It was Bob Dylan who asked the question “When will they ever learn?” Unfortunately, when it comes to redundancy, it seems to still apply: certainly when it comes to large organisations and what you can only call their “readiness for redundancy” – the speed with which they resort to redundancy as a solution to problems.
This cartoon that I commissioned for “Lean Organisations Need FAT People” remains relevant.
As long as you continue to manage people as costs, rather than as assets, redundancy will always remain an attractive option. Even if redundancy is not a “knee-jerk” reaction to bad performance it certainly can seem like it. At best it reflects badly on management and calls into question their ability – and therefore their right – to oversee a large organisation. Why?
Firstly, at a time when business is bad, it does not make economic sense to incur a huge, extraordinary expense to pay people not to work! Doing so must call into question management’s understanding of business. In fact the prevalence of redundancy as a solution to commercial problems not only reinforces a case that there is a great divide between economics and commerce, but it also begs the question, “To what extent are managers who resort to redundancy capable of original thought?”
More often than not redundancy is a “stock solution.” Someone, somewhere used redundancy to resolve a crisis and as a result it has now become a standard tool in the management toolbox. The formula has become as simple as: “Must reduce costs, therefore must eliminate people.” This is become so ingrained that when the issue comes up the focus is more on where it needs to happen than whether it needs to happen.
The consequence of this people-as-costs mentality is that redundancy is too readily contemplated with little or no thought given to the value of what is being terminated and the past investment that has been made in people. Certainly no thought is given to the future costs of rebuilding the expertise, experience and engagement that walks out of the door with those employees. You could, justifiably, argue that redundancy is the ultimate of short-term thinking. In which case, you have to also ask whether, in such circumstances, managers are really acting in their shareholders’/investors best long term interests?
This has recently been highlighted – again – for me by a colleague’s husband who has just become a victim of large-scale redundancy exercise. He works for a blue chip organisation that has decided to outsource jobs to India. Not only does this mean that irreplaceable specialist skills will be lost but the whole programme has been handled so maladroitly that:-
- The announcement was made publicly with employees being told that they would all have to reapply for whatever jobs remained;
- Everyone was offered a voluntary redundancy package with the result that they now have more people applying for these than they were making redundant.
Now the organisation finds itself in the predicament of having no-one applying for jobs. Furthermore, can you imagine how engaged employees will be if their request for redundancy is turned down? Certainly not the kind of place where you and I would like to work!
And all because of the pervasive attitude of accounting for, and managing, people as costs, rather than the assets we profess them to be. And know they actually are! Don’t you think it is high time for a different Bob Dylan song? Perhaps “Times are a changin’.”