Leadership and Managing Redundancies

These are challenging times! It seems that, at least in Australia, we are yet to fully recover the confidence levels that existed before the financial crisis of a few years ago. This has led to less certainty in sentiment and in some cases, reductions in the workforce.

Leadership is imperative at any time, however our recent global and local economic plight brings the importance of leading well to the fore even more starkly. This is no more apparent than when the unfortunate situation arises where members of your team have to be let go, not based on performance but from a financial situation for the company involved. Redundancies are rarely pleasant however, when managed well, the impact for all parties involved can be minimised.

Unfortunately, the worst thing to happen to these organisations isn’t the fact that these redundancies take place, it’s the poor leadership which follows the redundancies. Consequences such as reduced productivity and engagement can linger for many months, or even years, especially when the process has not been handled gracefully. (1)

I have personally been involved in redundancies previously within organisations and generally have felt they were handled well. I have found that leadership is critical to how the news is received and whether employees return to their works-pace with a high degree of bitterness, resentment and negative feelings about the employer or whether it is accepted, to a degree. The initial contact is critical. Key observations and recommendations include:

  1. Communication is core to the acceptance or otherwise of the redundancy news.
  2. Context and consistency in the communication must be prevalent.
  3. Follow up each contact/communication individually and as a team. Every employee has different needs and it is important to provide outlets to discuss privately whilst also sharing the discussion with the impacted group as a whole.
  4. If an existing level of trust and a genuine relationships does not exists, then managing redundancies becomes more difficult. This is the case with any leadership situation where, if the right to earn the conversation hasn’t occurred before the event, then it is more likely to be received with distrust, cynicism and resistance.

It can result in a lack of trust in management and a feeling of ‘what’s going to happen next?’ which leads to poor productivity, distractions and a disengaged workforce…even though tougher economic times called for cost cuttings, the wisest move employers could make is to help their leaders to manage through these times. Leaders have a direct impact on the engagement and productivity of their staff; after all, people tend to leave their bosses, not their jobs. (1)

The reality is that redundancies, downsizing and economic uncertainty will always exists. In economic downtime the impact of these decisions is even greater as the likelihood of ex-employees finding another role is reduced, creating the vicious circle of increased national unemployment, family breakdowns and other social problems. Understanding that situations such as these will occur in the future and proactively managing them now through leadership development, cultural growth and stronger relationships provides a more stable platform for any change or impact in the workplace.

Situations occur, however how we lead through these issues is the most telling point.

(1) Leadership Falters Following Redundancies – HCAMag