Why a benign and caring approach to making employees redundant can have a significant positive impact on your brand
In a new podcast interview for Cambridge Judge Business School’s expert comment series Dr Philip Stiles, Co-Director of the Centre for International Human Resource Management at Cambridge Judge Business School, says brand reputation will suffer if employees are made redundant in the wrong way.
Dr Stiles says there really is a ‘right’ and ‘wrong’ way to go about making redundancies whether you are in the public or private sector, and that it is easy to de-motivate those employees who remain and therefore slow down the growth of the company if you are ‘too harsh’ in your approach.
Dr Stiles says the first step in the good employer’s guide to redundancies is to ensure employees know that ‘all avenues’ had been explored to make cost savings before redundancies notices are issued:
“I think what employees want to know is that management have exhausted all opportunities and avenues for cutbacks before redundancies are on the table. We have seen a number of kneejerk reactions to the cuts where a number of organisations have made redundancies without examining whether other possibilities are open to them and I think employees are hugely frustrated about that.”
The second step, says Dr Stiles, is to ensure that those who are being issued with redundancy notices can see that you have been ‘fair’ in the selection process:
“Let’s divide employees into two groups: those who have to leave the organisation and those remaining: The method by which the first group finds out about their future is often delivered in a very harsh way. This can have a significant impact on the second group; those who are staying. They may see that management is overly tough on the people who are leaving and that will affect morale throughout the entire group.
“Management style is very important here. Management should give people a real say, a real voice about their future and should give them counselling where needed and the possibility of future work in other organisations if they can.
“In these situations process is everything. Cuts may involve redundancies, and how that bad news is broken is important. Employees want to think they have had a say in this and that the explanation and process is fair and that they are treated with some dignity. Giving them some kind of soft landing where they can make arrangements for their future is a very fair thing to do and where you see the absence of that you see huge disgruntlement with those who are staying too.”
Dr Stiles says it is down to the CEO and the Board to set the tone for the company and that the lead for HR departments had to come from the top:
“I think the tone which is set from the CEO is hugely important. Things like staying in touch with people who leave and when better times come around, maybe offering future employment to these individuals is important and a good signal. Often CEOs are manouvered into a corner and they feel the only way out is to make cuts and redundancies. Often a cause of employee disenchantment with their CEOs can be attributed to the fact that they feel the CEOs didn’t do enough to make efficiency savings elsewhere.
“There are so many bad stories I think we can assume there are managers who have no understanding of how this process should work. But we do see others who give employees up to six months to prepare themselves to find other work, they give advice, packages, counselling and coaching and through this their reputation remains good. The employees do not feel the company is being unfair to them even though they are traumatised by leaving.”
He says there is a real possibility the ‘cuts’ agenda can impact on the staff who remain:
“Cuts seem to be very high on the agenda and there seems to be little talk of growth. A lot is now about survival which doesn’t give much cause for excitement and when people just tread water that impacts on the economy too, it slows things down.”
Dr Stiles says the move into self-employment is a very tough path for many and that some would be better off going into other organisations if they could find work elsewhere:
“This transition is very profound and a lot of individuals think they can move into self employment, set up businesses and become consultants. However for a lot of people their real skills and values are better inside an organisation – so that transition is difficult. I think given the scale of redundancies happening at the moment, the idea that people can become consultants and win business seems to me very idealistic. Large consultancies are also currently struggling for work, and this whole area of what to do when you are made redundant has become a huge issue. Looking at what the councils are saying and the Pfizer redundancies one has to be fearful at the moment.”
He says HR departments where themselves being trimmed and their approach to redundancies often varies depending on the sectors in which people are employed:
“A lot of HR departments have been cut so they don’t have much bandwidth to cope with this level of activity. Some HR departments are soft-based, with knowledge workers and professionals, and some have a more hard HR role where they are dealing with more blue collar frontline staff. In the soft HR you see a more caring approach but with the hard HR, where there is more transactional relationships, you see more harshness, the text message, not much consideration, there is not much commitment. There is a lot of fear in the workplace at the moment.”
Dr Stiles believes that the ‘caring’ approach is the right one and that it keeps the company in good shape for the next upturn in the economy. It also supports employees who may feel a sense of isolation in today’s society:
“The message is for the upturn it pays HR to be considerate and kind; these are not just fluffy words. The people who stay want to see that HR is doing a fair and consistent job. Culture is one of the big reputational assets of a company and if it is not seen to be fair it will suffer.
“If you are made redundant it is time to rethink one’s career and to rethink what you want to do. A new work concept is that you don’t have one career for your entire working life, but potentially multiple careers. You need to think about your strengths and weaknesses. Consultancy is a route; social enterprise and the charitable sector is another route to earning a living again too. One’s pride does suffer – I think the difficulty is here that with the politics there is a sense that everyone is self-sufficient. It’s a very individualistic sense and that tends to make those who don’t do well to think it is their own fault and this is a huge mistake. The fact that people think the fault is with them is one of the huge social ills of our time.”