Understanding Redundancy in Organizations: Study Insights and Employee Selection Criteria

Corrected Text: Dear All,

According to a recent study by TimesJobs.com, while most organizations admitted that they had downsized their employee strength by less than 5 percent in the past 12 months, over 60 percent of these organizations also added that they would not be repeating this exercise in the near future. While it is a fact that no organization would like to lay off its employees, there are some circumstances under which this has to be done. For 38 percent of employers who anticipate downsizing the workforce in the coming 12 months, the reasons are varied.

Sectoral differences…

For redundancy:

Over 85 percent of the surveyed organizations in the IT/Telecom and project/infrastructure sectors cited the need to reduce costs due to the current economic slowdown as the key reason to execute redundancy. For close to 90 percent of organizations in the BPO/ITeS and manufacturing sectors, restructuring of existing business has been the biggest reason for downsizing their workforce.

How employees are selected for redundancy:

Overall, job performance/efficiency was cited as the key criterion by 58 percent of the organizations to select employees for redundancy. Close to 70 percent of the organizations in the IT/Telecom sector take into account job performance/efficiency while selecting employees for redundancy. Length of service decides the group of employees that need to be made redundant in the BPO/ITeS sector.

Level-based degree of redundancy:

While almost all key industries said that redundancy was maximum at the mid-level, the percentage was highest for participating organizations in the IT/Telecom and BFSI sectors (approximately 90%). Representative organizations from the manufacturing and industrial sectors revealed that almost an equal proportion of employees have been laid off from their mid-level and senior-level positions.

Gearing up…

Experts suggest that there are a few warning signs that organizations must look out for to prepare for an impending redundancy phase. It includes overall economic turmoil, change in top management, mergers and acquisitions, competition facing redundancy, and other such indications. They recommend that organizations should act swiftly and aptly as soon as they sense redundancy. While nothing can be done to avoid it completely, one can have strategies to pacify the situation and control the degree of damage.

Lending help…

It should be an organization's prerogative to offer assistance to those employees who have been made redundant, believe industry experts. Though any sort of help will not be able to compensate for the job loss, it does make a huge difference to the attitude and outlook of the redundant employee. Still, offering support to redundant employees is at a nascent stage in India. According to the TimesJobs.com survey, while 35 percent of the surveyed employers said they do not offer any kind of support to the laid-off employees, 29 percent said they do it by way of offering redundancy payoffs in excess of statutory minimum. Another 26 percent stated they put forward their support to redundant employees by way of offering counseling.

Please see the full report attached.

Courtesy: Timesjobs

In the context of redundancy in organizations, it is crucial for HR departments and management to understand the reasons behind downsizing, the criteria for selecting employees for redundancy, and the level-based distribution of redundancy. To address the situation effectively, organizations should proactively look out for warning signs, offer support to redundant employees, and have strategies in place to mitigate the impact of redundancy.

1. Reasons for Redundancy:
- Organizations often resort to downsizing due to reasons such as the need to reduce costs in times of economic slowdown or restructuring of existing business operations.
- Understanding the specific reasons for redundancy in different sectors can help tailor strategies to address the challenges effectively.

2. Selection Criteria:
- Job performance and efficiency are commonly cited criteria for selecting employees for redundancy.
- Length of service is also a significant factor in determining which employees need to be made redundant in certain sectors.

3. Level-Based Redundancy:
- Mid-level positions often bear the brunt of redundancy across industries.
- It is essential to analyze the level-based distribution of redundancy to ensure a fair and strategic downsizing process.

4. Preparing for Redundancy:
- Organizations should watch out for warning signs like economic turmoil, management changes, or mergers and acquisitions to prepare for an impending redundancy phase.
- Acting swiftly and having strategies in place can help organizations navigate through redundancy more effectively.

5. Supporting Redundant Employees:
- Offering assistance to redundant employees is crucial for maintaining morale and mitigating the impact of job loss.
- Providing support through redundancy payoffs, counseling, or other means can make a significant difference in how employees perceive the situation.

By understanding the nuances of redundancy, organizations can navigate through challenging times with empathy, strategic planning, and a focus on supporting their employees through transitions.