5 things to avoid when managing a redundancy process

In uncertain times, organisations may find themselves with no choice but to reduce their workforce. However, while redundancies may be necessary for the survival of the business, it’s also necessary to manage the process thoughtfully and strategically. Badly managing a redundancy process can lead to unnecessary costs, both financially and reputationally, impact departing employees and damage the morale and performance of your remaining employees.  

In this blog, we’ll explore some common mistakes people make during redundancy processes and offer practical advice to avoid these pitfalls.  

The potential cost of managing a redundancy process

No one likes the idea of letting people go, particularly if you care deeply about your team. However, when times are tough, you may need to reduce costs to prevent your organisation from facing even bigger losses. If handled poorly, a redundancy process can backfire. This can create more challenges for your business than solutions. 

A poorly managed redundancy process can lead to: 

• Decreased morale among remaining employees: Your top talent may begin looking for new opportunities if they feel the business is unstable or if they think the redundancy process is unfair. 

• Poor performance and productivity: If employees feel unsupported or overburdened following a round of redundancies, it can take a significant toll on productivity. 

• Damage to your corporate reputation and brand: If you handle redundancies insensitively or inefficiently it can damage your organisation’s public image, making it harder to attract future talent and retain customers. 

• Legal issues: Failing to follow fair and legal procedures can lead to claims of unfair dismissal, discrimination or other costly legal challenges. 

• Customer and stakeholder concerns: Suppliers, bank managers and customers may question your company’s stability. Potentially, they may take their business elsewhere if they perceive you as a risk. This can further impact cash flow and future profitability. 

Ultimately this could limit your company’s capacity to respond to an upturn. 

Here are five things not to do when managing a redundancy process so you can avoid the missteps that have tripped up many high-profile companies in the past. 

1. Forgetting to plan

One of the biggest mistakes an organisation can make is jumping into redundancies without proper planning. While financial pressure may force your hand, you should take the time to develop a comprehensive and well thought out transition plan. This includes the logistics of the redundancy process and also the support you’ll offer both exiting and remaining employees. 

Why planning matters 

Minimises risk of legal challenges

Follow legal protocols during redundancies to avoid disputes. You must adhere to the Fair Work Act, the National Employment Standards (NES) and any applicable enterprise agreements. 

Protects your reputation

A well-executed redundancy process shows compassion and professionalism, reinforcing your organisation’s commitment to treating employees with dignity. 

Ensures business continuity

A structured plan can minimise disruption to your remaining workforce and customers. 

We recommend using a tool like our free Redundancy Checklist to guide you through each step of the process. The checklist ensures you don’t overlook elements such as consultation processes, legal obligations and support services like outplacement. 

2. Cutting with a hatchet

Making indiscriminate or hasty workforce cuts without considering the long-term consequences can seriously harm your organisation. When selecting which roles to make redundant, you should be objective and strategic. This means identifying roles that are no longer necessary for the future success of the business rather than cutting jobs for short-term cost savings. 

Choosing to make cuts for the wrong reasons or without properly assessing the implications can expose your business to significant risks.

Avoiding unfair or poorly thought-out cuts 

Use fair selection criteria: Decide which roles to cut based on objective criteria such as skills, experience and performance. This helps avoid accusations of unfair dismissal or discrimination. 

Consider future business needs: Think about how your organisation will function post-redundancy. You don’t want to eliminate roles that are essential to your long-term success or future growth. 

Maintain employee morale: When employees view redundancies as arbitrary, it can lead to a loss of trust among remaining staff. If you are transparent about the decision-making process and ensure it’s fair, you can maintain morale and avoid unnecessary resignations. 

3. Turning it into a long process

Redundancies are emotionally taxing for everyone involved, and dragging out the process only adds to the stress. A long, drawn-out redundancy process can create uncertainty, fear and tension among your workforce, which may lead to decreased morale and productivity. Try to make restructuring a one-time event rather than a series of painful cuts. 

While it’s important not to rush the decision-making process, implementing a redundancy plan efficiently is critical for both business continuity and employee well-being.  

Why you should avoid a prolonged redundancy process 

Minimises ‘survivor syndrome’

Remaining employees may feel insecure or guilty after redundancies, a phenomenon known as survivor syndrome. If you can make the process quick and clear it will reduce the likelihood of prolonged anxiety. Also, reassure remaining employees that their positions are secure once the redundancy process is complete. This reassurance is essential to maintaining productivity and morale. 

Boosts business recovery

A swift process allows the business to move forward and focus on recovery. The faster you can stabilise your workforce and operations, the quicker you’ll be able to respond to market changes and opportunities. 

4. Making redundancies before the weekend or holidays

Timing is important when delivering redundancy news. Avoid holding redundancy notification meetings on a Friday or the day before a holiday. Informing employees about their redundancy at the wrong time can exacerbate their stress and make it harder for them to begin the transition process. 

Why timing matters 

Provides time for support

If you communicate about redundancies early in the week, employees have time to access support services, such as outplacement or job search assistance, during regular business hours. 

Allows for follow-up

Giving the news at the start of the week allows employees to seek clarification, gather necessary information and ask questions about their redundancy package. 

Prevents isolation

Having their role made redundant just before a weekend or holiday can leave employees feeling isolated and unable to take immediate action, such as contacting recruiters or attending job interviews. This can prolong their distress. 

The best time to deliver redundancy news is mid-week, allowing employees time to process the information, access available resources such as outplacement services and begin planning their next steps. 

5. Keeping employees in the dark

Whether you have five or 100 employees, communication at every stage of the process is key when managing redundancies. Failing to communicate clearly and openly with your employees can lead to confusion, resentment and even legal action.

Why communication is key 

Reduces uncertainty

For employees, uncertainty can be as stressful as the redundancy itself. Keep them informed and reduce the anxiety caused by speculation and rumours. 

Improves morale

Open communication reassures your remaining employees that the organisation values them and it is handling the process ethically and responsibly. 

Mitigates legal risks

Clear communication helps ensure that employees understand why you are making redundancies and reduces the likelihood of legal challenges. 

When informing employees about redundancies, deliver the message face-to-face where possible (or virtually if working remotely). Following this, provide them with documentation outlining the organisation’s reasons for making redundancies, the process it’s following and the support available to employees. 

Remember to communicate with remaining employees to address their concerns and clarify the next steps. This ensures that they feel informed, valued and reassured about their roles moving forward. 

Final thoughts: managing a redundancy process responsibly 

Managing a redundancy process is never easy. However careful planning, clear communication and fair, objective decisions can minimise the negative impacts on both your exiting and remaining employees. A well-managed redundancy process allows employees to leave with dignity and respect and safeguards the future of your business. 

Consider offering employees’ career transition support. An outplacement program can assist with job search strategies, resume writing, interview coaching and career counselling. Offering such services supports exiting employees and demonstrates your commitment to their wellbeing, which can preserve your company’s reputation in the long run. 

Ensure your organisation’s redundancy process is strategic and above board. By avoiding the common mistakes when managing a redundancy process outlined in this article, you’ll protect your business, your employees and your brand while also positioning your company to recover more quickly when the market improves.