This article first appeared in the Sunday Independent on June 24th, 2007
This article was reproduced with the permission of the Whitespace Publishing Group.
www.whitespace.ie
Whitespace Ltd 2007.
It’s never an easy option, but when a business decides to go down the redundancy route, it’s important to remember that there is a right way and a wrong way to do it.
John Hearne reports
With the reported level of redundancies up 8.1pc in the first five months of 2007, sections of Irish business are bracing themselves for a period of retrenchment. Dealing with layoffs is, of course, one of the most challenging and emotionally charged aspects of business life. Getting it right is not easy. Getting it wrong can be disastrous.
As with so much else these days, your starting point is the law. “This is steeped in the whole employment law arena,” says Mary O’Hara, partner with PricewaterhouseCoopers. “There are a whole lot of statutory obligations on employers before they begin to think about redundancies.” Once the need for layoffs is established and the area in which they will occur isolated, human resources takes over and begins implementation. In a collective redundancy situation there are extensive consultative obligations, inevitably through unions and employee representatives.
When you’re talking about partial closure as opposed to complete shutdown, choosing who goes and who stays is similarly bound by constraints. “You have to be fair and reasonable in the selection criteria you use. Employers can’t use this as an opportunity to get rid of poor performers — that’s something that should be managed in a different way. Good employers will have a process in place to deal with poor performers. It needs to be fair, it needs to be transparent or otherwise employers may find themselves up in front of the Employment Appeals Tribunal for unfair dismissal.”
Closure or contraction may also open up a host of ancillary issues. There may be a need to inform the Department of Enterprise, Trade and Employment. Grant repayment may be necessary. Further legal issues arise if the operation is being relocated as opposed to shut down completely. “In the compulsory situation, it’s really about following the right process, making sure all the legal 'I's are dotted and 'T's are crossed,” says O’Hara. This, of course, is not to say that voluntary redundancy is without its own individual complications.
In the unlikely event of the exact contraction required being met through voluntary redundancies, you are going to end up with a group of people who never wanted to leave but had to or, often worse, a group who wanted to leave but couldn’t. “These are what we call the survivor issues — those who are left behind who would have loved to have gone. This is where the money for- nothing concept that might appeal to someone in that situation doesn’t materialise. Or equally you could have a situation where those left behind feel they’ll have twice as much work to do with half as many people,” O’Hara comments.
Redundancy hangover
Dealing with these issues effectively is the difference between a company that will continue to suffer the redundancy hangover long after the event and one that can move on swiftly. “Certainly from our experience, companies that manage the process well in terms of being fair and transparent and in terms of giving a level of support to the employees when they’re leaving, create an environment in which the people who are left behind say: ‘Well, at least they treated them fairly, and it had to happen for a business reason - at least they looked after them and didn’t just shove them out the door,’” says O’Hara.
She points out too that much of the legal burden here shouldn’t be seen as such. The high level of consultation required makes good management sense. “Two things: once the decision has been taken, how an employer conducts himself after that is going to be critical. It’s about being responsive to employees — giving them an opportunity to have discussions; making sure information is available to them. All of that will be seen by employees who remain behind as well. Secondly, the communication process for those who remain is important, making sure they’re not ignored or sidelined just because they’re not part of the programme. They may well feel left out. Simple things make all the difference such as making sure their manager tells them the reason they’re not being offered redundancy is because they’re business critical, therefore there’s no rationale for it.”
In the aftermath, any damage to corporate trust and culture will have to be addressed. In addition to regular briefings, there may be a need for counselling or running an employee perception survey in order to address concerns. Often, the workforce will worry the axe may fall again. Open lines of communication are essential. “Think about those more intangible things.
Often it’s not about the money, it’s about understanding what’s going on and allaying people’s fears,” O’Hara says.
This article was reproduced with the permission of the Whitespace Publishing Group. www.whitespace.ie
(c) Whitespace Ltd 2007.
