Important Elements in a Responsible and Compassionate Retrenchment

Adrian Choo, CEO and Founder of Career Agility International shares how employers should approach the prospect of a retrenchment exercise.

09 Sep 2020 Interviews Retrenchment Trending Best practices

Mr Adrian Choo, CEO/Founder, Career Agility International

Q: When considering whether to carry out a retrenchment exercise, what are the important elements for employers to consider? 

Employers need to take a holistic view of a retrenchment exercise. At times, they may approach this option without realising the full impact that retrenchment may have on the business. This would include business implications such as affecting employer reputation, talent flight and even the possible loss of business as the workforce size is reduced. As a first step we encourage employers to try and avoid retrenchment by redeploying staff in other positions within the company, or better yet, stay ahead of the curve by retraining and upskilling employees early. 

  • Retraining: When conducting training and skills upgrading, employers can utilise training support schemes under the SkillsFuture movement, redeployment programmes under the Adapt & Grow initiative and other government grants to stay ahead of the curve. 
  • Redeployment: When considering redeployment or rotation of staff, employers will need to review how current roles in the organisation can be restructured, enriched or enlarged to fit the changing needs of the business.

QIn these challenging times, as some employers face the prospect of retrenching staff, how can this be carried out responsibly and with compassion? 

It is not very expensive to be human. That is, to treat employees with kindness and empathy when a retrenchment exercise is carried out. The ‘golden rule’ is to do to others what you would have them do to you. If an employer would not want to be told abruptly that they have lost their job as they enter the office or be escorted out of the office by security guards, then very simply, they should ensure their staff do not experience these situations as well. 

Employers would need to focus on getting the basics right. Two key steps to achieving this are to: 

  • Adhere to the Tripartite Advisory on  Managing Excess Manpower and Responsible Retrenchment.
  • Plan ahead to ensure that as many jobs are saved as possible, and that the retrenchment is carried out in a respectful and sensitive manner. 

Planning for a retrenchment exercise can take from a month to more than a year in advance, depending on the number of affected employees. In one positive example, a company that was closing a factory informed the employees 18 months in advance of the shutdown date and shared the retrenchment benefits as well as other support that would be provided. This was only possible through careful planning. 

Q: What are some of the common pitfalls on retrenchment that employers need to watch out for?
There is a strong business case to be made for compassionate retrenchment. One of the biggest challenges is when business owners believe they can cut corners to save money in the retrenchment process. However, this can have unexpected negative consequences for the company. If retained staff observe that retrenched employees are poorly treated, overall morale will be low and some may even opt to resign when the business picks up. If the employer’s reputation in the market is affected, clients may also think twice about being associated with your business. 

One example is of an overseas company which retrenched staff during a recession. At the start of the workday, employees were informed in the office lobby that if their company-issued access cards did not work, they had been retrenched. The company also delayed paying out bonuses that year, and retrenched staff instead. However, this approach affected the company in the long run, and they were faced with an exodus of employees once the market had recovered. Top talent were also reluctant to join the company because they felt the company could not be trusted. Employers should remember that the market has a memory – treating affected employees well now,, will help the business in the long run. 

Q: As key stakeholders in the retrenchment process, what steps should HR and supervisors take to prepare for it? 

Once it has been decided that retrenchment is necessary, HR should drive this process to ensure a dignified exit for affected employees. In addition to ensuring a fair retrenchment package and that legal requirements are met, HR should also provide the line manager with support for the notification to employees, both prior to and during the meeting.

One practical step is to role play the notification scenario with the line manager, ahead of time. This is especially critical for managers who have not previously retrenched staff. This exercise will help them visualise the process and also iron out any potential problems in the communication process. 

In some cases, employers may even opt to engage a consultant to train HR and line managers on the exit process. This investment in a one to 2-hour training session will ensure that the message is communicated well, in a respectful and compassionate manner. 

Q: Communication is a crucial factor in a retrenchment exercise. How can companies communicate well in this situation? 

There are two key levels of communications that need to be well-executed. First, the business owner or head of the organisation needs to be at the forefront, communicating a genuine and heartfelt message to affected employees. At this juncture, employers should also share the steps taken to preserve jobs for employees, such as earlier cost-savings measures. 

In one instance I have seen, a CEO made an honest announcement to affected employees, admitting their own disappointment that the retrenchment had to be done, and sharing specific steps the company was taking to support employees in finding alternative employment. The retrenched staff were appreciative of the planning and thought that went into the retrenchment and expressed that they felt they were part of a team. 

The next level of communication, which is equally important, is from line managers to each individual employee as they make the retrenchment notification. This conversation needs to be handled with sensitivity so that the message is not misconstrued. 

One common mistake that line managers make is trying to inject humour into the conversation or have extended small talk to lessen the tension. Instead, they should keep the conversation clear and to the point; acknowledge the contribution of the staff and briefly explain why the retrenchment is needed and repeat the Management’s earlier message of the support available to them. Affected employees will appreciate a dignified exit process, even if the conversation is a brief one. 

Q: In the current economy, career agility seems more important than ever for working individuals. Do you have any advice for employees?

Agility is crucial for working individuals to anticipate and adapt to a changing economy, such as the one we are currently experiencing. Companies can provide their staff with career agility training to ensure that they have relevant skill sets that are aligned with the market. Consider the banking industry for example. With the increasing automation in this sector, employers will need to consider how to train and equip their staff to pivot to new roles to stay relevant.

Ultimately, increasing one’s agility may require a mindset shift, and employees do need to take ownership of this process for themselves. These are some useful initial questions for working individuals to ask themselves: 

  • What is my back-up plan, should my current role be made redundant? 
  • How can I re-skill myself to stay relevant in the current economy?
  • What are other industries or roles that I can envision myself shifting into?

We advise individuals to invest in themselves and make time to learn new skills. Tap on available schemes such as SkillsFuture Credits to prepare yourself. When the economy recovers, you will be well-positioned to hop on the wave and ride it. 

A retrenchment exercise is never a pleasant situation for both the employer and the employee. However, when it is required for business continuity, business owners must ensure that affected employees are fairly treated and supported in their re-employment efforts. With careful planning and good communication, companies can provide a compassionate exit for the individual.