The IMF called this the biggest economic downturn since the Great Depression that has affected all different levels and types of economies.
Increase in redundancies
One of the consequences of this economic downturn has been the increase in the number of redundancies, with the UK witnessing 402,000 jobs being affected during the height of the pandemic. Recent figures show that in the three months to June 2023, there were 108,000 redundancies made in the UK compared with 95,000 in the previous month.
As a result, organisations have been forced to make difficult choices to survive, with the decision to let people go being one that can affect staff individually as well as the overall workplace culture. The huge increase in redundancies has caused some companies to approach redundancies in the wrong way which can devastate trust as in the case of Twitter (now known as X).
The redundancy process is often not undertaken well due to the emotions and impact that losing a job can have on an employee and their family. It’s also the affect it can also have on other stakeholders in the workplace such as the rest of the team that loses a colleague and friend, as well as a manager who has to take responsibility and shoulder the burden for making the decision.
Being fair and understand the effects of redundancy
The first rule of an effective redundancy process is to make sure the process is seen to be transparent and fair. This can ease some of the pain experienced by the affected employees but also reassure others in the workplace that the organisation is treating staff fairly as they may will think that it could happen to them one day. Those that have survived the process as well will also feel a sense that the process was undertaken in a fair manner and not feel as guilty about retaining their jobs.
Anger towards an organisation in redundancy situations can be a destructive element that can manifest into more damaging repercussions on the organisation. Therefore, there needs to be an anticipation towards the immediate and long-term emotional impact that redundancies can have and mitigate these risks through supporting all those affected either directly or indirectly.
The emotional scarring from unemployment can be both deep and long-lasting with one study highlighting that a longer spell of unemployment predicts lower life satisfaction as well as a higher level of economic anxiety even when people had the opportunity to ‘heal’ in later working life.
Therefore, losing a job can be psychologically shattering even when there is little affection for the role being carried out. There is a sense of security that the job may have brought to the person, their family and where they want to be in the future. There is certainly a sense of loss of autonomy that comes with being placed in a process we feel we have little control over.
The effect redundancies have on managers
A study in early 2023 by WorkNest found that 80% of businesses claimed budget cuts, due to low business demands and inflation, driving their need to make redundancies. The study also found however that line managers had received little training to deal with these cuts and this lack of assistance during the redundancy process also had a negative impact on a line manager’s mental health. Leaders, especially in SME’s, take on the pain and guilt of making staff they may know well redundant.
Leaders should feel empowered to talk to their teams, having an open door policy where they will answer questions to try and maintain an affective dialogue to alleviate stress and anxiety caused by the uncertainty of the process. Before helping others, leaders need to take care of themselves by being able to talk to someone, either at a senior level or potentially outside of the organisation, so they can vent, release tension and deal with their worries.
The importance of organisational justice and best practice in redundancy handling
As mentioned, an open and transparent process is fundamental within redundancy handling with honesty going a long way in how employees perceive the fairness in an organisation.
ACAS provide an excellent redundancy handling step by step guide that helps employers make sure that their decisions are fair and that they follow a process which would align with the requirements of the law.
At the heart of this guide is fairness, which is based around the concept of organisational justice. Organisational justice focuses on how employees judge the behaviour of the organisation and how this behaviour is related to employees’ attitudes. Developed by Greenberg in 1987, organisational justice consists of three main forms – distributive (the outcome), procedural (how the outcome was achieved), and interactional (how you were treated during the process).
This critical distinction helps organisations understand how employees process what happens in the workplace, as human beings with the outcome of any decision or procedure often being less important than the conditions that lead to the outcome.
Therefore, organisations need to consider how the redundancy process and outcome is going to seem fair and that those selected were done so in a clear, audited manner.
Here are some steps you could take to make redundancies fair:
- Be empathetic throughout the whole redundancy process demonstrating how much their people mean to them at every stage of the process and reassure those employees who are remaining with the organisation.
- Try to be aware of the emotional temperature of individuals and teams, so that you can share the hard facts in a way that will be received more positively than it otherwise might have been.
- Be open and honest as much as possible and take a personal approach where you discuss options and address questions or conflict as it arises.
- Do not get side-tracked and follow the ACAS step by step guide as there is a clear expectation of the redundancy process to follow within a set timeframe. These guidelines will help businesses to do everything by the book to protect the rights of workers and, at the same time, safeguard their business.
- Share these details and timings of the process with those affected, to help reduce their anxiety during the process.
Redundancy can cause stress and anxiety among all levels of employees, therefore developing emotional awareness and resilience-building skills to help recognise and deal with the process in a positive way can help reduce the overall impact this can have on the organisation.