HRM CHRONICLES
Making Redundancy Doable
By Samson Osero
Septla Limited ( SL ) is a mediumsized indigenous Kenyan company that manufactures drinking straws and toothpicks under Septla brand name . With a workforce of 200 employees , it ’ s located in the sprawling Nairobi ' s Industrial Area . Despite the recent Covid-19 instigated economic stimulus package , the company ' s financial performance has been deteriorating . For the last three months , employees have not been paid their salaries ; suppliers are up in arms on outstanding debts ; bankers are demanding for rescheduling of loan repayments and statutory obligations have not been met . These problems have forced management to plan declaring 30 percent of the workforce redundant . Since the company does not have a full-fledged HR function , it has hired Exponential HR Services ( EHRS ) to offer advice on carrying out the redundancy exercise .
Effective Communication : During the first meeting with SL managers , Peter Saiwa , Managing Consultant of EHRS , told them : " Redundancy can be done with a human face . The employees you are sending home have served you well until the pandemic disrupted business . The least you can do is to arrange for their exit with dignity and in accordance with the labor laws ." He further said that the CEO , Linus Chetwode , needs to effectively communicate about the impending redundancy to all employees at a company-wide meeting . Such communication will dispel any rumors that could be circulating on the matter . It ’ s important to identify and share factors that have necessitated redundancy . Employees would want to hear steps the company shall undertake to ensure their smooth transition into the outside world . " When talking to employees ," Peter added : " They will be keen to know the criteria for selecting those leaving ; payable terminal dues and any other assistance the company would offer ." Management needs ready answers on these issues for employees to appreciate that fairness and transparency will carry the day .
Termination Criteria : As Peter continued to address the managers , most of them looked worried but unwilling to express their concerns . At last one of them asked : " Which employees will be shown the door first ?" Peter replied : " After managers have facilitated the exit of staff working under them , they will be the next ones on the line . The board will decide their cases ."
An ominous silence gripped the room with managers looking at each other in obvious anxiety . Peter broke the silence by saying : " The first batch of staff shall consist of employees who want to leave on a Voluntary Early Retirement Program ( VERP ). This self-selection program will attract those who do not want to wait for exit orders ." To encourage employees to apply for the program , SL can offer benefits such as a one off payment popularly christened " golden handshake ." Peter cautioned the managers : " If employees with critical skills apply for VERP , you will be required to persuade them to remain ." Redundancy does not mean allowing all employees to leave like in business closure . It is releasing few employees to remain with those that can keep an organization afloat .
Managers became attentive as some pondered over the possible benefits of VERP . Peter continued : " First things first . In case VERP does not generate the target number of employees who must leave , SL can embark on forced separation ." Under this separation , the selection criteria can include : an age limit ( e . g . employees above 50 years ); the first to join SL employment to leave first ; the last to be employed to exit first ; work performance and working experience coupled with qualifications . Managers began imagining who among their staff will fall into each category . Peter interrupted their thoughts when he said : " There will be need for a Staff Rationalization Committee composed of senior managers to vet the list of employees submitted by managers . The vetting will limit possibilities of favoritism or revenge by uncouth managers ."
Financial Implications : Linus who had all along been copiously jotting down notes asked : " Peter , what will SL be required to pay as terminal dues to leaving employees ?" On remarking that finance is a key issue in redundancy , Peter said : " The separation package can include but not be limited to : an appreciation pay akin to golden handshake ; severance pay at a rate of not less than fifteen days ’ pay for each completed year of service ; payment for accrued leave days and not less than one month ’ s notice or one month ’ s salary in lieu of notice ." Some managers smiled on hearing the package but they did not comment on its adequacy . One of the informed managers commented : " Peter , what you ’ ve listed are the minimum legal requirements . Can SL give a better offer to these employees who have loyally worked to put the company on the map of Kenya ?" Linus intervened saying : " The board is the only one that can decide on payments over and above the minimum legal requirements ." Knowing that the company was struggling financially , managers did not want to guess the board ' s decision .
Special Considerations : Looking at the clock on the board room wall , Linus asked the managers : " Does anyone of you have any questions for Peter ?" One manager , who looked more elderly than others , asked : " Are there some employees who can be spared in a redundancy exercise ?" The Constitution and HR policies in some organizations have excluded persons with disabilities ; staff who hail from marginalized counties and employees with special needs or conditions . Linus , who was getting ready to close the meeting said : " SL board will guide us on special considerations so that we are not flooded with discriminatory ones . It has been a long meeting but with this mouthful information our next task will be to implement the redundancy exercise . Long live SL beyond the redundancy turbulence ."
Samson Osero is an Independent Human Resource Development Consultant and Author of the book ‘ Transition Into Retirement ’. You can commune with him on this or related matters via email at : Samsonosero @ gmail . com .
42 MAL40 / 21 ISSUE