Friday, 17 January 2014

Redundancy - the Ultimate People Process

In 2006 I was made redundant for the first (and last) time. At the time I was  devastated, not least because I was completely blindsided by the decision. Just a few weeks previously I had my annual performance review at which I "Far exceeded expectations", received a 5% bonus and a 10% pay rise. At that time bonuses were far rarer than rocking horse droppings and pay increases were 0% to 1.5% with the former being the standard. Needless to say I felt that my star was on the ascendent.

A month later I was called in to a meeting and given the news that my services were no longer required. A settlement package was on the table as part of a compromise agreement which I was expected to contest under the advice of a solicitor. There was no appeal, it was a done deal other than the extent of the final renumeration.

It turned out that I was in good company - a large number of my colleagues in the European leadership team were attending similar meetings during the course of that week. That didn't make it any easier, but at least for all of us the axe was sharp, the executions swift, and the journey to the next world was short. In hindsight, this was a fantastic opportunity. I sprinted through the psychological change curve which I had lectured about on so many occasions and started building my new life, and decided that no-one was ever going to get the chance to put me through that process again. (As an aside, it turned out that the architect of the executions lasted only a few weeks before signing out himself, apparently stressed out and sick from wielding such a heavy axe!)

The process of redundancy continues in unparalleled numbers in the organisation to this day (although it now exists as a division in a larger business). 34,000 people will lose their jobs this year alone. They are not as lucky as I was. They are being toyed with, by managers who seem to have little idea of the torment they are causing the individuals and little understanding of how much damage they are doing to their business, their bottom lines and ultimately their clients.

There is a massive hiatus in productivity as groups of people meet to discuss their fates. People are receiving "at risk" letters, months before decisions are being made about where actual jobs are being lost. Staff are placed into pools of potential redundancies and being told that they have 100% chance of losing their jobs only to be reprieved at the last moment because there is too much work on the books for a reduced work force to cope with. Experienced domain experts are expected to hand over to new graduates who are then expected to continue to provide the same level of support. And in an attempt to "invert the management pyramid" the real outcome has been to take out fewer managers than ever at the expense of genuine value add staff.

I've long been a believer that cutting jobs is about the daftest way to try and cut costs, and that a pure focus on cutting costs is the daftest way to try and improve performance, efficiency and effectiveness. To run a redundancy programme that is so devoid of common business sense that it is reducing output and productivity without actually adding any value whatsoever is the daftest thing of all.

If you must make people redundant, do it with respect, sensitivity and empathy for your staff. They are not human resources, they are the people who helped put you where you are. If you can't recognise that, then you don't deserve to share the same space or air as them. And don't be surprised if they take their loyalty elsewhere - or is that what you were really trying to do? Make them so unhappy that they'll leave without you having to pay them off? Just remember, what goes around, comes around...

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  1. The redundancies will continue with an aim to reduce costs until only the senior management team are left and then they will realize that they are the costly ones and should have gone not the experts and revenue earners. At least they will be able to afford the new corporate jet that they "need"

  2. The one aspect that senior management never considers when organizing redundancies is the snowball effect, as this demotivates the people who remain and feel insecure and they look at leaving the company as soon as possible. This is the great differentiator, are you can always recognize the best people in your organization by the fact that they are the first ones to find a job elsewhere.

    1. Totally agree Peter. A number of people in my team saw what happened to me and decided not to hang around. It all adds to the dysfunctional effect that a badly implemented redundancy programme will generate.