Handling Redundancy

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2009, Business Influence, All Rights Reservedwww.businessinfluence.com.au

Handling Redundancy

By Darren Bourke Director of Business Influence Pty Ltd

1. Review Your Organisational Chart. First things first. Review yourOrganisational Chart in terms of fulfilment of product or service delivery andthe operational necessity of each position. Also consider the impacta redundancy has on customers, continuing employees, team morale,revenue and operational efficiency.

2. Review Your Employment Obligations. This is key once you have decidedto make staff redundant. Are your employees covered by an EBA orCollective Agreement? Is your work force unionised? Are they under anEmployment Agreement? Is there an award that applies also? Be very careful

in understanding your legal obligations fully before taking any action.

3. Understand what Redundancy means. It's important that you get advice toconfirm that your staff cuts are in fact legitimate redundancies. Research firsttake action second. After you terminate, it's too late to reverse your actions.

4. Get Advice. Obvious but often overlooked. I could not stress this pointenough. Don't accept advice from a mate, a website or a colleague as gospel.Spend some money on legal or professional advice here to fully understandyour position. Get it in writing.

5. Determine the total cost of Termination Payments. Get your Internal orExternal Accountant to create a spreadsheet of all termination payments afterreceiving the advice on your redundancy obligations. Don't forget to includeemployee entitlements and other termination payments applicable beyondany redundancy payout.

6. Budgets & Cashflows. Once you know the total figure of the terminationpayments, calculate the impact on your budgets and cashflows from a timingperspective.

7. Do all your Homework before Execution. You have total flexibility inscoping redundancies before execution and absolutely none after execution.

The manner in which you handle your terminations is binding so do as muchhomework beforehand as possible given financial and time constraints.

8. Don't Over-React in cutting staff. If your forward demand can change fromweek to week or a staff member's performance could turn around in the short-term, don't cut head count too dramatically as you may quickly be under-resourced.

9. Be Human. While all of this is happening and your gut churning, try andremind yourself to be human in your approach and interpersonal dealings withexiting staff. They will never forget the way you behaved. Forever.


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10. Be prompt in Redundancy Payments. Once you have budgeted, decidedon action and executed redundancies you must make the payments promptlyas agreed. Holding over payments to your advantage is illegal and unethical.Your departing staff will hate you for it and you are potentially causing defaulton their mortgage payments and rendering them unable to put food on thetable.

11. Explain the situation fully to Exiting Employees. Don't guild the Lily here.Talk human to human. Explain the situation truthfully and outline yourcommitted action. Explain to them their Continuing Obligations. Let themspeak providing it remains civil. Let them pause to absorb the news and thinkof questions.

12. Explain the situation fully to Continuing Employees. Don't underestimatethe impact of the redundancies on your continuing staff. You've just sackedtheir workmates and you may have increased their workload. Again be direct,truthful and allow grieving and questions.

13. Decide on what Support you will offer if any. Consider if you will act as aReferee for their future employment. Will you offer counselling services? Theprovision of any support must be weighed up and advice taken.

14. Ensure Exiting Employees meet their Continuing Obligations. Protectionof company assets, non-disclosure of intellectual property, poaching ofcustomers and other actions are often strictly forbidden under employmentobligations that continue after termination. Monitor this.

15. Acknowledge that some Exiting Employees may go Legal. Relationshipschange after a divorce. Never assume this can't happen to you despite how

well you believe you behaved.

16. Return of Company Property. Prepare a checklist to tick off receipt of allcompany property. Remember that company property can be both tangibleitems such as cars and intangible items such as computer files.

17. Acknowledge that You may have to go Legal. As non-litigious as you maybe, an Exiting Employee that creates havoc for your business must bedefended.

18. Consider Security. Depending on your industry, premises and personalitytypes of Exiting employees, be aware that you may have to increase security

during and following the redundancies.

19. Immediate Departure or Serving of Notice Period. Consider whether youwish Exiting Employees to serve their notice period or exit immediately. Mostemployers request employees exit immediately to reduce risk and protectmorale.

20. Consider the transitional impact on Continuing Employees. Monitor theworkload, productivity and morale of your continuing workforce. Stay close tothis issue and focus on feedback mechanisms both internally and externally.


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21. How will you handle Customers? The delicate decision of how much orhow little to disclose to your Customers after redundancies is a case by casesituation. This needs serious attention around the time of the redundanciesand in the weeks following.

Darren Bourke, Business Influence, 2009. You are welcome to reprint thisarticle online as long as it remains complete (including the about the authorinformation at the end).

Darren Bourke is a Consultant, Business Coach & Mentor who helps small &medium businesses struggling to maximise profitability, productivity, peopleand performance. His Free Report titled What Successful Owners of GrowthBusinesses Do That You Dont, newsletter and updates are full of strategiesand tips to make your business boom. Sign up now atwww.businessinfluence.com.au

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Handling Redundancy