HR Doctor - Who goes in a redundancy situation?

HR Doctor Steve Cave responds to common HR concerns.

I have unfortunately spent a lot of time lately helping companies who are making redundancies. One interesting element to this has been the different approaches that companies have taken. One approach is to do everything possible to avoid having to make redundancies for as long as possible. The thinking here is that the company wants to keep its skilled workforce together and are hoping that the economic down turn is short lived. Given the cost of recruiting when things do pick up this approach has some merit.

The other approach being adopted is to take advantage of the situation and make redundant employees who they regard as poor performers. Of course it is quite possible to deal with poor performers through capability procedures but this takes time and patience. Redundancy offers a much shorter and arguably less painful route, especially to managers who dislike tackling poor performers! At a recent workshop with 22 companies, 14 admitted taking this approach and perhaps even increasing the numbers of employees they are making redundant to ensure that the organisation is stripped of people that do not quite measure up to the current demanding environment.

Of course for companies who are either taking the second approach or finding it essential to make employees redundant a key thing you need to consider is 'how you choose redundant employees'. In the past a lot of companies will have used the principle of 'last in first out '. Now not only is this likely be bad for the future of the business but also could well lead to both age and sex discrimination claims, and in particular age discrimination as the principle will favour older workers. It may be easy and understood by employees but needs to be avoided. So, what do you use? In the absence of 'last in first out' the alternative is to use a selection matrix that would include a range of items such as discipline, only use warnings that are still current, attendance is another commonly used criteria,you do need to exclude any absences connected with either a pregnancy or a disability. A matrix with four or five criteria should be easy to construct and apply. Other criteria to consider are 'skills' particularly if you use some sort of skill or competency based system. Most organisations would favour someone who had a good range of skills. You can also use some criteria that are subjective such as 'attitude' or 'flexibility'. If using subjective criteria you need to ensure it is scored independently by two managers. For each criteria draw up four ranges of scores, for example on flexibility, 1 to 4 points = very little flexibility, 5 to 9 some flexibility but reluctant to do other tasks. 10 to 14, can do a range of tasks to an acceptable standard and 15 to 20, very flexible and usually completes tasks to a high standard. Once you have decided on the criteria to use you then weight each one according to which you regard as important to the business. You then score each employee who is under threat of redundancy. This could be all employees in the business or just those in selected areas.

The law also requires you to consult with employees who are under threat of redundancy and part of this consultation is to discuss how employees will be selected.

If trying to avoid redundancies, the things you may want to consider are short time working, bringing forward holidays, secondments, training, sharing services with other companies such as IT or other specialist jobs, considering early retirements, reducing costs and freezing bonus payments or other benefits. The companies taking this approach have found that by everyone pulling together they may just get through the present difficulties and come out of it fitter and better equipped to take advantage of any upturn.

I mentioned a workshop I had been involved in earlier. At the workshop groups were asked to list the 'right way' to approach a redundancy and also the very best way. These are the lists the groups produced.

The right way

Make the announcement
Elect workforce representatives
Hold a vote if necessary
Send the reps on training
Fill out HR1 - the form you complete when you make 20 or more people redundant, essentially the official notification of the redundancy.
Release temporary workers
Agree selection criteria/matrix/package
Find ways to eliminate and reduce the numbers
Use holidays/short time working/bank hours/overtime ban/career breaks/secondment/re-deployment
Volunteers/ Early retirement
Individual consultation
Consider outplacement support

The very best approach

Communicate with everyone and especially reps
Consider stopping production, initially for one month but under review and continue to pay everyone
1. Use holidays
2. Training and up skilling of all staff
3. Focus on generating extra sales
4. Full pay with a reduced working week.
5. Review after one month and consider introducing early retirement packages and natural wastage packages on a golden parachute (This essentially means, encouraging people to leave, by offering packages such as paying an amount of money to the company they are going to, to help with training or offering to pay half their wages for a period of time. Some companies offer payments to help people start their own business or to get part time work.)
Redundancy
1. Work with staff reps to enhance package
2. Out placement support
3. Unlimited time off for training
4. Volunteers first
5. Minimum payment notice or lieu of notice

At the workshop groups also considered the 'nasty approach' to redundancy. I am afraid I can not say anymore about the results other than it involved 'texting'!!

Whichever approach you take, good luck and remember the single most important thing is to do whatever is necessary for the business to survive.

If you would like the HR Doctor to focus on an area you are concerned about, email steve@myhrpeople.com