Redundancy Best Practice: How to Support Your People Through a Restructure

For workplaces that pride themselves on how they support staff wellbeing, organisational restructures present a big challenge. Making redundancies doesn’t exactly align with the idea of psychological safety for your employees.

However, redundancies are part of being in business. One study found just over a third of New Zealand workers said they’d been made redundant at some point in their working lives.

The stress and uncertainty of the process can impact all staff, not just those who end up being made redundant. While you can’t totally negate the effects, there are ways to support your people through these times to promote psychological safety as much as possible.

Support matters

It’s vital to approach redundancies the right way. Not only is it about supporting your people - both those who lose their jobs and those who don’t - but your process can have very real effects on business performance.

The idea of making redundancies and restructuring is generally about improving business performance, so it follows that you want to do it in such a way that keeps employees engaged.

Leadership IQ surveyed 4,000 employees that survived a corporate layoff, and the study illustrates how easily staff can become disillusioned:

• 74% of employees said their own productivity had since declined
• 64% said the productivity of their colleagues had also declined
• 87% said they’re less likely to recommend their organisation as a good employer
• 61% believed the company’s future prospects were worse than before

Critically, the study also recognised how impactful a good manager can be in the process. Workers that gave their manager high scores for visibility, approachability and candour were 72% less likely to report a decrease in productivity, and 65% less likely to say the company’s product or service had declined.

Communicating redundancies

McKinsey refers to two traps that businesses often fall into when communicating restructures:

• Taking a ‘wait and see’ approach, where leaders try to keep restructures secret until the last minute. Senior leaders are involved, and though they’re sworn to secrecy, news of job losses inevitably leaks, which creates fear and uncertainty among staff until the new structure is confirmed.
• ‘Ivory-tower idealism’ involves communicating exciting business opportunities ahead, with optimistic assessments of what the future holds and little mention of job losses until they’re confirmed. Workers tend to see through the positive veneer, and the leader’s enthusiasm about how the restructure will improve things feels uncaring.

Communication really matters when people face losing their jobs. There are five factors to keep in mind:

• Frequency. Don’t just announce what’s happening and leave it at that. Communicate a lot - things like what’s happening, when and why really matter. Repeating things shows you mean them, so don’t be afraid to reiterate your important messages. Your people will be talking about the situation, and if your leadership isn’t then it feels like a lack of connection.
• Clarity. Make sure your people have the details they need. Explaining the process helps to reduce the anxiety and uncertainty that staff feel. Take time to explain why you’re doing it too, and what you’re hoping the changes will achieve.
• Engagement. In a large business, different teams will be impacted differently by a restructure. You may need to have sessions with various departments to explain specifically how they’ll be affected. Your goal should be to make sure every person has all their key questions answered.
• Design. Consultation is often required in a restructure, but it can be disingenuous if you’ve already made up your mind about what’s happening. However, if you involve your people in the design process, they will take ownership of the vision, understand why it’s necessary and have a greater connection to their work afterwards. In reality, this doesn’t often happen, but it does have a significant upside.
• Stakeholders. As well as your staff, unions, councils, customers, suppliers and regulators can all be affected. Consider if you need to engage with anyone else - although your staff should always come first.

Remember, you’re communicating with people, not robots. Be open, honest and real. If you’re sad about cutting jobs, say so - it helps to reinforce your conviction that it’s the best thing for the business. Authenticity and empathy go a long way.

Those made redundant

Plainly, losing your job is hard. It can have financial implications, raise career question marks and even larger life issues. Companies have legal obligations towards staff who are made redundant, but these tend to fall short of a standard of psychological safety.

A Seek study found employees who have been made redundant wanted:

• An additional payment on top of the legally required amount (41%)
• An internal job offer (38%)
• Counselling and health support services (30%)
• Free career advice with a career consultant (25%)
• Links to an external job opportunity (21%)

If you’re in the position to, being able to help with these things will show you genuinely care. It will also help your reputation in the community and with your wider stakeholder network.

Managers

Telling someone they’re being made redundant is hard on the messenger too. Managers often have close bonds with team members - they may have worked together for a long time, know staff on a personal level, and have a relationship with each other’s families outside work. If managers are delivering bad news to their teams, it’s crucial that you ensure they access professional psychological support via your EAP provider like Clearhead, to debrief what they have to do.

Even if they aren’t delivering the news, managers have a critical role in adapting to the new model and going forward. It will take time for people to understand how they operate under a new organisational structure, particularly if they’ve been moved into newly created roles or teams. For a manager to be effective in leading their people, they need to understand how things are supposed to work.

Senior leaders need to ensure team managers are engaged and informed with the vision going forward, so they can be genuine leaders of their teams. As the first point of call for ground-level staff, managers should be equipped with the answers to likely questions, and have a clear idea of what’s expected under the new normal.

Remaining employees

Survivor’s guilt is real. Don’t automatically expect people who keep their job to be grateful, let alone productive. There may be a grief period they go through, and it helps to allow the dust to settle somewhat before rushing in talking about your upbeat plans for the exciting future.

As with any grieving process, some may struggle to work through it, and it’s important to offer therapy via your EAP provider like Clearhead, to ensure they are able to develop healthy coping mechanisms.

Leaders should take time to read the room before engaging with staff after layoffs.

Looking after those who’ve been made redundant can really help the mood of those who are kept on. Staff form close bonds, and when their close colleagues are let go, people may question their loyalty towards the employer. But if they see you making a genuine effort to support redundant staff, and help them find new jobs, it’ll reduce the guilt they feel.

When your people are ready, HBR recommends reorienting your people towards their individual and group purpose. By articulating business values and goals, and showing people how they contribute to achieving them, you help people to engage in their jobs. This is something you may have done before the redundancies, and that connection can become lost in people’s minds through the process.

Mental health repercussions

One of the big questions managers may face is how they support staff who have prior mental health concerns when making them redundant. Or, how to help staff through redundancy without contributing to, or causing, mental illness.

Losing your job can clearly create stress and anxiety, and any supportive workplace will want to look after vulnerable people. The World Health Organisation outlines the importance of managers being trained to support their workers’ mental health, but it also recognises that it’s not a manager’s job to provide professional help.

The best way to approach mental health in the workplace is to create a psychologically safe environment where people can be open and honest about how they’re feeling. This helps to prevent issues from snowballing and growing into larger, more serious problems.

If you don’t have that culture or leadership training already, it’s not something you can manufacture in time for impending job cuts. Regardless, it’s standard practice to make professional help available to those that need it.

Workplaces that use an EAP service like Clearhead to support their people may find it easier to connect staff with counsellors and psychologists and need to regularly communicate to staff that this confidential service is available for them to deal with all the uncertainty and job insecurity they will be experiencing.

Remember, those that keep their jobs may go through something of a grief period, so this support should be available beyond the time where redundancies are announced.

Resources

As you can see, the entire workplace may need support whenever an organisation goes through a period that involves making people redundant. It helps to make a variety of resources universally available to people that need them.

There are three main areas people look for support:

• Finance and budgeting services. For those who are made redundant, losing their income can create significant financial pressure. Financial experts can help to understand their position and adjust their spending if necessary. Most EAP providers like Clearhead will also have them in place.
• Recruitment experts or career counsellors. Most people that lose their jobs will want to find another one fairly quickly. For some, this may involve a change in direction. Being able to talk to experts can help to give people direction. Most EAP providers like Clearhead will also make these services available.
• Mental health support. This is relevant for those that lose their jobs and those that don’t. You want to ensure you have an EAP provider with a short wait time (i.e. days not weeks) in place before you start the restructure/redundancies to ensure professional psychological support is available to all your employees.

Takeaway

Restructures or redundancies often take up a lot of time and energy. Having empathetic, two-way dialogue with your people can help to reduce the stress that comes with it. It’s always best if you can involve your people in the process, but this won’t always be possible.

At a more fundamental level, having a psychologically safe workplace culture helps to support people through ups and downs of any sort, including periods of change. People should always feel like they can be open and honest with how they’re feeling and know that when they reach out for help they will get support that is personalised for what they need.

To find out more about how Clearhead can provide high quality and timely mental health and wellbeing support in your workplace as you go through restructures or redundancies, book a free demo today.