What is Redundancy?


In layman’s terms, ‘redundancy’ refers to the state of not being useful. However, in the corporate domain, redundancies are the process of removing employees who are technically unnecessary for the company.


Mostly, redundancy is considered when the company is going through a rough patch financially. As a result, redundancies can be either ‘forced’ or ‘voluntary’.


The voluntary redundancies are accompanied by incentives, which provide the employees with an additional reason to quit the company. Some companies might even provide higher severance packages as an added incentive.


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1. What is Redundancy in the Workplace?


Redundancy in the workplace is a sensitive issue since it deals with the livelihood of the employees of an organization. It becomes a controversial issue in case of forced redundancies as companies usually follow the ‘LIFO’ or ‘Last In, First Out’ practice of removing staff.


It also harms the company’s employer brand as the employees who are made redundant would mostly be youngsters who take a hit on their careers simply because the company performing badly financially.


To soften the negative effect of redundancy, companies generally have lengthy consultations with all the associated stakeholders to avoid the redundancy scenario. Such consultations are mandated by law in many countries in cases where many people could potentially lose their jobs within an organization as they are made redundant.


2. Potential Causes for Redundancy in the Workplace


There are several common causes of redundancy in the workplace, such as:


➔ Recession


Economic recessions result in major losses for companies. If the losses start mounting, companies might have to let go of staff despite their stellar performances leading to redundancy.


➔ Funding Issues


If there is a lack of funds for a certain department, companies might shut it down or let go of employees of that department, once again, leading to redundancy.


➔ Relocation


Relocating is another major cause of redundancy since not every employee would be ready to relocate with the company.


➔ Downsizing


Companies may downsize due to various factors and letting go of the staff working in certain sections may be deemed necessary for the company’s stability.


3. Assessing Potentially Redundant Roles


You can follow the steps provided below to assess potentially redundant roles in your company:


➔ Identify Essential Roles


To minimise redundancy, you should identify the essential roles within your organization which ensure its sustainability. These roles should never be considered for redundancy since they are key to the daily functioning of the company.


➔ Review Key Staff


Another essential factor in reducing redundancy is to review the key personnel who are performing well and check whether they can take on additional responsibilities. For example, in the marketing department, there could be an individual in the role of content writer who has prior experience with SEO, and hence, they could perform the role easily.


➔ Classify the Least-performing Roles


Similarly, you can also check for the underperformers and determine their relevancy considering the company’s financial stability. For example, if your 5-people accounting team can undertake their work with the help of 3 people, then 2 of those roles can be made redundant.


4. Difference between Redundancy, Layoffs, and Downsizing


While the terms redundancy, layoffs, and downsizing are used interchangeably in common usage, it is essential to distinguish between these terms. Since we have already discussed redundancy, let us understand what is ‘layoff’ and ‘downsizing’ and the difference between them.


Layoff Downsizing
Layoffs happen when the company cannot afford to employ the staff and hence, their employment with the company is either suspended temporarily or terminated permanently. Usually, redundancies can be permanent, while layoffs can be either permanent or temporary. Downsizing refers to the reduction of resources within the company. It could happen due to either financial or other reasons such as relocation or merger. While companies are technically downsizing concerning employees with redundancies, downsizing could also include letting go of offices and other non-human resources.


More HR Terms


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