LMAC Insight

The Reality of Redundancy — What employers and employees need to consider

Redundancy is a word that strikes fear into the heart of employers and employees alike. Unfortunately, the COVID-19 crisis has made it an all too common reality for thousands of New Zealanders recently.

Since the start of the COVID-19 restrictions in March to the end of May, over 14,000 employees have been made redundant by some of New Zealand’s biggest and most successful companies including:

Air New Zealand: 3500 job losses
Fletcher Building: 1000
Auckland Council: 1100
Sky City: 900
Millennium/Copthorne Hotels: 900

Most of us will know at least one person whose lives have been changed by this horrible process. I vividly remember my father losing his job during the manufacturing decline in the UK in the 1970’s. I remember the fear and anxiety he carried around with him as a result of being let go, the impact it had on his mental wellbeing, and how his redundancy affected the whole family.

Many of us will feel anger and disappointment with how carelessly and recklessly hard working, loyal employees are disposed of as soon as they are considered surplus to requirements. In many cases, other options are not even considered. Getting rid of employees is an easy way to cut costs and they are usually the first to go when a recession hits.

It’s the capitalist mentality of protecting just one stakeholder above the interests of all others, in this case the shareholders and their insatiable demand for dividends. So when a crisis like Covid comes along, organisations and boards with this mentality make a snap decision and announce redundancies.

I can’t deny that in some cases taking such quick action is necessary and the survival of the business depends upon it, but in many cases the obvious solution to make people redundant is a way of avoiding making hard decisions in other areas of the business.


On the other hand,
I’ve seen a lot of good organisations and leaders whose efforts are stymied by lazy, unmotivated employees who seem to think they are entitled to a job and a weekly wage without putting in much, or any effort, on their part. If their work environment isn’t perfect they use it as an excuse to bitch and moan to their employer and no matter how much the organisation does to try and improve things, it is never good enough. 

We all know the type — they’re like a cancer eating away at the organisation. This type of person believes it is the leader’s responsibility to constantly motivate them. While it is true that this is part and parcel of a leader’s role, individuals must also accept some responsibility for motivating themselves. 

There’s a lack of self-accountability in some people – some can be improved and encouraged to change their ways, but many can’t. They’re just bad apples and an organisation is well advised to cut their losses and cut them loose.

Advice for employers: Do everything you can to encourage your employees to be self-accountable and motivate themselves. If you have some bad apples, don’t ignore the problem – deal with it. Your organisation will perform much better and build greater resilience for the hard times.

Advice for employees: Understand that life is competitive, and you are entitled to nothing. If you work hard and are accountable for yourself and your own performance then it’s unlikely you’ll face redundancy. If you’re that kind of person but are still treated poorly by your employer then it might pay to take your skills and talents elsewhere. That might not be possible given the current employment market but the world has been through recessions and depressions in the past and this too shall pass.

 

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Complete the questions below to test your data maturity.

Over the next two years, which three of the 14 key performance indicators do you most want to improve on as a business?

Make a note of these before you carry on reading.

The key 14 performance indicator categories:

Productivity

  • Asset & equipment efficiency
  • Inventory efficiency
  • Materials efficiency
  • Utilities efficiency
  • Workforce efficiency

Flexibility

  • Planning & scheduling effectiveness
  • Production flexibility
  • Workforce flexibility

Speed

  • Time to market
  • Time to delivery

Quality

  • Product quality
  • Process quality
  • Safety
  • Security

Now ask yourself – what is your current performance against these three KPIs? Can you tell me how you performed in the last hour, yesterday or last week?

If you can’t answer this question for all three because you aren’t measuring the data, then the next step is clear. Figure out what data you need to enable you to measure it, and decide how you are going to collect that data.

If you can answer it historically; last week or last month – ask yourself, is this retrospective view sufficient for me to really make improvements?

If you can answer it for all three up to the minute, then it is quite possible that shopfloor intelligence isn’t a number one priority for you. Look out for parts 2 and 3 of this blog series for some more insights into how you can make the data work for you.