Gettler: Redundancy is a delicate area

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This article appeared in the November, 2009 issue of CRN magazine.

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Gettler: Redundancy is a delicate area

Redundancies have been common, with the economic downturn hitting company profits hard. While many in the reseller space and IT market are dealing with the skills shortage by putting on staff, there are many others who have had to lay people off.

Outplacements specialists say they have never been busier. In the past 18 months, their business has doubled and unemployment is expected to continue to rise still.

Sacking is not easy, for the employee or the manager. Retrenchments need to be handled carefully. Managers not only need to understand the sensitivities, they should also be mindful of legal issues and, for that matter, doing the job in an ethical way. If they don't, it could damage the brand, staff morale and customer relations.

Redundancies are usually the result of performance issues or a complete restructuring of the organisation. That usually happens in times of economic downturn but it can also take place when a new managing director comes in and half the senior staff discover they have either been moved to a new position or they have lost their job.

Senior managers, after all, tend to bring in people they can trust, regardless of whether their predecessors had done anything wrong. It is more a question of taking the organisation in a new direction.

Specialists say there are a number of key rules that need to be followed. First is the initial conversation with the employee.

This needs to be handled in a business-like manner, free of emotion and recriminations. Managers should not, under any circumstances, start talking about performance issues. If they do that, the conversation will break very down quickly.

Preparation is critical. Resellers not accustomed to doing this might need training and they certainly need to monitor their body language, their expression and the way they handle it.

If it's done badly, it could undermine the brand and alienate remaining employees who are likely to start looking around for other jobs. It can also leave management unfocused and distracted. Companies could also leave themselves open to an unfair dismissal claim if it is handled badly.

The discussion with the employee needs to cover such issues as the departure date and the package. There is no law requiring resellers to provide outplacement services or financial counselling.

However, it is advisable to at least look into this. It is not only regarded as best practice but it will help preserve morale for remaining staff.

"Survivor guilt" is one of the most difficult passages for those not targeted for retrenchment and employers need to manage it carefully to ensure staff remain productive and focused.

This is why remaining staff need to be kept informed of developments. In small companies, this is usually done with a meeting. Larger companies can do it by email.

It is important, however, to address the issue in terms of restructuring, not downsizing. The focus needs to be on rebuilding, refocusing and consolidation. If the talk is about cost cutting, it's likely to alienate customers who would worry about reduced services, and concern employees who would already be worried by heavier workloads and their own future.

Companies also need to be aware of leaving themselves open to claims of discrimination on the grounds of race, sex, disability or whether the person belongs to a union.

They also need to be mindful about potential claims of indirect discrimination. A reseller, for example, might have only started employing women in recent years but if they then implement a "last in, first off" policy, they could be open to claims they are discriminating against women. Companies also need to be very clear about their legal obligations including the required levels of severance pay.

Negotiating how much time one allows the person to stay once they have been declared redundant is a sensitive issue. This depends on the circumstances. If the job is complex, some companies would require the employee to continue working for some time to complete a handover.

If the job is less complex, and if the transition is likely to be smoother, the employee might be required
to leave at the end of the week.

If there are security issues, the employee might be required to leave immediately. The danger with that, however, is that this could send out a punitive message to remaining staff. Regardless of the circumstances, very few people do inappropriate things during the workout period.

But, it is also damaging to have a workout period that is too long. A three-month stint can be demoralising all around. Smart employers find a middle ground.

To protect the reseller's intellectual property, employees should be required to return everything belonging to the company, and they should sign an undertaking that they have done so.

If employers want to read employees' emails or check their computers to ensure nothing has been taken, they should first talk to their lawyers before doing so. The best IP protections are done through properly drafted contracts which include post-employment restraints of trade and policies regarding confidential information.

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