and although some people do actually see it as a positive thing (e.g. they were planning to leave anyway, they would like to take some time off to look after their children etc), for the majority of people it’s a huge blow - not only to their finances, but to their self-esteem and confidence. Suddenly not having the structure of a job can plummet some people into a negative spiral of thinking, which compounds with the stress of not having enough money to pay the bills, making it difficult to move forwards with their lives in a positive way. I have personally been astounded at how many people who have been extremely successful and confident prior to redundancy can transform in a relatively short space of time into nervous wrecks who find it an almost insurmountable task to do the washing up, and find even the smallest decision difficult – let alone choosing the right job! I have experienced it personally, and through my coaching clients. The good news, however, is that if you can lose confidence so quickly, you can theoretically get it back just as quickly, with some support. This is where coaching can help. 2. Get in touch with your emotions: before you start thinking we’re getting all touchy-feely here, we really do think that this is an important part of coping with what for many is a life crisis. Particularly as we are generally brought up to just “get on with it” or “man up”. Like the grieving process, you will find yourself going through many emotions, such as anger, denial, resentment, confusion, fear. If you have experienced redundancy before you may be familiar with the mixed bag of emotions that go with it - perhaps anger at your employer, feelings of guilt or blame, a feeling that you have lost your identity or purpose in life, fear of not finding another job, or losing your home, and the effect on your family. I have worked in companies where redundancy looms, and it’s like living under a cloud – you never know who’s going to be next. This can leave employees feeling very negative, even depressed, and lacking in motivation. Coaching provides support and focus to both those made redundant, as well as those left behind. 3. Get support: if you feel capable of handling things yourself – great! However, most of us need a little bit of extra help, which is where a coach can help you. Coaching is not counselling or therapy. It is not concerned with the past, but where you are right now in your life/career, and where you want to be. It is non-judgmental, and non-directive – the role of the coach is to help people identify exactly what they want, and guide them to make decisions that are well-thought-through and robust. The coach uses a range of tools to do this – questions, exercises, diagrams – whatever is appropriate to each person. Each session ends with the client agreeing to a number of positive actions to move them close towards their goals. The power of coaching lies in the power of commitment: once you have agreed to something – who wants to come back next week with pathetic excuses about the dog eating your homework? You have all the answers somewhere inside your head – or you can find them out. The coach provides the key to help you unlock this, and then make a solid plan of action to drive you forwards, providing support along the way. This can help your transition into another role more easily. 4. Consider your commitments: rather than stick your head in the sand (although an attractive option, in the longer term probably pretty disastrous!) make sure you are clear about your financial commitments: which have to be paid, which can be deferred? Where can you economise? You need to know how long you can survive on whatever payout you have, before there are consequences (such as repossession of house for example). Consider all your options – e.g. temporary work, can your spouse help financially? Again, get advice so you know where you stand. 5. Positive outcomes: it is our belief that there is generally a silver lining to the cloud, even if you only see it later. Maybe this is an opportunity to take some time out to consider what you really want out of life – perhaps a change of career? Again coaching can help you identify the best options. In conclusion, redundancy is, unfortunately, a fact of life, but if dealt with in a best-practice, positive way, it can actually have benefits to either or both parties. At SME HR, we strive to help employers and their employees through this difficult time. Christine Perrin is a CIPD qualified HR Consultant with many years HR and business experience. She is a Director of SME HR, an HR Business and Training consultancy that provides best-practice advice and support to small and medium-sized companies. Alison Zarecky is a former Marketing Manager and fully qualified Life Coach, who provides coaching support to those made redundant, or seeking a career change, as well as helping employers and employees get more satisfaction from their work, and be more successful and effective in what they do. They can be contacted at: www.smehrconsultants.co.uk 01428 717667 (office) 07505 514067 (Christine Mobile) 07905 214074 (Alison Mobile) *sources: www.statisctics.gov.uk www.redunancyexpert.co.uk About Author
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