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Recovering after redundancy

Written by Hannah Prevett on Friday, 17 August 2012. Posted in HR, People

In these tough times, lots of small businesses have had to face the inevitable and make cuts to headcount.

 Morale is bound to be affected, but how can growing businesses bounce back after the guillotine has fallen?

 Redundancies are an unfortunate reality of working life. But for employees the length and breadth of these bootstrapped shores, losing a job as a result of cutbacks has become increasingly likely. It seems hardly possible that it has been nearly four years since the Lehman Brothers collapse that precipitated the worst economic crisis in modern history. But still the ramifications of the downturn continue to be felt: according to the Office for National Statistics, in the three months to May 2012, 147,000 people were made redundant. This was actually down on the previous quarter, but still represented a rise of 4,000 from the same period in 2011.

  The effects of redundancy and downsizing on an organisation have been widely reported. Even once the ‘victims’ leave the company, the aftershocks can be felt within the organisation for months. Emotions among those who survived the restructuring can range from shock and anger, through to hurt, panic and a loss of motivation. And if the process isn’t managed effectively, organisations can eventually end up losing the staff they wanted to keep hold of. “It can be very damaging for an organisation if it’s hemorrhaging skills it wants to hang on to,” says Dr Ian Ashman, senior lecturer in HR management and leadership at the University of Central Lancashire (UCLan). It is inevitable that staff are going to be feeling demotivated and stressed following redundancies. But how does a business ensure that it can pick up the pieces and move on? It is vital to ensure the process has been viewed as fair, not just by the victims, but also by those who are still employed. “The temptation is for people in an organisation to concentrate on the people who are losing their jobs, but the survivors also have to be considered; they’re usually picking up extra workload and they’ve probably been through a fairly uncertain period themselves,” says Ashman.

  The key to reducing uncertainty and retaining respect is to be as honest as possible, says John Taylor, CEO of HR advisory body ACAS. “Honest communication is the absolute golden rule,” he explains. “You give people as much notice as possible about what’s happening. Unless there’s a shock meltdown in the marketplace, or suddenly your product is no longer desirable, employers won’t be surprised by the fact they have to make redundancies. Where a lot of employers go wrong is they hang on and wait for something magical to come along. And it doesn’t.”

  Also of paramount importance is providing all staff with adequate support mechanisms, according to Ashman. “It’s likely to be much more difficult in small organisations than in larger ones, but it’s important that everybody gets access to the support they need,” he says. And this is just as important for envoys – a term coined by Ashman to describe those delivering the bad news. “Envoys need someone to share their experiences with; someone to tell them: ‘it’s going to be tough, but this is how I dealt with it’,” he says.

  This role can often become even more difficult in smaller companies, because it’s more likely the person bearing bad news has a close relationship with those being made redundant, explains Ashman. “They will know about their children, their mortgage, and so will feel a much greater sense of responsibility,” he says. Once those who have been made redundant have left the company, it’s important to try to instill a sense of confidence. More often than not, the reason people join entrepreneurial young businesses is because they believe in the vision of the person at the helm. Ashman says they need to know the founder or CEO still believes: “They’ll be thinking: ‘If this guy or woman hasn’t got the confidence in the business, and they’ve got all of the information, what chance have we got?’” he explains.

  Keep a positive mindset and things can slowly, but surely, recover. The founder can concentrate on financial recovery and the team will take on a new identity. “The good times will return, they’ll just be a bit different to what they were,” concludes Taylor.

About the Author

Hannah Prevett

Hannah Prevett

Prevett likes to think she's something of an expert when it comes to small business. Having cut her teeth writing about tech, she latterly moved on to such illustrious titles as Growing Business, Management Today and the Sunday Times to indulge her enthusiasm for entrepreneurship: from P&Ls to private equity and all that's in between, you can't keep this girl away from the heady world of start-ups. 

Back in the day when she had spare time, she would spend it networking, horse riding, drafting and re-drafting ideas for novels, and playing auntie to her niece and three god-children. Those were the days...

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