Skills HR will need in 2021: Restructuring your business with confidence

Redundancies are an inevitable part of many HR teams’ post-Covid workloads, but sticking to key principles will help the process to run as smoothly as possible

The headlines make grim reading. ‘UK redundancies hit record before second Covid lockdown.’  ‘1,700 employers planned redundancies in September.’ ‘Covid redundancies will exceed anything seen in “at least a generation”.’ Even with the extension of the job retention scheme to March 2021, it appears redundancies and restructures will be a fact of life for HR teams for the foreseeable future. Matt Reymes-Cole, employment law consultant at Croner, is seeing a “large increase” of queries relating to job cuts thanks to the impact of the pandemic.

But even before Covid hit, organisations existed in a state of flux, forced to reinvent themselves and their operating models to survive and thrive in a changing world. It’s rare to find a large firm that wasn’t undergoing some sort of transformation even before ‘coronavirus’ became part of our daily vernacular. Businesses needed to become more agile to cope with constant change.

According to the CIPD’s People Profession 2030 research, HR practitioners expect internal change around operating models, structures and processes to be a key future trend. As one research participant said: “The pandemic has shown to us that in times of crisis HR is at the forefront of changes and it is HR that should act as a change agent first.” 

Running restructuring and redundancy programmes is tough, disruptive and emotionally draining for all involved. Now more than ever, with people anxious about the job market and struggling with wellbeing challenges, HR needs to go beyond what is merely required and act with compassion and ethics to make the process as painless as it can be for all parties. As Rachel Suff, senior policy adviser for employment relations at the CIPD, says: “Compliance is a given. It’s about how we go beyond that.” Over the next few pages, People Management shows you how… 

Make time to plan

All too often, leaders launch into restructures without giving them sufficient consideration, says Sally Hopper, assistant director of HR at Hertfordshire County Council. “It’s easy to have a ‘big idea’ or to latch on to a novel concept,” she says. “If you are in a position of power you can get excited by something without going through critical thinking. Right now, rushed decision-making is happening, but that’s no excuse not to think more critically about those decisions. Stop a minute and think.”

When it comes to redundancies, Madeline Petzer, senior lecturer in HRM at Liverpool John Moores University who studies the impact of redundancy programmes, says employers often fail to achieve their aims of improving financial performance, organisational effectiveness or productivity. “Companies [don’t succeed] when they implement redundancies as a knee-jerk reaction without considering the human factor and significant negative consequences,” she says. “As with all change strategies, the benefits need to outweigh the negatives. This requires proper planning and implementation.”

Petzer’s research has shown the profound emotional impact such programmes have, not just on ‘victims’ and ‘survivors’, but also on those implementing the process. She has found these ‘redundancy envoys’ experience a range of negative emotions, from guilt to anger, shock to embarrassment. “Organisations cannot expect redundancies to be successful if the redundancy envoys are overwhelmed with increased workload and a new process, and stressed as a result of implementing the redundancies,” she points out.

HR and business leaders need to think through their proposed plan carefully, around the impact it will have and whether it’s the right solution in the first place: restructuring is not always the answer. “It’s important that HR can provide a robust counsel and guidance to avoid the pitfalls of believing that a simple shuffle of people into new roles is the answer,” says Darren Hockaday, former HR director at Gatwick Airport. “The bigger the understanding of the issues that are trying to be solved, the better the outcome.” 

He also advises involving staff and asking for their input. One restructure he was involved in aimed to improve leadership. “One of the most effective actions was to ask employees what they valued in a leader and what impact a leader needed to have for teams to be at their best,” he explains. “By creating a set of simple behaviours, it became easier to assess, recruit, develop and manage leaders. This led to a sustainable change.”

As far as the law on redundancies is concerned, employers must show they have followed a fair procedure and this includes exploring other options such as redeployment. Hopper advocates redeployment where possible, having used this successfully at Hertfordshire County Council during the pandemic. “Leadership is about considering what you need for today, but also for tomorrow and the longer-term impact of your decisions,” she says. “Do I jump to make redundancies or can I redeploy? Our catering staff were facing redundancy and many have been redeployed as cleaners. I’ve match-made people. There are jobs, but the need has changed. Engage with the individual to find out what would work for them.”

Petzer agrees HR professionals should be considering redeployment, even to other firms or sectors. “Organisations should be solution-focused,” she says. “Connect at-risk employees with other industries that are thriving.” 

Implement with compassion

If you’ve got to the point where a restructure is your only option, there are ways of doing it well. “Dealing with people compassionately will make a big difference to how they react and cope,” says Suff. “But it’s not enough to have good intentions, you need to embed it into processes. Compassion means action, not just empathy.”

Communications need to be carefully considered and implemented. Suff advises asking yourself: what and how are you going to communicate? What is the tone? Who is responsible for comms? How do you make sure your values are visible? Practical information must be provided in a timely manner, and people should be given time to absorb what’s happening and come back with questions, which may take longer than you anticipate.  

Employers are required to conduct meaningful consultation irrespective of the number of employees at risk. Anecdotal conversations with HRDs who have recently undertaken collective consultations suggest organisations are receiving more alternative proposals from at-risk staff than usual, as a result of the depressed job market. HR needs to be sensitive: the external environment makes this an even tougher experience.

And doing everything over Zoom or Teams could make it easier for managers and HR to avoid the human element of change, Hopper worries. “It makes it easier to just give someone the ‘brown envelope’,” she says. “That leaves a bitter taste. It leaves space for uncertainty and gossip, which has a massive impact on wellbeing and becomes unethical.” Most of the people she’s made redundant have “ended up shaking [her] hand”. “That’s a sign of doing it with dignity and respect. Be honest and straight with people about what you have to do, rather than treating it as a transaction.” 

The impact on those implementing any redundancy process should not be overlooked. Managers need to be adequately supported and given training, access to support groups and even counselling. “All impacted groups should be treated with respect, empathy and honesty,” Petzer says – not only because it is the right thing to do but also because it is best for the business. “If survivors believe their colleagues were treated fairly, they are more likely to stay committed and engaged, which improves performance and productivity. If survivors are more content, workload and pressure is reduced for redundancy envoys.”

Follow up where you can

Organisations should carry on providing support to those leaving if possible, as it is critical to wellbeing, says Suff: “Can you give people access to your EAP for three months after they leave? That could be really needed as it is likely to be harder for some people to get another job.”

John Palmer from Acas advocates offering some give and take where you can – ending employment relationships as positively as possible will help preserve your organisation’s reputation and leaves the door open to rehire good people in the future. “Make it clear that employees can have some flexibility for things like job seeking, retraining and interviews,” he says. “Ending on good terms helps employers retain a positive reputation and a pool of experienced staff to potentially rehire from.” 

If you’ve handled the process compassionately, fairly and transparently, you should minimise ‘survivor syndrome’ and boost trust and confidence in leadership. This will give you a solid foundation to build from as and when the pandemic recedes and new opportunities for growth arise.

But tempting as it may be, don’t be in too much of a hurry to draw a line under the process and move on, warns Hockaday. “A common mistake is to change people and titles and expect much to change,” he says. “It will take a long time to redefine roles and responsibilities. It will need constant reinforcing and leadership, often over a longer period than anticipated.”

Top 10 redundancy pitfalls – and how to avoid them

Acas’s John Palmer reveals the most common mistakes organisations make when cutting jobs

Rushing the process

Often when a redundancy situation arises, it can be tempting to try and just ‘get through’ things. This increases the likelihood that an employer will make mistakes or miss opportunities to mitigate the impact of the redundancy (like failing to find out staff would have considered pay cuts). Familiarise yourself with the process and give yourself, managers and staff time to engage properly. It will save time and expense in the long run.

Closing your mind to alternatives

An employer can feel redundancy is the only solution. But is it really? In the 2008 recession, many businesses were taken by surprise at how many employees were prepared to move to part-time hours, for example. Keep an open mind and consider any alternative suggestions from managers, advisers or the workforce.

Setting managers up to fail 

Busy, untrained and unsupported managers are likely to make a bad situation worse. Managers need to be trained to understand the redundancy process, and how to handle consultations and challenging conversations. They also need looking after, so make sure they have support for their mental wellbeing.

Keeping unnecessary secrets 

Many employers hold back information about their financial challenges. But keeping your people in the dark is counterproductive because bad news, when it does arrive, comes out of the blue.  Businesses should be open, transparent and honest. Make sure managers and the workforce receive information in a timely fashion.

Communicating poorly (or not at all)

Communication around redundancy is often unhelpful or excessively distressing: leaving a message on a notice board, telling some teams before others... Waiting too long is also a problem. It limits the time to discuss the situation, and information may get leaked, damaging trust. Communicate early, regularly and consistently.

Failing to consult

The concept of consultation is relatively simple but often misunderstood. At one extreme, employers can encounter a range of legal issues and missed opportunities by consulting only as much as they think is legally required. At the other, firms that try to consult extensively can feel they end up negotiating with their workforce on every point. 

Using unfair selection criteria 

Employers can unintentionally use criteria that disadvantages those with protected characteristics. During the pandemic, be particularly mindful of not disadvantaging furloughed workers or care givers.

Being unclear about payments 

Give each employee a full breakdown of how much redundancy pay they are entitled to, how the sum was calculated and confirmation of when and how the payment will be made. Confirm how much is tax-free and detail any other monies owed, like a final pay package and accrued but untaken annual leave pay.

Only focusing on the present 

Focus your energies on both carrying out a fair process and planning the future of the business and the restructuring of the remaining workforce. Setting and agreeing reasonable objectives and workloads for remaining employees is important.

Ending a relationship badly 

Redundancies are a challenging and distressing situation for affected employees. End employment relationships as positively as possible. Think about your employer brand. 

Development tips for HR

Restructures can be emotionally draining for people professionals. Do a good job and protect yourself by following these personal development tips:

  • Look after your own health and wellbeing, as well as supporting others. HR can feel as if it’s in a lose-lose situation, so make sure you practise self-care.
  • “Live it like it’s you,” advises Hopper. “Think about how you like to be treated. Would it fill your heart with joy to get an email at 5.20pm on a Friday saying your job was at risk?”
  • All new HR professionals should be trained in the likely emotional consequences, both for themselves and others, says Petzer. “They should also be trained on how to deal with reactions, including shock, anger and tears.”
  • Get to know the business, says Hockaday, advising HR pros to shadow internal clients. “This will ensure another voice and potential challenge when looking at a restructure.”
  • Get advice on specific situations. The process is complex, so get professional advice from lawyers and services like Acas as required. 
  • Consider your own readiness for change. Sometimes HR can be the biggest blocker.

Read the rest of our 'Skills HR will need in 2021' series: