Managing Job Loss Responsibly

Centre for Employment Relations, Innovation and Change

Chris McLachlan is a third year Postgraduate Researcher and member of the Centre for Employment Relations Innovation and Change. Chris won an award for the best PhD paper at the British Universities Industrial Relations Association (BUIRA) conferencehosted by Leeds University Business School earlier this month. The below blog post is based on his winning paper.

Profile picture of Chris McLachlan

As witnessed with the recent 'crisis’ in the UK Steel industry, the impact of job loss on employees has gripped the media’s attention.

The negative effects of job loss – or ‘redundancy’ – are profound for employees and communities. Not only does the loss of income put increasing strain on those affected, but the social base and networks that workplaces offer employees also disappear.

We all know someone who has been ‘made redundant’, ‘laid off’ or been given the even more inhumane description of ‘surplus to requirements’. Losing one’s job is not a pleasant experience.

Of course, job loss is not exclusive to the steel industry. Just last month Lloyds Bank announced further job cuts and with the additional uncertainty created by ‘Brexit’, further jobs cuts could be on the horizon.

As cutting jobs has become commonplace in organisational life, people’s lives will continue to be affected. The focus of my research is on how organisations might manage job loss in such a way that the associated impacts might be reduced for those affected.

Photo taken by Chris McLachlan at the "Save Our Steel" rally in London, May 2016.

Although there are ways that organisations can manage job loss, the underlying assumption is that they have a ‘responsibility’ towards affected employees and communities. Especially so, given the unilateral nature in which job loss is inflicted on employees by the organisation’s decision to cut costs through jobs. The practices and processes through which organisations can achieve this has been described as ‘responsible restructuring’.

Organisations might offer affected employees enhanced severance packages, opportunities for retraining and reskilling, or even counselling services to help them adjust to the impact of being made redundant. My research focuses on the combination of practices and processes that organisations implement in order to manage job loss in a responsible way that, ultimately, reduce the negative effects on employees.

In particular, my research highlights that managers tasked with cutting jobs must address four key areas of responsibility. My intention is to provide a framework for organisations to adopt when seeking to manage job loss in a responsible way.

  • Firstly, organisations need to ensure compliance with the relevant legislation. In the UK this refers to actions outlined in the Trade Union and Labour (Consolidation) Act 1992. This is the minimum that employees should expect.
  • Secondly, organisations need to document formal policies and procedures that reflect their responsible approach. For instance, inclusion of additional stages of consultation that account for, and are sympathetic to, the response of affected employees.
  • Thirdly, implementing fair and effective communication throughout the process helps keep employees up to date on progress. It is important for organisations to engage with employees as much as possible during the process. Other organisational actors, such as trade unions, can also offer a vital source of support here.
  • Lastly, and arguably most importantly, organisations should seek to ensure alternative employment for employees once their job has been officially terminated. Measures such as offering other jobs at the organisation – internal redeployment – or the provision of skills and training services can help those affected get back into work following redundancy.

Taken together, a consideration of these four areas in the initial stages can contribute to a responsible restructuring process.

At face value, a responsible restructuring process is a nice idea. Data I collected from a UK steel company that claimed to have conducted a responsible process suggested otherwise however. Whilst practices and processes aimed at helping employees existed and, in some instances, were beneficial to employees, in reality the majority of employees perceived them as inadequate in addressing their concerns.

Instead, the banner of a ‘responsible restructuring’ process was used as a way in which to maintain, and even improve, the reputation of the company. The company hoped that by describing it in this way, the workforce and the wider public would view them in a more positive light: that although they were cutting jobs, they did so responsibly.

In all, responsible restructuring has the potential to mitigate the more profound negative effects on employees. For this to be realised though, it will require companies to focus less on the supposed reputational benefits, and instead implement responsible restructuring purely for those affected the most - the people losing their jobs. 

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The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.