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Working the Future blog: our latest insights and future of work sensemaking

COMPARE AND CONTRAST: HOW (NOT) TO MANAGE REDUNDANCIES

2022-11-08 16:34

Cathryn Barnard

Blog, FUTURE OF WORK, FUTURE OF WORK CONSULTING, EMPLOYER BRAND, REDUNDANCY, BOOMERANG WORKER, ORGANISATIONAL AGILITY, STRATEGIC FORESIGHT,

COMPARE AND CONTRAST: HOW (NOT) TO MANAGE REDUNDANCIES

This is a tale of two layoffs.Recently, news of imminent widespread redundancies has begun to infiltrate the press...

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This is a tale of two layoffs.

 

In the past fortnight, news of imminent widespread redundancies has begun to infiltrate the press. Or at least the kind of press we pay attention to, given our interest in the future of work.

 

While of course it’s easy to become depressed by click-bait headlines, when we analyse emergent trends for potential implications, we’re continuously searching for the opportunity beneath. Effectively interpreting what things might mean moving forward is key to successful strategic foresight work.

 

Last month, I wrote about managing staff redundancy in the age of agile working. There’s a clear need to re-design approaches to redundancy, not least when the labour market is now so very different. Socio-cultural attitudes have shifted seismically in the past decade, and those employers who don’t factor in what modern workers want and expect will inevitably experience a backlash if redundancy is managed inelegantly. Today, employee experience is a critical component of engagement and high-performance. This extends to how people are perceived to be offboarded when tough times hit.

 

With this in mind, were intrigued to contrast two very different layoffs from within the technology sector.

 

On November 3rd, payment processing platform Stripe announced [1] its decision to reduce its global workforce by 7%. In a heartfelt post on the Stripe website, co-CEO Patrick Collison both shared details of the layoffs, and more importantly, described why he and his brother John took full responsibility for the job losses. He attributed them to “two very consequential mistakes” that they’d made – growing too fast and over-estimation of the near-term opportunity for e-commerce.

 

The post detailed the measures Stripe would take to go above and beyond any statutory redundancy obligations, ensuring each departing employee would be furnished with as much support as possible.

 

To my mind, Collison came across as authentic and a great example of what ‘good’ looks like when it comes to layoffs. It reminded me very much of the open note AirBnB founder Brian Cesky wrote in early 2020 [2], when the pandemic forced his business to dramatically adapt to prolonged lockdowns and the ensuing turmoil within the travel and tourism sector.

 

As both the Collison and Chesky examples show, demonstrating grace and humility when the chips are down goes a long way towards protecting a brand’s reputation and building wider empathy and rapport within the business community.

 

Let’s compare this to the way Twitter handled its announcement of mass redundancy in the same week.

 

First, rumours were swirling online long before any announcements were actually made. The acquisition of Twitter this summer by marmite billionare Elon Musk must surely have been one of the longest drawn out sagas of the technology industry for some time.

 

As soon as the sale was finalised, Twitter’s senior executive team were reported to have been escorted from the building. Musk doesn’t have a great reputation as a boss – while SpaceX and Tesla are clearly exciting brands to work for, a recent BBC documentary [3] contained interview excerpts from former employees who spoke about how relentless, demanding and unforgiving he is. Doing ‘the right thing’ clearly comes second place to extracting all possible value from his resources. Which, it seems to me, is all his employees are.

 

No real surprise then, that as details of Twitter’s redundancies emerged, there was a lack of empathy about them.

 

On November 3rd, Reuters broke the story [4] that up to half the global Twitter workforce were at risk of redundancy.  Without any coherent internal communication strategy, staff were apparently left to revert to message boards and indeed, tweets from their new boss, to try and decode their immediate future. On november 4th, Sky News reported [5] that all Twitter offices had been temporarily closed and that staff had been requested not to communicate with anyone externally. Internal emails would confirm who was staying and who would lose their jobs.

 

Of course, I only know what I’ve read in the news, but at face value, Twitter’s entire approach to redundancy sounds cold and callous. What a stark contrast.

 

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The months ahead are likely to be incredibly challenging for business owners across the board. But as I wrote last time, we urgently need to upgrade our thinking about how we approach staff redundancies. While they’re an inevitable side-effect of recession, there are good reasons to manage them in a way that optimises dignity and respect for those involved. Here are a few:

 

1)    Employer brand reputation is everything

In the digital age, your employer ‘brand’ is everything. Whether you’ve taken time to work on your brand or not, in the internet goldfish bowl, people are watching what you do and how you behave when the going gets tough. If you don’t do the right thing by the people you let go, you can be fairly sure it’ll only be a matter of time before how you dealt with redundancies gets documented online. The internet has the unfortunate ability to permanently mark your organisational reputation. As and when you return to business growth and need to recruit, don’t let how you handled this process impact your ability to hire next time around.

 

2)    The labour market is shrinking

On the topic of staffing, be aware that the number of people of working age is slowly declining. Here in the UK, we’ve seen more than 700,000 people become ‘economically inactive’ in the past year or so. [6] This creates additional pressure for a labour market already experiencing skills shortages.

 

Bad news always travels faster than good news. Any perceived lack of compassion in the way your organisation handles redundancy has the potential to deter people from considering any future employment opportunities you may have.

 

Thoughtfulness, care and consideration cost little – it’s worth getting your approach right now, to avoid unnecessary pain in the future.

 

3)    Social activism is on the rise

Continuing the theme of brand reputation, don’t underestimate the potential for social activism to damage your business. In the past few years, we’ve all seen the chaos caused to organisations by disgruntled former employees who take to social media to publicly denounce the behaviour of their former employers.

 

Brew Dog, Apple, Amazon… each has had to deal with negative publicity as ‘whistle-blowers’ have called out perceived unethical behaviour. In the always-on, digital realm, it’s never been easier for social activists to spotlight a lack of ethics or integrity. With trust under fire like never before, transparency and ethics are now critical cornerstones of business sustainability.

 

4)    The future is anything but certain

The multiple forces driving change at work are complex and unpredictable. While we can make comparisons with previous recessions, this one will be entirely different for many reasons.

 

We now live in a hyper-connected, globalised world where seemingly tiny events far away can ricochet through markets at lightning speed, causing fallout no one could have foreseen. Geopolitical tensions are rising and instability is now embedded. The climate emergency is forcing us to reconsider how we define value. We can no longer rely on traditional approaches to redundancy to work for us.

 

At some stage after this round of economic turmoil, we’ll want to rehire. There may be people we regret having to let go, who we know could deliver value for us in the future, with all the tacit organisational knowledge they possess. We’d be foolish to miss out on the opportunity of re-engaging with ‘boomerang workers’.

 

We’ll also likely need to access the ‘alternative workforce’, to optimise organisational agility. There’s a good chance rising swathes of this portion of the labour market will have experienced redundancy at some stage in their careers. They’ll likely be hyper-critical of and sensitive to any perceived injustices surrounding layoffs. Don’t let your mismanagement of redundancy now tarnish how you’re perceived in the future by the people you need to help you deliver business results.

 

5)    Survivor guilt impacts engagement

 Finally, it’s worth pointing out the impact of redundancy on those left behind. Not only are those who stay likely to suffer enhanced anxiety for their own job security, but they’re also likely to have many questions about why they weren’t impacted. Survivor guilt has a direct impact on staff engagement, motivation and performance, as outlined in a 2020 article by Personnel Today [6].

 

At a time when business is so uncertain, do you really need the added pressure of underperforming and anxious team-mates?

 

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Of course, only time will tell what impact Musk’s approach to redundancy will have on Twitter as a viable commercial enterprise. But, given the alternative option, as illustrated by Stripe, and knowing now what I’ve outlined above, which will you go for?

 

It goes without saying that I truly hope none of you reading this will have to consider making staff redundancies. But the whole point of strategic foresight is to consider alternative future possibilities and to have contingency plans in place. Such plans underpin organisational agility and longer-term survivability.

 

Even as analysts of the future of work, unforeseen events continue to surprise us. Don’t let a lack of foresight and planning ruin all your years of hard work.

 

Looking to dive deeper into some of the areas covered in this blog post? Contact us today for a no-obligation chat about how you can better prepare your organisation for the future of work.

 

References

1. https://stripe.com/en-gb/newsroom/news/ceo-patrick-collisons-email-to-stripe-employees

2. https://news.airbnb.com/a-message-from-co-founder-and-ceo-brian-chesky/

3. https://www.bbc.co.uk/iplayer/episodes/m001d1n9/the-elon-musk-show

4. https://www.reuters.com/technology/chaos-confusion-reign-ahead-twitter-layoffs-2022-11-03/

5. https://news.sky.com/story/elon-musk-to-start-twitter-layoffs-within-hours-and-offices-are-closed-12737849

6. https://www.health.org.uk/news-and-comment/charts-and-infographics/is-poor-health-driving-a-rise-in-economic-inactivity

7. https://www.personneltoday.com/hr/survivors-guilt-supporting-staff-who-have-avoided-redundancy/

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