Voluntary redundancies could be an unsatisfactory way of making public-sector savings
Bev White, July 22, 2010
Local government currently finds itself in a difficult quandary. On the one hand, it's being pressurised to cut costs to help reduce the current public deficit, which will invariably result in job cuts. On the other, it has a statutory duty to avoid compulsory redundancies, and any attempt to implement such measures is likely to be faced with huge industrial unrest that will undoubtedly impact on front line services. It's a catch 22 situation, and you would be forgiven for thinking that there is no clear way out of the current situation.
Voluntary redundancy is, of course, a plausible option and one that many councils will be looking to implement. However, it’s important to consider whether this measure is capable of producing the required savings. Think about the long-serving public-sector employee who has been with the organisation for over 15 years – they will receive a generous redundancy package and the current climate is hardly favourable for finding new employment; given these factors, who would put themselves forward?
Controversial plans by the Government to limit the redundancy terms offered to some civil servants will possibly encourage some to consider voluntary redundancy. However, with unions threatening industrial action, it could be some time before these changes are adopted, if they are at all. The question therefore remains: in the current climate and with voluntary redundancy as the only clear option, how can local government make the necessary cost savings?
Offering voluntary redundancy in itself may sound like a good compromise, but it certainly isn’t a risk-free option. It needs to be carefully managed if local government is to avoid an exodus of its key talent. The very individuals who will have a vital role to play in executing the new strategy and vision are also the ones who are most confident about their market worth and skills; unless clear criteria is communicated early on in the process they will be the first to step forward for voluntary redundancy in full knowledge that they will be quickly re-absorbed into the job market.
But what of those individuals whose futures are not aligned with the future strategy? How can local government make the required cut backs without implementing compulsory redundancy? The Government has already identified that enhancing voluntary severance packages can make a significant difference, and this is a positive move. There will be many people who are keen to leave for a variety of reasons, and, if handled well, this can minimise the disruption to front-line services that are so vital to our society. Voluntary severance or progressive redeployment initiatives can speed up the change process, lessen the number of mandatory redundancies and save money by reducing the difficult and lengthy selection processes that usually form part of any downsizing activity.
While voluntary severance packages may provide a short-term financial buffer, it may not be enough to encourage some people to put their hands up. However, offering individuals support with their careers early on in the process can actually help local authorities achieve a number of their objectives, while treating employees who have been loyal with the respect and dignity they deserve. Tailored support helps individuals to better understand their skills, provides them with the confidence to look at where these are best aligned and the environment best suited to allow them to flourish. This approach has been proven to help individuals come to a decision more quickly about their future career, resulting in significant savings for the council and mitigating against industrial unrest.
Unable to make compulsory redundancies, if voluntary redundancy is to produce the savings required, we must look beyond the financial packages offered and at how we support individuals to transition quickly out of their current roles and into roles for which their skillset is best suited. Despite the belief that the private sector will be able to take on ex-public sector workers, the reality is that the private sector is still suffering; and if there are recruitment vacancies, they will be highly competitive and employers will have the cream of the crop to choose from. Therefore, public-sector workers need to understand the transferability of their skills and prepare for the cultural differences – they will need to adapt too or they run the risk of not getting a look in. The ramifications of this will be felt not just personally, impacting on society and long term unemployment, but also economically – risking a double-dip recession.
Bev White, MD of HR consulting at Penna