What is redundancy in the workplace?
In the workplace, redundancy refers to the process when employers have to let go of one or more employees due to circumstances unrelated to job performance or behavior. Here are some examples of situations where employers may have to let employees go due to redundancy:
- Economic recession: If external factors like an economic recession start to affect your business, you might have to let employees go, even if they make beneficial contributions to your company.
- Termination of business: Another reason for redundancy could be when you decide to close your business because you want to try another venture, retire or move on to a new job.
- Termination of job title: If your business no longer needs a particular job title, this could lead to redundancy. For example, if your company moves to an electronic phone system, the role of a receptionist may become unnecessary.
- Limited funding: If your business has limited or no funding for a project, this might be a cause for redundancy. Keeping employees when there’s no work for them could cause a loss in profits.
- Relocation of business: If you decide to move your business to a new location or another region, state or even country, this could cause redundancy because there may not be enough money to help every employee relocate. Your company may also need to downsize in order to get established in a new location.
What is the difference between redundancy, layoffs and downsizing?
Before you evaluate redundancy within your workplace, you should understand how redundancy differs from layoffs and downsizing. Here’s how you can distinguish between these terms:
The difference between redundancy and layoffs
Layoffs typically occur when an employer can no longer provide work for their employees. Layoffs can either be permanent or temporary depending on the state of the company. Similarly, redundancies can also occur as a result of a lack of work, but they can also occur due to other situational factors such as business termination or relocation.
The difference between redundancy and downsizing
Downsizing is when a company reduces its size. This could be because they’re preparing for a merger or because they’re trying to balance their finances in response to an economic downturn. In this way, downsizing is similar to redundancy, but with downsizing, sometimes employers offer employees the option to transfer to another company location.
How to evaluate potentially redundant roles
Evaluating redundant roles within your company may help you preserve your company’s finances. Here’s a list of steps to help guide you through the process:
1. Identify essential roles within your company
To help you distinguish a group of positions that may not be necessary for your company, you first need to establish essential roles. For example, you could identify essential personnel as company officials and department heads or managers because they help oversee your company’s operations. Department heads could also help take on more administrative tasks within their department if needed.
2. Review key personell and their ability to take on additional roles within your company
Review each essential employee and their role within your company. They could have previous experience in another role that enables them to take on additional responsibilities. For example, if the head of the accounting department has a background in financial planning and is also a certified public accountant (CPA), they could take on more responsibility if you have to let go of one or more accountants.
3. Consider which roles or departments currently present limited benefits
Although this task might be difficult, you should think of the financial stability of your company. Review the structure of your organization to determine which roles present the least potential benefit to your company going forward. This can help you determine which roles are redundant. For example, if the marketing department has seven marketing specialists completing work that four people might be able to accomplish, there would be three marketing specialist roles that present redundancies to your company.
4. Evaluate the employment history of each employee in those roles
Once you’ve narrowed down the scope of your search, you can evaluate each employee in the redundant roles. Review their qualifications, job performance and overall contributions to the company. If one employee performs at a more consistent rate than the others, they might be a better candidate to remain at the company.
For example, if you decide there are three marketing specialist roles that present redundancies, review their job application and performance details. If one marketing specialist has a great work ethic and creative ideas, they could be a valuable asset to keep at the company.
5. Identify potential areas that those employees could move to within the company
If your purpose for finding redundancies is to improve productivity rather than prevent a loss in profit, you could create new positions or move employees to other roles to better benefit your company. For example, if you found multiple redundant marketing specialists but still want to keep them in your company, you could offer them positions in customer service, sales or another marketing role that needs support.
Best practices for handling redundancy
Here are some tips to help you handle redundancy within your workplace:
- Consult with other company officials.
- Hold a company meeting to address the situation.
- Meet with each redundancy candidate individually.
- Provide compensation to volunteers.
- Avoid making productivity assessments for anyone on medical leave.