managing redundancy for employers

22/04/2020

Whatever an employer’s reason for making staff redundant, it is unlikely to be an easy process but, for the mutual benefit of employer and employee, it’s important that it is planned and executed properly.

Communicating with the Employee

If redundancies are likely, either due to an economic downturn, significant changes to market conditions or a new strategic direction, it’s quite likely that your staff have picked up on the possibility.  But that doesn’t mean it won’t still come as a shock. And what’s obvious to some, is not always obvious to others. It’s important not to make any assumptions about who knows what when it comes time to break the news about a role no longer being required.

Before making any announcements, it’s important to ensure that you are compliant with New Zealand’s employment law with regards to redundancy. It would be wise to engage with external professional advisors to ensure you fully understand and meet your obligations. 

To support employers through this complex and difficult time, we have provided some advice on areas that need to be addressed when managing redundancy in the workplace: 

  • Develop a communication strategy that factors in all stakeholders of the business (all staff, shareholders, clients and suppliers) including how and when announcements will be made.   
  • Be transparent and don’t try to sugar-coat the situation – call it what it is and acknowledge the uncertainty and unhappiness that redundancy brings. 
  • Have all paperwork in order for each employee impacted, include a plan with timing, logistics and options – ensure these are in accordance to their employment contract. 
  • Don't announce the redundancies in a group setting, bring people in for individual meetings to enable them to process the news and ask questions that relate to their own situation. Then bring the wider, relevant team together. 
  • Be professional but not devoid of feelings - have empathy and compassion for the range of emotions your employee will be experiencing and keep the focus on the redundancy of the role rather than the individual being redundant. 
  • If it’s feasible in your situation, consider offering employees the option of a career counsellor to support them through the post-redundancy phase and help them prepare for their next role.  

Resilient teams recover better

There is no doubt that redundancy is hard on those directly affected but what about those that are indirectly impacted?

Before redundancies are announced, the company may have been going through a time of uncertainty. This will be followed by a period of disruption as employees come to terms with the changing environment, loss of teammates and loss of institutional knowledge. And coming out the other side of this will be the need to adjust to a new landscape. All of this can erode culture of a company which is why it’s so important to factor in pre- and post-restructure support to help all staff get through it.

At Randstad, we find that our clients who have placed a high priority on employee health and wellbeing are better placed to weather difficult situations and work through them with their employees resulting in a better outcome for all. 

Going about it the right way

The management of restructures and redundancy varies widely between organisations and there will be some firms who are extremely competent in managing the process and others who need to improve.   

Employment New Zealand outlines the full process businesses should go through when planning a restructure and redundancies and this is a useful resource to ensure everything is being done properly. 

At Randstad, we believe it’s important to put people at the heart of business strategy, and this can still be done even in a redundancy scenario. With careful planning, clear communications and sensitivity it’s possible to retain goodwill amongst both outgoing and retained staff members, which is ultimately better for morale and in turn better for the employer brand. 

Unlike  other countries, New Zealand does not have mandatory redundancy pay so redundancy arrangements need to be factored into individual employment contracts and this may become a point of negotiation at the hiring stage.  

What can happen if things go wrong

A mishandled redundancy process has the potential to create reputational and operational challenges which is why it is so important to get good advice and ensure the proper procedures are followed.  

Employees that feel a redundancy has not been handled fairly or is not a genuine redundancy, may choose to appeal it, causing delays and damaging goodwill.

If retained staff feel their coworkers were unfairly treated, they may lose faith in management, and this can impact on loyalty and, potentially, on productivity. 

There is also the potential for people to air their redundancy grievances publicly which may result in a backlash from consumers, as in the case of the Cadbury factory closure in Dunedin a few years ago. 

Focusing on the future  

With foresight and workforce planning, businesses may be able to look for options to help reduce the need for redundancy. This could mean bringing in people from across your business to tackle a challenge or look for a new growth and learning opportunities rather than cutting overheads.  

A number of New Zealand industry sectors like teaching, IT and construction are currently experiencing skills gaps and are bringing in overseas workers.  Redeployment and skills development can be a viable alternative. Having healthy connections, even among competitors, can make redeployment of staff much smoother.  

Consider strengthening relationships with those in your sector and assisting each other whereby during peak and quiet periods with talent pools and career opportunities.  

We know that the increased use of AI and automation will cause roles to change or become obsolete in the future. Technology changes work but will never replace the need for human interaction and skills, rather it should empower more people to work smarter and deliver greater improvements in efficiency.