Redundancy
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Redundancy is the process whereby employers have to let go of one or more employees due to circumstances unrelated to job performance or behaviour.
Redundancy is imminent if the erstwhile job the employee used to carry out does not exist anymore due to a variety of reasons (listed below). In other words, the job has become redundant, NOT the employee.
Redundancy, thus, leads to surplus of labour which occurs when the number of employees required to carry out work of a particular unit has ceased or diminished or is expected to be reduced permanently or temporarily. In such a situation, the employer is forced to reduce the size of the workforce due to a variety of reasons:
1. Economic recession
There is no demand for your products. The chances of reviving the business look grim. You do not have the courage and convinction to put more money into the business. Then you have to trim the workforce, whether the said employees are top performers or not.
2. Termination of business
Another reason for redundancy could be when you decide to close your business because you want to try another venture, retire or move on to a new job. You want to get out of the business at any cost.
3. Termination of job title
If your business no longer needs a particular job title, this could lead to redundancy. For example, if your company moves to an electronic phohne system, the role of a receptionist may become redundant.
4. Limited funding
If your business has limited or no founding for a project, this might be a a cause for redundancy. Keeping employees when there’s no work for them could cause a loss in profits.
5. Relocation of business
If you decide to move your business to a new location or another region, state or even country, this could cause redundancy because there may not be enough money to help every employee relocate. Your company may also need to downsize in order to get established in a new location.
How to Evaluate Potentially Redundant Roles
Redundancy is a sensitive issue. It needs to be handled carefully without rubbing people on the wrong side. You need to put the finger on the problem causing trouble in a balanced and rational manner—without getting trapped by emotions (and also rubbing people on the wrong side).
- Key roles. — Identify the key roles that are irreplaceable. Discussions with departmental heads would eliminate lot of confusion in this regard.
- Key people. — Also find out the key persons who are good at multi-tasking. See whether they can handle additional responsibilities without making a hue and cry.
- Lop off positions with limited potential. — Review the structures of your organisation to determine which roles present the least potential benefit to your company going forward. This can help you determine which roles are redundant.
- Look at the employment record of each employer. — Once you’ve narrowed down the scope of your search, you can evaluate each employee in the redundant roles. Review their qualifications, job performance and overall contributions to the company. If one employee performs at a more consistent rate than the others, they might be a better candidate to remain at the company.
- Evaluate the relocation option. — If your purpose for finding redundancies is to improve productivity rather than prevent a loss in profit, you could create new positions or move employees to other roles to better benefit your company. For example, if you found multiple redundant marketing specialists but still want to keep them in your company, you could offer them positions in customer service, sales or another marketing role that needs support.
Career Changes after Redundancy
Most people who lose their jobs do so as a result of a redundancy. As career coaches, we are also more likely to see a high proportion of clients from this category, since redundancy or outplacement counseling or coaching can be offered as part of the redundancy agreement, so it is worth spending some time trying to understand the particular experiences of those who have faced this.
Organisations should be well advised to approach redundancies with great caution because the research suggests that in general, downsizing rarely has long-term positive outcomes. There are always several casualties. Firstly and most obviously, redundancy has a significant and sometimes lasting impact on the lives of the people who have been redundant. There is then an impact on those workers whose jobs are safe, but who witnessed and perhaps were involved with the process. They suffer from something that has been termed survivors’ guilt, describing the negative emotions associated with watching colleagues suffer, and they have also been shown to have an increased chance of mental ill-health, linked to a feeling that their own jobs are insecure (de Jong et al., 2016).
The layoff agents — the people who actually have to deliver the bad news, are particularly affected (Parker & McKinley, 2008). For these people, the whole process is highly stressful, they experience significant psychological discomfort, and they struggle with a shift in identity and role as they move from building and developing teams to destroying them. On top of all these personal negative experiences, downsizing doesn’t even seem to have much of a positive impact on the finances of the organization. Redundancies have a negative impact on stock prices, customer service and reputation, and don’t even seem to reliably produce leaner organizational structures (Quinlan & Bohle, 2009).
And yet the redundancies keep coming. Looking at the data over the last few decades, it seems that every quarter, on average, five or so people in every 1,000 workers are made redundant and many more people are told their jobs are at risk (ONS, 2019).
An Ethical Approach to Redundancy
The details of how the redundancy was handled by the employer can give an indication of the emotional impact that the job loss may have. Eby and Buch (1998) explored the impact of an ‘ethical’ approach to making employees redundant and found the employees who had advanced warning of their job loss felt that the organisation cared more about their future, which led to better emotional acceptance of their situation.
Employees were also shown to have greater emotional acceptance if they had been told about their job loss by the HR department or the senior managers in the organisation rather than by their line manager. Although perhaps rather counter-intuitive, employees felt that it made them think that the organisation as a whole cared about them if the notice came from someone central. The third factor uncovered in this study was that having a good reason for the redundancy made a positive difference to the employees’ subsequent health and emotional acceptance.
