OrgHealth - Downsizing and redundancy

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Downsizing and redundancy

Case Study

In an organisation employing about 2000 staff in various capacities from cleaners to consultants there emerged a bright idea to transfer some senior consultants from various departments into a ‘new’ department. The purpose behind this was to bring together some consultants who had similar skills and experience and to create a ‘super’ department, one that would be very attractive to clients.

Unfortunately, the company believed that clients would know of the new department by a process of osmosis rather than by the company telling clients of the ‘new’ department and its unique attributes. This caused immense frustration to the consultants who spent much of their time telling their manager that a good way of ‘selling’ the services was to tell clients that the services exist.

Inevitably, top management became interested in the lack of income from the ‘new’ department, and started to demand routine performance information from their accountants. As matters became worse, with costs continuing without a balancing income, top management made some decisions that resulted in the manager making three of the seven consultants redundant.

The process of making the consultants redundant appeared to follow a unique company process – ignoring the legislation and other guidance – and keeping the process secret except for those directly involved. One by one the Consultants faced their manager, who was accompanied by a particularly bleak looking accountant, and given the news. No appeal - simply a walk to the back door and away.

Naturally, those affected by this process started to take legal action. As none of the proper processes were adopted it was easy pickings for the lawyers, whilst the individuals affected became disaffected with the company. Money exchanged hands, and all three established new consultancies in direct competition with their original employer, despite the gagging clauses, and all are reporting doing well with several clients transferring their contracts to the three individuals of high reputation.