Is Redundancy Your Only Option?

Hard decisions have to be made currently by senior managers to keep their organisation going. Making staff redundant may seem the obvious way to save money which for some may be the only viable course due to cash flow issues. However, others may be able to explore additional options that will serve their organisation better as discussed below.

After redundancies, managers often notice an effect that was hidden before – the loss of organisational memory – no longer is there much experience of nor accurate recall of:

  • what solutions have worked well in difficult times;
  • the ways in which staff can improve rapidly service and productivity;
  • the key preferences of customers’ requirements which the value;
  • staff becoming galvanised to address key issues.

That often impedes the future effectiveness of the organisation. Some ways or retaining that organisational memory are given below.

Exploring Alternative Ways

The examples below will not come alive if you just consider them in your own mind. You need to discuss them with staff to establish which are viable as staff begin to see what can help with their own needs and those of the workplace. Some of the examples will be familiar to you but others may seem quite strange on first reading them – do not dismiss them out of hand.

Contain Costs and Ensure Key Knowledge is on Tap

Find out if some individuals wish to reduce their hours but need some assurance. Create a job share with a difference – two people share one salary and ensure that either one of them can step in when the other is ill or needs to mind the children or a dependent. That gives the manager continuity as both staff will be familiar with the service/tasks. It gives staff the freedom to arrange their home life to cope with care needs and at the same time having the the security of a shared income. This works best with spouses, partners and close family members.

The reduction should be introduced for a set period and then reviewed. This encourages staff to give it a go and avoid both parties feeling they are trapped in the arrangement. Individual and work situations can change and so either or both parties may wish to revise the arrangement to better reflect their emerging needs.

Reduced Pay but Backed with an IOU for Future Payment

This may seem strange at first sight and its take up will depend on the degree of trust between managers and staff. Rather than lose their job, staff may consider a reduction in wages especially if that is underpinned by an IOU from the organisation. Honouring the IOU has to be a genuine intention when the company’s finances improve. It is not a gimmick and its sincerity is underlined by the Chief Executive/Owner of the organisation giving the signed IOU to each affected member of staff.

You may wish to set either a date when the IOU will be repaid in full or set several repayment stages.

The IOU is usually phrased as an intention to repay rather than a legal contract to repay by a set date. Of course, you could make it the latter if you are confident that sufficient funds will be received to cover the IOU in full. Remember that thisis a serious intertion to repay and trust will be undermined gravely if that is not fulfilled.

Reduced Hours on a Permanent Basis

Occasionally, staff will find this of interest due to their situation. You should encourage the individuals to think what this will mean in terms of holiday pay, pension etc. Accepting such a change in full knowledge of the effects will promote trust to go ahead and also trust for the future.

You can always float the idea that the reduced hours could be for a temporary period both to overcome needs of the individual and the organisation’s need to reduce costs until finances improve.

When the money is repaid, it boosts the trust and the loyalty of the staff. So do not enter this option as means of putting a redundancy decision.

Longer unpaid leave period but termination osts would neet to factor in increased notice period and costs

Unpaid Leave to Travel or to Pursue a Hobby or Sport

Again this may seem strange to raise but it is surprisig what pastimes or skills staff have outside of work. The cbance to take a few unpaid months of with agreement of the managers has been really welcome by some individuals. It is on the understanding the the individual will return to their current postion at an agreed future date.

There is a risk that the work situaton may deteriorate by that date and it may be difficult to resume the role as before. The indvidual should still be consulted if such a problem arises and not treated differently because the have been on the period of leave i.e. their future role or lack of it should be considered alongside that of other staff.

Contract Clauses

It is wise to ensure that the wording of clauses reflects what is intended. Advice should be sought to ensure that the clauses make plain what is the aim and spirit of the changes It will also help you to clarify the implicatios form the outset. For example, in the preceding Unpaid Leave section, both parties should understand that although it a period of unpaid leave, the employee will continue to accrue certain rights such as continuous service for notice periods etc.

Talk about Such Options

You will not know the potential savings that may arise from similar types of options unless you talk to staff about the options or variations that they may think of. You will retain the organisation’s memory as noted earlier which will be especially useful in these difficult times. Moreover, the trust of staff will increase as will their realisation that managers have tried to chart a way that allows indvidual’s needs to be considered

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© 2020 Jim Harrington, HR Management Dimensions

Editor’s Note: some text corrections were made on 26/11/2020

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