Transcript Redundancies in a Cold Climate – and what ETHICS?

Redundancies in a Cold
Climate – and what ETHICS?
Presented by
Vinod Kumar
Jean Li
Kelvin Ng
Key Points
• Under UK’s two-tier economy, employees in
manufacturing get the short end of the stick compared
to service sector come redundancy (eg Reed)
• Many companies, especially global firms, react to over
capacity in downturns by cutting jobs – mostly through
voluntary redundancies (Merrill Lynch, Goldman Sachs)
• EU countries have restrictions on withdrawing
manufacturing facilities, UK doesn’t (Marks & Spencer)
• Increasingly favourable environment for legal action
when made redundant
HR Practices in Downturns
UNETHICAL
ETHICAL
Enforced redundancy
Retraining/reskilling
for other roles
Voluntary redundancy
Redundancy disregarding procedures
and law
Explore other options –
redundancy as a last resort
Unlawful dismissal
Renegotiate terms and
conditions to avoid redundancy
Over-Capacity in Downturns
• People strategy needs to be CONGRUENT
with business strategy, organisational
culture and values
• People strategy is largely driven by
budgets and bottom line
• Take a “real options” view before deciding
on appropriate strategy
What to do?
Underlying belief – It’s harder to recruit good staff than to
retain them
• Redundancy as the last resort – explore other
options eg
– Pay cuts
– Compulsory leave
– Half pay, and look for other employment temporarily
• If redundancy is the last resort, handle the
process with dignity and respect
– Deciding who to let go comes down to market value
of the person to the firm
– Differential treatment between manufacturing and
service sector is inevitable
• Redundancy, particularly voluntary
redundancy has been used widely in
recent times
• Ethical issues arise not because of
redundancy itself, but HOW it is
implemented
• Dignity and respect are the key
• Communication, transparency of process
and perceived fairness are critical in
parting with employees on good terms