AHRI’s latest Quarterly Australian Work Outlook report notes that “organisations planning redundancies in the September quarter has risen to 27%, which is the second highest figure recorded in any of our six surveys to date.”. This means that companies are looking to change their status quo.
This could be for a range of reasons, such as financial strain, technological advancements or as AHRI have stated in their report “changes to the composition of the workforce and the changing skills requirements within organisations”.
Whatever the reason, preparing to downsize a business is a difficult and emotional process, that requires careful planning, communication and execution to minimise negative impacts on both the business and its employees.
Commonly, executives and employees will look to HR for help in navigating its many challenges. Some common themes that may arise, include:
- Ensuring that the workforce plan is accurate and factors in all relevant information to support this critical decision making
- Having a legal and sound approach
- Supporting the impacted employees, treating them fairly and with dignity
- Communication plans for inside and outside the organisation
- Managing the morale and retention of managers and employees who stay
- Brand integrity
- IT security, including managing accounts and permissions
HR professionals can play an influential role in ensuring downsizing is legally compliant and brings an element of compassion to the process.
Key points to consider when preparing a downsizing strategy
- Define why downsizing is necessary. For example, downturn in economic conditions, improved efficiencies, technology or a need to improve profits.
- Spend time undertaking an organisational review to determine where efficiencies can be made. This can include reduction in expenditure, hiring freezes and role re-alignment. This analysis will also be useful in ensuring roles are fit for purpose. This review may well identify roles that are superfluous to business needs. It is then that developing a robust downsizing plan is critical.
- Of course, expert legal advice should be sought at the outset to ensure compliance with employment laws and other legal requirements.
- The plan should include a clear communication strategy. This should be a clear and transparent communication that informs employees as early as possible and outlines the reasoning for the downsizing. The benefits of clear communication are to help prevent speculation, protect employee branding and help to retain key employees whose roles are not impacted. A communication plan should also be prepared for both the internal and external stakeholders.
- Implementation of a downsizing plan may include phasing. This allows for adjustments and can minimise disruptions.
- Critical to the success of any downsizing plan is the offer of career transition services. An effective outplacement program not only supports impacted employees but also recognises the impacts felt by those left behind after a business change or those involved in shaping a new organisational structure. Additionally, the service plays an important role in strengthening the employer brand, mitigates risk and sends a message to customers and employees that the organisation cares and is invested in what happens to its people.
Post Downsizing Plan
Once the restructuring plan has been executed, a post downsizing review should be undertaken to review the impact on the business performance. Another important step is to review the culture of the business and continue to focus on building a positive workplace culture and ensuring the remaining employees are engaged and aligned with the new direction.
Downsizing is a complex and emotionally challenging process, but careful planning, communication, and support can help the business navigate through it while maintaining a focus on long-term success.
If you’d like to explore how deliberatepractice’s service can support you and your organisation through organisational restructuring, please feel free to contact our Careers team on 1300 335 423 or careers@deliberatepractice.com.au
