Thinking you might be laid off/be made redundant?

Tuesday, October 21st, 2008 - Uncategorized


If you listen to the media at present, we are probably heading right now into the worst recession since the 1929 crash. Looking what goes on a round us in our daily lives, that could be true – the only construction going on right now is that associated with either long term projects (ie – shopping centres, which on average take seven years to plan and come to fruition), or government projects like roads or schools.

The question therefore is – who is going to take the brunt of this recession, in the form of unemployment?

If we look back at classical recessions, then

– The young will still be employed, particularly post-school leavers. Simply, it is an economics calculation: young people are cheap, energetic and lacking work place experience easily lead
– The foreign economic migrants will leave, whether they be legal or illegal, will go home. Why be low paid or redundant here in a high cost western economy, why not go home to a low cost economy?
– The old will retire. If you are three years or less from retirement, one year+ of tax free salary in the form of a redundancy is two years income in reality. Is three years worth of hassle really worth one years pay? Add to this the fact that you can now pick up some part time work and do some of things you always promised yourself you would do

That leaves the rest of us, or about 90% of the average work force:

65-16 = 49 years of potential employment, minus 3 = 46

If you are an HR Director, tasked with cutting 20% of a workforce, and you successfully released your close to retirees, what are you going to do next? There are two common strategies which are employed:

An open redundancy program: the company initially announces a consultation period – effectively a non-contractual on either side, open discussion on the scale of the package and who is interested. From the employees view point, it is an opportunity to explore options; from the employers view point it is a question like a fisherman of seeing who bites. If the employer arranges a meeting for interested employees, then it is not a tacit agreement on behalf of the employee to be made redundant: legally that’s against the law in a majority of countries. Most HR law requires a stepped redundancy process of: meeting followed by interview; confirmation of package; and finally a period of consideration by both parties before the final agreement is signed. The advantages form the employers view point of this method is that: it is relatively cheap in administration costs; you only address the willing; and it leaves the rest of the work force motivated knowing that you are a caring employer. The disadvantages from the employers view point is that some great employees could leave – hence there is often a selection/agreement on the employers behalf inside the scheme to stop top talent walking

A performance review program: the employer asks each manager to note the performance of their employees over the last period (a month legally would be too short, a year may not produce a sufficient result; last two quarters is legally defensible). Employees in the lowest performance bracket (you don’t need to be low performing against the previously agreed targets; just below any new mark they set at an overall level in the company), are added to a list comprising of two elements:

– those who are already under performing
– those who are below the new targets, who are then given a period to perform at the required level

Most employers will now take both groups through a process of meeting and review, offering the carrot of “redundancy now at these terms, which will reduce if we make it compulsory.” At the end of a period, normally at least three months, the employer may then select compulsory redundancy. The disadvantage to the employer of this option is that it is: higher cost; more open to legal redress by the employees effected; it takes longer to process legally; it leaves a severely reduced morale in the remaining work force. Often, remaining employees think “do I want to hang around for the next round of this” and hence start looking for new opportunities, and there is a long tail of leavers. It is also more difficult for the employer to take on new employees when the economy recovers, due to this residual feeling

What can employees do to make sure they get the choice of employment they want?

1. If you have not had one in a while (ie – over six months ago), ask for a performance review. Make sure any issues of under performance are addressed immediately, and that it is confirmed that you are ideally in the top quartile of performers, or have an agreed and written down step program to achieve this in liaison with your manager
2. Work a bit extra. You don’t need to do all the hours possible, just 10% more than the average employee is often sufficient – 1hr a day
3. Take on opportunities inside the company. Join works committees, performance initiatives or optionally groups which do charitable work on behalf of your employer. Do anything which gets you involved in the infrastructure of operations

These simple steps should make sure that you don’t end up on a performance review list, and you now have a choice of where you could be employed. So now make the most of that choice:
4. Review your career plan
5. Review your CV/Resume, and bring it up to date
6. Review you online profiles, and if you don’t have any create them NOW! Start with LinkedIn
7. Check out the local newspapers, trade magazines and online jobs boards for suitable posts in your desired next job
8. Make a note of all the employers and recruiters who list these jobs – they are your target audience

If you are unlucky enough to be made redundant, then know that attitude is the key to getting your next job: be positive, and be prepared to graft – these attitude issues will count as much as your skills to any future employer

Good Luck!

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