One CEO on how to make staff redundancies with tact and diplomacy
Technology is changing the workplace more than ever before.
Indeed, a piece of research commissioned by Oxford Economics just before the COVID-19 pandemic predicted that up to 20 million manufacturing jobs around the world could be replaced by robots by 2030. The research also stated that people displaced from those jobs are likely to find that comparable roles have also been squeezed by technology and automation.
We have all seen the march of self-service checkouts in shops, replacing the checkout operator, and I am sure we have all had to navigate a self-service ticket machine at a railway station, or even had to check-in our own bags at an airport, because there are no staff to be seen.
Pooling resources, especially at a time of rapid technological advancement, may well be an option and could help the headcount remain as productive as possible
To add even more pressure on the UK’s workforce, the COVID-19 pandemic has seen an even more rapid move to becoming reliant on technology and automation. We have all become used to video conference calls – indeed, they have now become the norm, used for anything and everything from simply catching-up with colleagues to signing multi-million-pound business deals.
Add to this mix the pressures being faced by employers caused by fluctuating global financial markets and the seemingly ever-increasing competition across all sectors, and you begin to understand why it is that a safe, guaranteed job is becoming a luxury during current times. As a result, many companies are re-examining their operational costs and are considering making some difficult decisions to shoreup the balance sheet. These decisions will cause short-term pain but will be deemed necessary by those in charge for the long-term health and overall survival of the company.
One option that will undoubtedly cross the minds of HR personnel and company chiefs is the potential to reduce staff headcount. Not only can employee costs often be the highest fixed outlay on company accounts but advances in technology may mean that these jobs are not even needed any longer.
If you are an HR professional or company director planning to make redundancies, then firstly you have my sympathies. It is never an easy situation to be in, especially knowing that those who are selected may well suffer from resulting emotional distress and potentially financial hardship as a direct result of your decision.
Although most Western countries have an aid package in place which subsidises the payroll bill, meaning that any decisions around headcount reduction will hopefully not need to be made in a rush, when the time to make the decision does come, it may well be tough – and you owe it to those involved to carry out the task with tact and diplomacy.
Headcount decisions should be based on performance management, not 'last one in, first out' – despite this often being the reason that people are selected. However, if performance management is the reason that people are selected for redundancy, care must be taken that there are specifics on which to measure this decision. Consistent appraisals and objective setting can lead the way to annual rankings which could drive any headcount decisions – and provide cast-iron evidence for any decision that is made.
Another option which could be a feasible way of taking the sting out of the decision on the part of the employee is to examine whether any of the employees would consider working on a part-time basis or as a contractor. While the redundancy decision itself will undoubtedly still cause upset, the fact that you are doing all you can – both as an individual and as a company – to take the sting out of the tail by looking at all other options will go a long way to helping that person. Even if this is not intended as a permanent solution, the fact that you are providing the employee with some time to look at alternative options, while still earning an income, will mostly be appreciated.
A practical cost-saving measure which could be examined in place of making redundancies is to look at whether a proportion of back-office functions can be outsourced or potentially merged with a partner or related third-party. Pooling resources like this, especially at a time of rapid technological advancement, may well be an option and could help the headcount remain as productive as possible. Indeed, there are arguments based around the fact there where technology displaces jobs, roles can be created because of this very same technology, which opens-up other avenues and creates brand-new opportunities which need human skills to harness.
Of all the factors to consider when making a reduction in headcount, the golden rule should always be to consider what your decision will do to company morale and to the colleagues – who are often close friends – who will be left behind. Changes in staff numbers always have the potential to cause serious unrest, which, if not handled correctly, could cause more damage to the company than not making any changes in the first place. Generally it is best to get any headcount reductions done quickly and at once rather than “death by a thousand cuts”.
Therefore, any decisions need to be accompanied by clear communications explaining the reasons behind them, but also to convey a clear sense of direction about where the company is heading. Senior staff should make themselves available for questions, and whether through one-to-one meetings or by a group forum, those staff remaining should be given the opportunity to ask questions and be part of the overall company dialogue.
Companies are facing more pressures than ever before as we head further into 2021 and beyond, meaning that a guaranteed job is fast becoming a luxury. Any reductions in staffing numbers should always be done with the realisation that the human cost is often just as important as the financial cost.
Rami Cassis, pictured below, is the founder and CEO of Parabellum Investments, a family office operating as a global private equity firm focusing on enterprise software, IT & business services firms across multiple sectors including pharmaceuticals and banking & finance