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We sometimes have to deliver bad news, communicating redundancy, closures or similar change. Here is practical advice on planning and delivering the messages.

Communicating redundancy, closures and other bad news

At times you have to make tough decisions: to make people redundant, close down plants, move services off shore, move manufacturing facilities and shed unprofitable customers.

Of course, you will need to plan these changes carefully. You will need to comply with statutory requirements and contractual conditions. There are statutory redundancy periods and notice periods to comply with. There may also be consultation arrangements with unions and worker representative groups. In some countries this will include a workers’ executive, in others the union, or a workers representative panel or group.

Some employers will stick with statutory minimum terms for redundancies. Others may decide to offer preferential terms to all or particular groups of staff.

You may decide to establish a programme of counselling, job assistance, or support for any people made redundant. Some organisations help their ex-employees start new businesses, enabling them to become or move to suppliers, customers, and competitors. Such employees will continue to be ambassadors for your company, whether you employ them or not. How you treat them, will be reflected back on you as an organisation.

Questions:

  • What statutory or compulsory arrangements do you need to make?
  • What contractual obligations do you have?
  • What are you doing to help and communicate the help to these people?
  • How are you ensuring that those people who leave remain ambassadors for your company?

When communicating redundancy, Consider the ‘survivors’

While attention is paid to those being made redundant, you also need to talk with the survivors. These survivors may be relieved they are still in a job. They may simply fear that they will be included in the next round of redundancies.

On occasion, when people leave an organisation quickly, with no notice, those who remain are asked not to contact those who have left. I do find this strange, but it is not totally unusual. In one case, employees were explicitly asked not to contact those that had left. It is almost as if the management were saying, “Those people are bad and you are the survivors. Do not mix with them”. In reality, these people were probably your friends and they will remain so after they have left.

You will have selected a number of key people you are keen to retain. If you handle the redundancies poorly, you may disenfranchise them as well. Handle this badly, and they will simply leave when they are ready, on their terms. Some of the survivors may feel embarrassed that they still have a job.

The message is simple. Pay attention to the messages and signals you send out to both those who are leaving and those who remain.

Questions

What about the survivors?

  • How will you manage the message to them?
  • How will you make sure they do not leave at the soonest opportunity?

How will you make sure they do not leave at the soonest opportunity as well?

Explain and engage people in the economics of the business

When you are communicating redundancy and closures, you need to explain why.  Simply saying, ‘Trading is bad’, or ‘We had a bad winter’, is not good enough.It will not convince people.

You need to engage people in the economics of the business. The level of detail should explain the broad economics.  You perhaps do not (and should not) include all the detailed financial calculations.  However explaining to people the basics of the situation with the profit and loss account, the balance sheet and the margin is important.

Amongst the heresies in chapter 2 of Communicating strategy, there is Heresy 1: People are not stupid. In this case, explain the economics and don’t dumb it down. This relies on a fundamental belief: That your people are not simply employees in an organisation, but human beings in a business.

Example of simple explanations of the economics (that you would back up with evidence):

  1. ‘At the moment we make this much per car and we want to be making this much. Steel prices have risen by 40 per cent which has cut our margins from eight per cent to four per cent. This means we shall make a loss of £500 million this year, unless we find ways to cut costs elsewhere.’
  2. ‘If we can avoid an increase in costs above inflation, whilst managing the eroding prices, we will remain profitable. But only just and bonuses will need to be cut back.’

When people understand how what they do affects the costs, they are better positioned to make informed judgements about helping to improve it. If they are kept away from the economics, how can they understand and assist?

Any strategy is likely to involve a cost of change. This might be associated with projects or programmes of work aimed at delivering a better process, the cost of redundancy or investment in a new factory.

Questions

  • What is your economic model for the business?
  • What are the economic levers or drivers of your strategy?
  • Can you explain these in a simply and clearly, treating your people as human beings in a business?

Conclusions about communicating redundancy

The clearer, more honest and more congruent that your communications are, the easier it is for people, whether leaving or staying, to understand the message and trust it.

Even if there is bad news, explaining the bad news well, will engender trust and understanding.

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About the author:

Phil Jones is Managing Director of Excitant Ltd, and a consultant and author. (He has been made redundant twice). This article is based on material from his book, Communicating Strategy.

Phil has helped a wide variety of commercial and public sector organisations communicate their strategy, improve how they manage performance and deliver results. He can be contacted via this website (Contact us).