Minimise risk & support employees when making redundancies

In challenging economic climates, your organisation may face the difficult decision to downsize and reduce its workforce. While making redundancies is often necessary to reduce costs in order to safeguard the future of the organisation, the process may have risks that, if not managed properly, can have lasting negative effects and cause long-term damage. From potential legal liabilities to the impact on morale and brand reputation, a poorly handled redundancy process can harm both your transitioning employees and the remaining workforce.

The importance of a well-managed redundancy process

Making redundancies is a challenging decision that no employer takes lightly. It’s not just about numbers; it’s about people, their livelihoods and their future. For employees being told their roles are redundant, the news can be devastating, affecting their mental health, financial security and career trajectory. But for the organisation, the stakes are equally high.

A poorly managed redundancy process can:

Expose the company to legal action by a former employee.
Damage the company’s corporate reputation as an employer of choice and limit its capacity to respond to an economic upturn. Companies that don’t manage redundancies well often struggle to attract top talent in the future.
Negatively impact remaining employees’ morale, leading to decreased productivity and higher turnover. According to a 2020 study by the Society for Human Resource Management (SHRM), 46% of organisations that experienced significant layoffs saw a decline in employee morale, and 33% reported a negative impact on company culture.

Five key strategies to minimise risks when making redundancies

Businesses need a thoughtful, strategic redundancy process that addresses the immediate need to cut costs while protecting the organisation’s long-term viability and the wellbeing of its people.

1. Identify key roles for your organisation’s success

When making redundancies, you must consider legal liability and fairness and should base decisions on the organisation’s current and future needs. This requires evaluating the role, not the individual. It’s important to assess each position’s contribution to core business objectives and to retain critical roles. Cutting back non-core business units instead of making across-the-board redundancies can ensure that key areas remain staffed and operational.

For example, if you are a manufacturing company, it might make sense to reduce the size of administrative teams while keeping core production roles intact.

2. Identify what competencies you need to achieve future business goals

As you evaluate which roles to make redundant, you should think strategically about the the right competencies the company will need after the restructuring. This includes not only technical skills but also leadership and innovation capabilities. It will be worthwhile to think about which add value and which are hard to replace.

In some cases, your business may need to retrain and upskill remaining employees to fill gaps left by redundancies. Investing in cross-training can provide the flexibility needed to respond to future challenges and opportunities.

3. Protect your bottom line and brand

The way an organisation handles redundancies (and the messages it communicates) speaks volumes about its culture and values. Treating departing employees with dignity and fairness will help to preserve your brand’s reputation as a caring employer, both internally and externally. Word travels fast in today’s digital age, and former employees who feel they were treated poorly may speak negatively about your company, potentially affecting your ability to recruit new talent when the economy improves.

Offering outplacement services to those leaving the organisation is one way to demonstrate your commitment to your employees’ wellbeing. It helps departing employees in their career transition and also shows the remaining workforce that your organisation cares.

4. Maintain open and regular communication

Keep communicating throughout the redundancy process. Keeping employees in the dark breeds anxiety and rumours, which can worsen the emotional toll on both transitioning and remaining staff.

It’s important to provide updates as soon as you have information. Be transparent about why the redundancies are happening and how the organisation made the decision. This will help employees come to terms with the situation more easily and reduce any feelings of resentment or anger.

5. Support the remaining workforce

Redundancies don’t just impact those who are leaving; they also affect the employees who remain. These staff members often experience ‘survivor syndrome’ after seeing their colleagues lose their jobs. They can feel guilty that they have been retained, thinking this may be at the expense of others, or stress and anxiety about the future. This can result in lower morale, decreased productivity and even higher turnover as remaining employees fear they might be next.

How can you support remaining staff following redundancies? It is important to to rebuild their confidence by reassuring them of their value to the organisation. Providing support through career development opportunities, wellness programs and team-building activities can help ease their anxiety and encourage them to stay engaged.

The role of outplacement services when making redundancies

Outplacement services provide a wide range of resources to support career transitions including:

Emotional support: Job loss can be an emotionally turbulent experience. Outplacement services provide counselling to help employees process their emotions and regain confidence.
Career coaching: Outplacement specialists can offer one-to-one coaching to help individuals define their career goals, identify transferable skills and explore new career paths.
Resume writing: Professional assistance with writing a standout resume, cover letter and LinkedIn profile can make a significant difference in how quickly someone secures a new role.
Interview preparation: Outplacement programs often include interview coaching, helping participants present their strengths and handle tough questions effectively.
Networking advice: Outplacement services help employees build their professional network and tap into the hidden job market, giving them a competitive edge in their job search.

By offering outplacement services, organisations help their employees transition into new roles more easily and also protect their employer brand. According to the Career Management Alliance, 72% of companies that provided outplacement services reported improved brand perception following redundancies.

One Sydney retail company faced the challenge of making redundancies after a decline in consumer spending. To minimise the impact on their brand and support their employees, they partnered with Glide Outplacement Australia to offer career transition support. Over the course of three months, 85% of the transitioning employees found new roles and the company retained its reputation as a fair and caring employer.

Managing risk when making redundancies

Making redundancies is never easy. However, a strategic, well-executed plan helps to minimise the risks and protect your employees and your organisation. Identifying key roles, aligning competencies with future goals and offering outplacement services will position your business for long-term success.

If your organisation is facing the difficult task of making redundancies, consider partnering with Glide Outplacement Australia. Our outplacement programs offer tailored support to help your transitioning employees find new opportunities while protecting your brand and workforce. Contact us to learn more.