Double jeopardy: The surreptitious consequences of redundancy

As we approach the Christmas season, announcements of redundancies are profuse and more attention should be placed on the psychological safety of individuals during these tumultuous times.

During my career as an HR practitioner, I have unfortunately had to implement many redundancies. One day, I overheard an employee say to his colleague, 'Here comes Darth Vader again…'. I asked about this statement and the explanation was revealing as to how my role was perceived: 'Every time we see you, it is with news of people losing their jobs'. The realisation hit – there is a lot we need to do to limit the stigma of redundancy and improve the management of the actual process. I have seen the severe impacts during redundancy implementation, and I have found my passion to influence, educate and change how organisations implement redundancies.

Fortunately, I have also been put at risk of redundancy twice in my career. I say 'fortunately', as being on the other side of the table allows for a rich insight into how unpleasant and distressing the experience is. This helps with truly understanding how to deal with redundancy implementation with dignity and respect. Central to this is the concept of 'psychological safety'. There is an expectation by employees that employers will provide security of employment and a safe environment. Redundancy isn't like misconduct, where employees are culpable for their own actions. In the case of redundancy, the situation arises without any fault of the employee, and the employer removes the employee's control over the situation. The psychological contract is severely impacted, and repairing the relationship is extremely difficult.

With the impact of Covid-19 restrictions, continuous advances in technology and a more than ever competitive marketplace, the scale of redundancies reached a new height during the pandemic, with ONS figures showing 14.5 out of 1000 employees being made redundant in the UK alone. High profile cases such as the P&O dismissal of 786 employees poses the question of how aware organisational leaders are of the lived experience of an employee's breach of psychological safety. Royal Mail announced up to 6000 job losses, shortly followed by the tech giants Twitter announcing up to 3700 redundancies globally and Facebook Meta dismissing up to 11,000 employees worldwide. Made.com implemented 573 recent redundancies, followed by the clothing group Joules, who announced up to 1600 job cuts earlier this month. With employers and employees impacted during a time of economic crisis coupled with the pressure of Christmas, more attention should be placed on the psychological safety of individuals.

A breach of psychological safety could lead to a fear of reprisal for speaking out, reluctance to share knowledge and a lack of progress, due to fear of challenging existing processes. Research indicates that redundancies impact all employees;

* Employees leaving the organisation (victims),

* Employees successful in retaining their employment (survivors),

* Employees who were made redundant and then rehired (semi-survivors),

* Directors, managers and HR professionals who implement redundancies (redundancy envoys)

Here, I focus on the substantial and often underestimated turmoil that employees experience that is 'at risk of redundancy'.

Impact on psychological safety

Redundancies impact people at the basic level of physiological needs, such as food, water, warmth and rest. It's a significant psychological shock. The moment an employee is informed that their role is at risk of redundancy, the fight or flight stress response will manifest, with a release of hormones that will increase the heart rate, blood pressure and rate of breathing. The impact is immediate and does not only realise if and when an employee loses their job. Employers, therefore, need to adopt a more proactive approach in how they manage the implementation of redundancies, actively working to re-establish employee levels of psychological safety. The detection point of jeopardy for employers should be that being 'at risk of redundancy' alone has a severely negative psychological impact on individuals.

I consider the impact of redundancy announcements in the context of Timothy Clark's four stages of psychological safety: 

Stage 1 – Inclusion Safety: In this stage, employees experience a connection with other employees, through a sense of belonging.  Redundancy announcements could lead to employees questioning their own unique attributes and contribution to the organisation.

Stage 2 – Learner Safety: When an employee is in this stage, they feel safe to embrace learning by asking questions and giving and receiving feedback. When employees feel that their jobs are at risk, they are more likely to be protective of their knowledge and more reluctant to experiment and drive innovation. Asking questions to drive learning will be limited, as employees would be reluctant to demonstrate any perceived weaknesses in their own knowledge and skills.

Stage 3 – Contributor Safety: At this stage psychological safety is established through employees feeling safe enough to use their skills and abilities to make a meaningful contribution. During redundancy situations, employees are more reluctant to share their contributions and work to their full potential, due the feeling of organisational betrayal as the psychological contract has been breached and the trust relationship damaged.

Stage 4 – Challenger Safety: During this stage, employees drive continuous improvement by challenging the status quo. Feelings of job insecurity and low self-esteem caused by redundancy announcements have a negative impact on employees' confidence.

It is important for employers to recognise that each individual will experience an initial reaction uniquely, and their experience of change may then narrate through the following stages:

Stage 1 – Denial

Employee experience: Employee is unable to accept that job loss is a possibility. Employee rationalises situation by convincing self that redundancy is likely to happen to other people. Cannot be me/eus. I will be fine.

Employee behaviour: Why me? Surely this will blow over? Is this a mistake? This cannot be happening.

Stage 2 – Shock

Employee experience: Shock, shortly followed by outrage. This can not be happening to me.  This is a mistake. Humiliation, shame and betrayal.

Employee behaviour: Why is this happening? What have I done wrong? How will I pay my bills? What will I tell my family?

Stage 3 – Anger

Employee experience: Employee experience anger towards management and organisation. Feelings of management failed me. Betrayal of my loyalty. Breached and damaged psychological contract. Embarrassment, cynicism, resentment.

Employee behaviour: I will see you in court. You cannot do this to me. It is fixed. Resentment for all the extra hours and extra work I have given to this company. Retribution. Sabotage. Lack of organisational commitment. Tardiness. Absenteeism.

Stage 4 – Negotiation

Employee experience:

Employee negotiates position. Let me see what I can get from this company. I have to look after myself, no one else is. What is the best deal I can get?

Employee behaviour: I should not be selected for redundancy, because of the following reasons. Can I appeal? Exploring alternative roles in business.

What if I work fewer hours? Is job-sharing an option? Requesting an enhanced financial package. Negotiating a later exit date.

Stage 5 – Depression

Employee experience: Employees experience a sense of loss and failure, self-blame, helplessness, anxiety and stress. Concerns of financial survival. Feeling of job insecurity. Feelings of lack of self-worth, isolation, withdrawal. Lack of purpose and identity.

Employee behaviour: Isolation, withdrawal, absence, lack of care in appearance. Lack of appetite to fight. Decreased loyalty. Lower productivity.

Stage 6 – Acceptance

Employee experience: experience a sense of acceptance that they will lose their job. Focus on finding alternative employment. Focus on finding alternative methods of generating income. May perceive the redundancy as an opportunity to start own business, become self-employed and pursue personal goals.

Employee behaviour: Continued lack of interest towards the current employer, however, may focus on handing over projects and work as soon as possible. May ask for time off to attend interviews, attend support workshops or outplacement support. Actions are focused on the future.

Stage 7 – Relief

Employee experience: Employees experience a sense of relief when a new role or income source is established. Employees sets new personal barriers as part of their psychological contract for future employment.

Employee behaviour: More cautious in a new role and less likely to offer the same level of commitment and loyalty as before. (Stevens, 2022, p.31).  

Employees' response to a perceived breached psychological contract, then, may include conscious and unconscious behaviours. Those at risk experience a rollercoaster of emotions, including feelings of rejection, low self esteem, depression, fear, anxiety, psychological stress, helplessness, social isolation, cynicism, uncertainty and embarassment. Employees' reaction to a perceived breach of the psychological contract will depend on their own level of sensitivity as well as the perceived lack of sensitivity that the organisation exercise (DelCampo, 2007). Employers may feel that the psychological contract can be repaired on the basis that not all the employees at risk of redundancy will be made redundant, but in reality this is tricky. Once the psychological contract is deemed to be damaged, employees' levels of scepticism about the likeliness of repeat events increases, and caution is exercised with entering into trust relationships with the employer.

Challenges from a legal position

Redundancies are often unanticipated by employees, as management decisions to implement redundancies are usually made behind closed doors. Depending on the scale of the redundancy implementation, announcements may come from senior directors that incorporate the legal responsibility of the employer to provide a 'warning of impending redundancies', as soon as a decision is reached.

Although redundancy warnings are intended to provide an opportunity for employees to start exploring alternative income sources and to allow the workforce to absorb and adjust to the initial shock, they can also have a counterproductive impact. Often employees panic – instead of waiting to ride out the storm, they decide to start their searches for alternative work immediately, even if they may end up retaining their current roles. It is no surprise that it is the most talented and skilled employees who typically find work first – ironically, these are the employees that employers would want and need to retain. The 'redundancy warning' does have to be communicated with the skill, to limit knee-jerk reactions from employees.  

A second challenge posed by employment law is the requirement on the employer to establish a 'redundancy selection pool'. Legally, employers have to consider all employees who undertake similar roles in an area that has been identified for redundancies, even if they operate in a different department of the organisation or work different shifts. For example, if an organisation has established a requirement to reduce their cashiers from 32 to 27, all 32 cashiers and employees that undertake similar or interchangeable work need to be included in the redundancy selection pool. The end result is 32+ employees in an unsettling position, even though the organisation only need to make five redundant. Unfortunately, the test of 'fairness' run by courts – which examines if the employer 'genuinely applied their mind' to the selection of the redundancy pool – can have negative consequences for managing employee morale, as all employees in the redundancy pool will be experiencing the fight or flight stress response.

There's also the use of 'fire and rehire' techniques, which have significantly increased during the pandemic. This has led to the development of 'semi-survivors (Stevens, 2022) – essentially employees who were fired (victims), and then rehired (survivors). Their experience of the breach of psychological contract is exacerbated by the manipulative and unethical approach, which takes advantage of people and removes dignity in the process. Employers adopting this strategy are likely to cause an irreparable breach of the psychological contract, with negative consequences on the well-being of the semi-survivors reinstated.

Best practice

When employers treat redundancies as a process, with milestones and tick boxes instead of a focus on the human factor; and when they emphasise targets, i.e. 'we need x number of employees to exit the organisation by x date'; then the experience for employees is dehumanised and psychological safety is at risk. Added to this, the lexicon used in redundancy is often akin to that of the French Revolution: organisations may 'execute' redundancies, look to reduce 'headcount', talk about 'exit', 'victims' and 'survivors', even 'grim reapers'! Employers may become oblivious to language which has a negative stigma attached to it. This further dehumanises the practice of redundancy.

If managers and HR professionals understand the emotional turmoil that employees experience, they are better equipped to help employees through this distressing event. There are various steps organisations can adopt to mitigate the negative impact of redundancies, without putting themselves in a legally compromising position. HR practitioners or occupational psychologists can focus on the necessary strategic steps in the implementation of redundancies. Psychologists can harness their skills to limit the damage caused to psychological safety by guiding implementers on the importance of how messages are delivered, to ensure the main elements of psychological safety, such as feeling included and having a sense of belonging, are not compromised.

Prioritise psychological safety

Raise awareness of the importance of psychological safety at work and how this drives innovation and continuous improvement. Highlight the benefit of the long-term sustainability of the organisation by driving psychological safety through inclusion and supporting employees to speak up and challenge the status quo. Not only would this allow for more effective consultation, but could also lead to valuable and insightful ideas on how to save costs instead of implementing redundancies and thus potentially could lead to saving jobs.

Psychological safety could also be established through running lessons-learned sessions, where management could genuinely learn from mistakes made that lead to the organisation being in this position. Being heard and encouraging new ideas allows for an opportunity to rebuild trust and drive creative innovation.

Both psychologists and HR professionals should embrace and facilitate constructive feedback and healthy debate by establishing protocols and methods for employees to communicate concerns and processes that are not working effectively or challenging redundancy decisions such as which employees have been selected for redundancy.

By allowing and facilitating employee voice and supporting the healthy and productive debate or conflict, the psychological safety of employees can be preserved, leading to positive benefits for the overall redundancy programme.

Announcement

Where possible, employers should aim to minimise the shock factor when announcing redundancies. This will allow for better cooperation and understanding if communicated effectively and in a timely manner. Keeping the workforce up to date on organisational issues is a key part of the ability to successfully communicate the announcement of redundancies. Research indicates that employers who surprise employees with unanticipated redundancy news, reap overwhelmingly negative responses (Cascio, 1993). Employers who share a reasonable level of financial and competitive information with employees and who demonstrate a willingness to communicate openly are more likely to establish a sense of trust and honesty, which encourages employees to cooperate (Kets De Vries & Balazs, 1997).

Timing of redundancy communication

The timing of redundancy communication can have a big impact on employees' susceptibility to accept and process the message. There are also ethical considerations associated with the timing of the announcements that could negatively impact employee morale, such as implementing redundancies on or near a major holiday season such as Christmas. Employers need to consider the practicality for employees who have holidays booked or who have higher expenditure than normal, due to the holiday season. In addition, it is harder to seek alternative employment during holiday periods, due to business closures and the lack of availability of key people in the recruitment process.

Communication

Communication is pivotal during any change programme and especially so when effective communication can help mitigate the negative impact on employee wellbeing.  Sufficient and effective communication could help prevent employees from feeling excluded, disillusioned and rumours spreading (De Meuse et al., 2004). Employers should consider the timing of the meetings, to minimise the embarrassment and distress caused. Offer employees the rest of the day off to clear their heads if they choose to do so and arrange help to manage their work priorities to facilitate this support.

Empathy, dignity and respect

All redundancy communication should be delivered with empathy, with the goal to make staff feel valued, despite the unfortunate situation. Job loss as a result of redundancy is not the fault of the employee and it is important to remind employees that it is the role they fulfil is no longer required, not the person. Research has indicated that treating people with empathy can have significant benefits not just for the employees at risk, but also for survivors, as they are positively influenced by how their colleagues are treated (Petzer, 2020). Breaking the news of redundancy needs to be handled with extreme sensitivity and congruently, employees should feel that they are treated with fairness and with genuine concern as people. Psychological safety should be promoted throughout, by encouraging employees to speak up.

Employees react with shock, tears, fear, anger and any emotion that can represent itself. It is therefore recommended to provide the necessary training and support for the 'redundancy envoys' on how to handle these challenging situations. Delivering the message of bad news with dignity and compassion can have an important influence on how it is received (Petzer, 2019).

Support for employees at risk

Many employers naively approach redundancy support as a handshake coupled with a flyer for further support, assigning the ownership to third-party providers. This is perceived as a lack of care and ownership by impacted employees that leads to feelings of rejection and isolation.

Employers can support employees at risk of redundancy with psychological aid, as well as financial support to address monetary concerns. Psychological support could include providing support through networks, counselling services and listening groups which can help employees to transition more fluidly through the redundancy change curve. Support to alleviate financial concerns could be helping employees to find alternative work, through educational routes, such as workshop offerings or enhancing financial packages to help eliminate anxiety and financial concerns.

Support offered can be tailored to the scale of the organisation, the size of the redundancy programme, the industry and most importantly the specific needs of the individuals impacted. If, for example, the demographics of the employees indicate an ageing workforce, tailor the offering of support accordingly, with retirement and pension workshops. Enhanced financial packages could offer short-term relief for employees, whereas retraining or training vouchers could put employees in a position of long-term benefit. Deciding what level of support to offer, should however where possible be tailored to individual needs and established through either individual or collective consultation. Despite various notions for support to consider, the most important element is to treat people with respect, dignity, fairness and compassion.

Repair

Evidence on the true impact of redundancies is limited, mainly due to the difficulty of engaging in research when individuals are going through a period of personal trauma. It's also the case that many employers are embarrassed about the situation. Further research on the coping techniques deployed by all impacted groups would be beneficial, for practitioners to understand what enablers could be implemented to facilitate and promote these successful coping techniques. Although a large part of redundancy implementation attracts attention during the process, more focus and literature is needed on how to repair the breached psychological contract of all key stakeholders.

• Dr Madeleine (Petzer) Stevens is the author of Strategic redundancy implementation: Re-Focus, Re-Organise and Re-Build and a Senior Lecturer in Human Resource Management at Liverpool John Moores University. For further information or support with redundancy consultation or implementation, please visit: www.madeleinestevens.com

References

Cascio, W. F. (1993). Downsizing: What do we know? What have we learned? Academy of Management Perspectives, 7, 95-104.

Clark, T.R., (2020). The 4 stages of psychological safety: Defining the path to inclusion and innovation. Berrett-Koehler Publishers.

De Meuse, K. P., Bergmann, T. J., Vanderheiden, P. A. & Roraff, C. E. (2004). New evidence regarding organizational downsizing and a firm's financial performance: A long-term analysis. Journal of managerial issues, 155-177.

DelCampo, R.G. (2007). "Understanding the psychological contract: a direction for the future", Management Research News, Vol. 30 No. 6, pp. 432-440. 

Kets De Vries, M. F. & Balazs, K. (1997). The downside of downsizing. Human relations, 50, 11-50.

Stevens, M. (2022) Strategic Redundancy Implementation: Re-Focus, Re-Organise and Re-Build, 1st Edition; Routledge.  

ONS. (2022). ILO redundancy rate [Online]. Office of National Statistics: ONS

Petzer, M. (2020). How to limit 'the sinking ship syndrome' during redundancies. CIPD LAB: 18 December 2020.

Petzer, M. (2019). Developing effective interventions for mitigating the pscyhological impact experienced by redundancy envoys during redundancy situations. PhD, Solent University.