But termination doesn't end when the employee cleans out his or her desk. A sacking or retrenchment can cause traumatic disruption in a department or organisation. Managers often overlook their own feelings and the feelings of the employees who are still around. Survivors might well feel a mixture of grief and guilt: a "why them and not me?" mind-set.
Charles Drummond, divisional manager, information systems for AM Corporation, says IT managers generally handle retrenchment well, "but we don't handle those who are left. We focus on those who are leaving and forget about those who remain." These survivors, he says, can be seriously "demotivated" and they manifest it in a number of ways.
Many people have an increased sense of vulnerability, as in who's next? They think: if the boss can sack the others so easily, they can get me too. On the other hand, some survivors are upset that they were not chosen. Indeed, they would prefer to go. They want to leave and would welcome the payout money as a financial buffer while they find a new position. And then there is embarrassment. Colleagues find it difficult dealing on a day-to-day basis with someone who is earmarked to go - do you commiserate, do you act normal, do you leave them out of social functions, can you be cheerful around someone who is going?
It's important for CIOs and other executives to let the people who remain know everything is going to be OK. This step is easy to overlook, yet neglecting it can really destroy the fabric of your organisation.
See You in Court
Retrenchments are not only emotionally charged, but are also a legal minefield
Paul Brown, a partner with Baker & McKenzie and an expert in industrial relations (IR) legal issues, says that generally, while most organisations handle retrenchments well, "a cursory look at the judgments of the Industrial Relations Commission and unfair contracts jurisdiction courts shows that there are still plenty of employers who get both the retrenchment process and the financial considerations wrong.
"The legal requirements are quite complex," Brown says. "In some states, procedure is important, whereas financial outcomes are relatively modest; in other states, getting the money right seems to be most important." The IT sector, in particular, he says, has had a number of cases that have received some prominence. Primarily this notoriety has swung on the "financial expectations of individuals and lawyers".
Swebeck says: "Loss of jobs because of corporate cost-cutting will need to be handled differently from job losses flowing from a merger, sale of business or outsourcing of function. In the latter circumstances, there will be a need to consider whether the legal system will operate to transfer employment conditions from one employer to the other, and the implementation of a sophisticated integration plan, which covers people, process, systems and HR.
"In my experience, the single most important factor to be properly undertaken by managers when faced with the task of making jobs redundant is communication. Strategic communication of decisions that will end the jobs of employees requires thoughtful preparation. People's livelihoods are at stake. The communication strategy should be focused on different audiences such as employees, their representatives, the media, internal management, investors and, if applicable, the board," Swebeck says.
"While technical requirements must be complied with as part of the management of risk, and particularly legal risk, the failure to adequately prepare and communicate the corporate plan will most likely lead to intense, unfavourable media scrutiny, the commencement of legal proceedings by employees or their unions, and the destruction of ongoing trust between the survivors and management."
Peter Ratcliffe, the CIO of consumer products distributor Hagemeyer Brands Australia, supports this view, using his own company as an example. "We undertook an analysis of an outsourcing proposal 12 months ago as an exercise in assessing ways to reduce costs," he says. "A cost benefit analysis decided against it, but staff were involved in all processes - the communication lines were kept open throughout. Our staff were involved in the final proposal [to remain in-house] put to management. They would have probably moved to an outsourcer if the decision had come down to follow that path. But the important thing is they were part of the whole process."
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