By Wim van Hennekeler, PA Consulting Group
The ´commissie-Bakker´ is expected to announce its recommendations concerning revised redundancy rights in June. The political discussion is focused around the question of whether it should be easier and cheaper to dismiss people. However, redundancies are a sign of tighter and traditional labour relations, and therefore in our view, can be approached differently.
When an organisation is faced with a reduction in employee workload, or loss in external market share, it must review its employee headcount. Typically the factors that have led the company to review will have been evident for some time. However, if the organisation does not intervene to solve the problems over a period of time, the mismatch between supply and demand of labour grows. Eventually redundancy programmes become inevitable. As a result of negative publicity, trade unions will try to negotiate with the employer to achieve the best deal for the staff. But the redundant employee loses their job anyway.
Typically, employees do not start to consider alternative job options until redundancies are formally announced. This will result in at least a number of months paid by unemployment compensation, but probably more. This is bad for the employer, due to the expense and negative publicity with a negative effect on the employer brand as well. It is also bad for the employee, who needs to adjust psychologically to being unemployed. And it is also bad for the taxpayer, who in the end funds unemployment compensation for others.
Supply and demand of labour can be better balanced in practice. Fortunately we are now seeing the first examples of this. Before employees become redundant, they are encouraged to look into other working areas - among other techniques by using awareness increasing programmes to move employees. The technical possibilities for sophisticated staff planning have also increased thanks to the inter- and intranet. This encourages employees to take self responsibility for managing their own career, even if they have an employment contract that is ten or twenty years in length, or their level of education is relatively low.
Management plays a key role in this process, redirecting employee resource over time to prevent the need for mass redundancies. This requires leadership and excellent change management. However, the financial rewards can be substantial - up to 1½ annual salary per employee is saved when the employee moves to another line of work, rather than being made redundant.
Reorganisations in different ways prevent expensive redundancy rounds. Therefore, employers and employees should leave their traditional propositions about traditional reorganisations behind.
