More redundancies on the way

May 30 2002 by Brian Amble Print This Article

Nearly half of organisations that have carried out redundancies in the past 18 months plan to make further cuts this year according to the CIPD’s first ever report on redundancy workplace attitudes. The majority of organisations (52%) also report a decline in employee morale in the aftermath of redundancies.

The report, Best of a Bad Job, sets out the findings of a survey of 563 organisations which, during the last 18 months, have made at least one employee redundant. The CIPD commissioned IRS Research to undertake the research during April and May 2002.

John Philpott, the CIPD’s Chief Economist comments, “Organisations will continue to carry out redundancies in the next year due to ongoing organisational restructuring, irrespective of how well the economy performs. Organisations are becoming more strategic in their operations and undertaking change to gear up for domestic and international competition. So redundancy is no longer simply a defensive cost-cutting exercise.

Philpott continues, “The good news is that most organisations seek alternatives to redundancy and recognise that redundancy has an adverse impact on employee morale. It is also heartening to see that the majority of employers (72%) have paid redundancy compensation above the statutory minimum. Such a sensitive approach may explain why many of those made redundant seemed philosophical about the decision. Redundancy is not the threat it used to be, particularly among younger people.”

The main findings include:

  • A large proportion of organisations (45%) believed that they would need to make further redundancies over the next 12 months.
  • Redundancies are concentrated in general manufacturing (17%), engineering (10%), retail (7%) and financial services (5%).
  • 37% of HR professionals said that organisations were too ready to make people redundant to meet short-term changes in demand.
  • 53% of HR professionals said that younger people were less worried about the prospect of redundancy while 32% said that employees do not see redundancy as the threat it used to be.
  • 74% of lay-offs were compulsory.

The main criteria used by employers for selecting people to be made compulsorily redundant included (where three criteria were selected by respondents):
1. the employee’s role within the organisation (68%)
2. job performance (62%)
3. ability or flexibility (52%).

Most organisations (95%) sought to minimise the number of redundancies. The main alternative measures used included:
1. offering alternative employment to employees in affected posts (74%)
2. placing a freeze on recruitment (56%)
3. achieving workforce reduction through natural wastage (55%).

Employers reported that the most common reaction of employees to the announcement that they were to be made redundant was acceptance (49%).

The majority of employers (72%) paid redundancy compensation above the statutory minimum.

50% of organisations provided counselling whereas 44% provided access to a specialist outplacement agency/consultancy.

HR professionals described the redundancy process as ‘traumatic’ although most considered the job cuts to be necessary. Organisational restructuring is the most common reason given for making redundancies by employers (66%).

The Chartered Institute of Personnel and Development (CIPD) has over 110,000 members and is the leading professional institute for those involved in the management and development of people.

For a copy of the report email [email protected]

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