Down and out: How to deal with downsizing effectively

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Consultant and HR Zone member Sandra Beale advises on the best approach to take when managing a downsizing process.

The management of a downsizing exercise to maintain good employee relations is as important as managing the process itself within the employment legislation framework. It is quite often an aspect which many companies fail to consider, given their every move is watched by the whole organisation and those who remain employed have to continue on after colleagues have been made redundant, themselves fearing for the future.

Companies who need to downsize need to conduct the exercise according to legislation guidelines, whether there be one or hundreds of employees. The main points to consider are an effective, worthwhile consultation process providing the right to be accompanied and the right to appeal during the dismissal meetings.

Key timelines

Before the start of the process, a company should have in mind key timelines to ensure the process goes smoothly, for instance, a period of consultation with a potential dismissal date in mind should redundancies be required.

A selection matrix should identify those at "at risk" using criteria such as attendance, disciplinary record, skills, etc.

"The purpose of consultation is to discuss the issues with employees and, if at all possible, to consider ways to avoid downsizing."

The period of consultation before the dismissals take place depends on the number of employees who need to be made redundant.

For less than 20 employees there is no definitive period of time and this could take place over a number of weeks. For 20-99 employees, a consultation process of 30 days is required and for 100+ employees it is three months.

The purpose of consultation is to discuss the issues with employees and, if at all possible, to consider ways to avoid downsizing, for example, early retirement, voluntary redundancy, reduced hours, overtime ban, termination of temporary workers, and so on.

Two-way process

The consultation process should be meaningful and definitely a two-way process because often employees feel their input is not worthwhile and the process is a 'done deal'.

Managers who are conducting the consultation meetings should be trained in managing the process supported by HR and/or provided with a script for a consistent message.

The right to be accompanied at all the meetings is most important and for companies who do not recognise a trade union, the need to appoint employee representatives and provide training is needed.

There should be a redundancy policy in place providing clear guidance for all involved in the process. Access to the policy should be provided at the start of the process with either a hard copy or access details on an intranet.

All employees affected should be offered outplacement so that they can quickly find alternative employment. This should include CV building, interview skills and possibly psychometric testing for improved career management.

If all else fails and downsizing has to take place, the three-step procedure for dismissals should be carried out -invite in writing to meeting, dismissal meeting then right to appeal.

Once the air has cleared, companies need to pick up the pieces with those employees who are left and who may be suffering from 'survivor syndrome' and feeling very vulnerable. By including these employees with plans for the future, and providing two-way communication, the whole company can successfully move on from what is perceived to be a very traumatic process.

For further information on this article contact Sandra Beale FCIPD on 07762 771290 or email [email protected]


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15th Aug 2007 11:25

You've just carried another example of a consultant missing an important point.

In "Down and out: How to deal with downsizing effectively" (August 14, 2007), Sandra Beale overlooks the institution-specific problem of discontinuity, corporate amnesia, the inability to learn from their own experiences and the associated effects on productivity and competitiveness.

Yes, how to deal properly with the actual problems of disposing of people in a flexible labour market is important, but what about the other, indirect effects on the employers themselves and their ability to make good and better decisions?

This is an issue that nearly everyone overlooks - the employer as well as the business schools/consultants. It also happens to be an area of huge unrecognised cost, characterised by the succession of repeated mistakes, re-invented wheels and other unlearned lessons that litter British industry, commerce and Government. According to Proudfoot, the international management consultants, the pricetag for the cost of wasted productivity in the UK is 7.5% of GDP, an amount that outranks many of the other areas of corporate deficiency.

To ensure that employers get the maximum from the flexible labour market, business schools/consultants and organisations have to better teach and implement the discipline known as experiential learning, a field still largely misconceived, conspicuously absent and studiously ignored in the workplace. That means having formal processes to capture exiting knowledge - particularly tacit knowledge -from knowledge owners before they walk out of the front door and then knowing how to turn that knowledge into better decision-making by the remaining/next generation of employees.

The flexible labour market has its advantages but there is an iceberg-like downside. It doesn't encourage the corporate ability of getting from A to B without going via Z. Better experiential learning - the facility to better benefit from hindsight - is the only way to reduce the resultant steep learning curve that the corporate equivalent of musical chairs has foisted upon us.


Arnold Kransdorff. author “Corporate DNA: How Organizational Memory can Improve Poor Decision-Making” (Gower, 2006). & email: [email protected] Tel: 01923-896288 or (m) 07906-059435.

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