Redundancies Done, Now for the Hard Part

Tuesday, October 1, 2013 - 10:14

Managing employees who remain after downsizing can be every bit as challenging as telling people they are no longer required. By Leon Gettler

Rebuilding morale after a round of redundancies is one of the most difficult tasks for managers.

Energy levels might have dropped and employees who survived the cleanout might experience what is referred to as "survivor syndrome".

Their initial relief can turn into guilt at having kept their jobs while their colleagues lost out. Others can feel envious over their colleagues' severance packages or even their new jobs. Some may feel resentment at the extra work they are expected to manage without the help of their departed peers.

All up, the manager is left to deal with employees who might have much less trust in management and be resentful over what's happened.

What makes it even more difficult is that there are no silver bullet solutions. Every company and every person is different. Redundancies will have different effects on different people.

For some organisations, the redundancies might be the thing to re-focus and streamline the company. In others, it's a matter of shifting deck chairs on the Titanic. Similarly, some people will welcome the payout and the opportunity to rebuild their careers. Others will feel it's destroyed their working life.

With more companies trimming costs and laying off workers, and post-election public-service cuts looming, this is now the big challenge for Australian managers.

Vivienne Anthon, chief executive of the newly merged Australian Institute of Management QLD NSW ACT NT, says the process needs to be conducted in a business-like way. The business is restructuring to ensure it has a future, it's not about performance management and it can't get personal.

And, strictly speaking, redundancy means the position no longer exists. People need to be given that context.

"If they've been kept in the dark and they don't understand the business imperatives or what's actually happening and you don't give them any context, then you're not going to get a positive outcome," Anthon says. "If you do give them the context, it will no doubt be disruptive to them, but a certain percentage of very professional people will understand that context."

She says skilled managers will work through options with the person. That could include putting them in touch with an outplacement firm or giving them time to recalibrate. With remaining staff, conversations have to be businesslike. The manager has to let them know exactly what their roles are and that they have a future in the organisation.

"It's really important that when you are talking to those people, you tell them it's not their job at the expense of another. You tell them there's a role that was judged to be necessary for the business to continue and really that they are the person filling that role," she says.

If there is uncertainty about the future, the managers have to make it clear to everyone they're all in this together. That might also mean acknowledging the uncertainty.

"The manager has to be skilful enough to determine what the climate and mood is and then work with that group of people to determine what suits them," she says. "If they can't put that in place, they at least have to be transparent.

"They have to talk about what can be done within the budget and they have to approach it realistically. If, as a manager, you tell people what needs to be done and you don't act on it, then you have a double whammy."

While many companies struggle to manage the survivors, some have done it well.

One example is the beverages company Bonlac, which had to restructure its Spring Valley juice label and sell it to British soft drinks maker and confectioner Cadbury Schweppes in 2000.

As part of that restructure, 170 positions were made redundant. People who worked with the company at the time said the emphasis was put on communication all the way. Everyone knew exactly what was happening and how it was being managed. They said people were distressed, but management acknowledged it was distressing for everyone, including the managers.

Significantly, morale was so strong the last three months of production activity was the strongest volume they had ever had. There was buy-in to the process as those leaving renegotiated careers and the ones kept on felt the company was in safe hands after the sale.

Another example is the Australian branch of the bearings company Timken, which in 2000 announced it had to cut 600 jobs worldwide. Plants in Australia and England were closed. People who were there said the managing director had a quaver in his voice when he was explaining to everyone what was involved.

Jannine Fraser, managing director of Australia's largest outplacement firm Directioneering, says the most successful redundancy processes she has seen, where morale was not damaged, happened when managers started with the end in mind.

"This idea … is aimed at survival and growth and promoting an engaged workforce with the lowest possible disruption to business and reputation," Fraser says. "It's very easy to get caught in the detail of exits and forget what the longer-term purpose of the organisation and process is about.

"Ensuring dignified exits is fundamental because everyone is looking at it and wondering: 'If it's me next, how will it be for me?'"

The key, she says, is to have lots of communication that change is nigh. Indicate there will be some pain but paint a realistic picture of the way forward.

"I don't think you can overcommunicate,'' she says. But managers have to be straight down the line with those remaining. They can't resort to jargon. Australians have a terrific bullshit detector.

"They're not interested in anything that tries to gloss over the tough stuff,'' she says.

"People don't want to hear just the bad news. People want to understand where you are taking them on this journey."

And the emphasis for those remaining, she says, has to be, "We're all in this together".

"I have seen executives who have known they are part of the target group being retrenched and they've still gone ahead and delivered the message of retrenchment, knowing full well they have lost their own job in the process. Some of those people are the most effective leaders I have seen."

United front:

  • Communicate relentlessly.
  • Make sure all the managers and executives are saying the same thing Keep everything consistent. If the redundancies are happening to cut costs, it sends the wrong signal to staff if there are bonuses for executives or some of the managers head off on holiday after the announcements.
  • Don't use jargon: make sure the language is straight down the line.
  • Talk to staff about what they want and see how it can be addressed.