Poor workforce planning behind public sector redundancies and rehires, experts say
7 April 2014
Public sector employers who “cut through” staff numbers in response to financial pressures before rehiring them must improve their workforce planning to avoid unnecessary payouts and pain, experts say.
Mon, 7 Apr 2014 | Sam Sachdeva
Public sector employers who “cut through” staff numbers in response to financial pressures before rehiring them must improve their workforce planning to avoid unnecessary payouts and pain, experts say.
The NHS recently said it had re-employed nearly 4,000 staff it had made redundant in the past four years, leading to widespread criticism.
While the government has announced plans to increase restrictions on redundancy payments for NHS staff who are subsequently re-employed, the controversy is just part of a broader problem relating to how public sector employers plan for workforce changes.
Dr Zofia Bajorek, a researcher at the Work Foundation's Centre for Workplace Effectiveness, tells Recruiter the "politically sensitive and economically expensive" nature of the issue makes it difficult to obtain statistics from public sector employers.
She adds, however, that the NHS is far from alone, with local councils, police and fire stations just some of the public employers who have often had to bring back redundant staff.
Bajorek believes poor management and a lack of workforce planning are often to blame for rehiring, with employers failing to consider the longer-term implications of staff cuts.
"If you look at the reasons why they are made redundant, they often say it's a cost-cutting exercise as a result of the economic climate… but management need to recognise that, as the economy recovers and productivity increases, that they'll need these staff," she says.
Bajorek says employers should seek to avoid rehiring redundant staff due to the "traumatic" psychological effect of the redundancy process, as well as its possible effects on the morale of staff who had remained at the organisation.
Instead, they should focus on identifying employees' transferable skills and how they could be used in a different part of the business, while also ensuring they have a solid business plan to avoid rash decisions and justify any necessary redundancies.
Bajorek says some employers could consider using a flexible-firm model, with a "core" of permanent staff to manage key services and a team of flexible support staff that could be increased or decreased as necessary; controversial zero-hours contracts are also an option to increase flexibility.
Some employers in the public sector are taking greater measures than others to avoid the pain of redundancies and rehires.
Dean Shoesmith, human resources director for the London boroughs of Sutton and Merton, tells Recruiter many local authorities have introduced rules to stop staff from being re-employed for at least a year after they had accept a redundancy package, and even then only in "exceptional circumstances".
Rather than simply making staff redundant, which comes at a cost to both employer and employee, the councils work with other local authorities in London to see if there are any positions that the employee could fill.
"Because of the austerity measures that [public sector employers] often face, we at least need to be maximising opportunities to have staff re-employed elsewhere.”
Shoesmith acknowledges that not all public sector employers follow this best practice, with short-term budget targets taking precedence over long-term workforce development and planning.
"If you've got very hard cuts, very deep cuts to be delivered in a short period of time, that sometimes leads to a more reactive response than a planned response,” he says.
“We refer to it as a salami-slicing approach to budget reduction — you just cut through without doing it in a planned, structured, business-critical way.
“It's not necessarily good or wise, but sometimes these measures are taken very quickly."
Shoesmith says the up-and-down nature of staff budgets makes life difficult for HR teams, and can lead to different recruitment decisions being made.
"It can affect the nature of the workforce. We may employ more temporary or agency staff; it does make people averse to permanent recruitment as it doesn't make sense to hire them in and then have to make them redundant."
Shoesmith says employers in the public sector have a duty to treat redundancies as a last resort, instead ensuring there are clear strategies and budget plans in place to avoid drastic measures that could later be regretted.
"There's a wider skills and competencies issue: it's incumbent on any employer, particularly public sector employers, to focus on redevelopment and reskilling and retraining rather simply making redundancies."
A spokesman for NHS Employers, which represents employers in the NHS, tells Recruiter that, while restructuring can often result in difficult decisions, the employers are accustomed to dealing with the challenges that the process brings.
"The impact of any change on staffing is thoroughly assessed, with redundancy considered as a last resort and never as a perk."
The spokesman says NHS organisations are constantly seeking ways to improve workforce planning to reduce the likelihood of redundancies, with technological tools and more predictable national pay reviews among the possible solutions.
When redundancy is necessary, employers have to respect an employee’s contractual entitlements, he says.
The spokesman also referred Recruiter to the NHS terms and conditions of service handbook, which states that employees cannot receive a redundancy payment if they are re-employed in the NHS within four weeks of leaving.
Public sector employers who “cut through” staff numbers in response to financial pressures before rehiring them must improve their workforce planning to avoid unnecessary payouts and pain, experts say.
The NHS recently said it had re-employed nearly 4,000 staff it had made redundant in the past four years, leading to widespread criticism.
While the government has announced plans to increase restrictions on redundancy payments for NHS staff who are subsequently re-employed, the controversy is just part of a broader problem relating to how public sector employers plan for workforce changes.
Dr Zofia Bajorek, a researcher at the Work Foundation's Centre for Workplace Effectiveness, tells Recruiter the "politically sensitive and economically expensive" nature of the issue makes it difficult to obtain statistics from public sector employers.
She adds, however, that the NHS is far from alone, with local councils, police and fire stations just some of the public employers who have often had to bring back redundant staff.
Bajorek believes poor management and a lack of workforce planning are often to blame for rehiring, with employers failing to consider the longer-term implications of staff cuts.
"If you look at the reasons why they are made redundant, they often say it's a cost-cutting exercise as a result of the economic climate… but management need to recognise that, as the economy recovers and productivity increases, that they'll need these staff," she says.
Bajorek says employers should seek to avoid rehiring redundant staff due to the "traumatic" psychological effect of the redundancy process, as well as its possible effects on the morale of staff who had remained at the organisation.
Instead, they should focus on identifying employees' transferable skills and how they could be used in a different part of the business, while also ensuring they have a solid business plan to avoid rash decisions and justify any necessary redundancies.
Bajorek says some employers could consider using a flexible-firm model, with a "core" of permanent staff to manage key services and a team of flexible support staff that could be increased or decreased as necessary; controversial zero-hours contracts are also an option to increase flexibility.
Some employers in the public sector are taking greater measures than others to avoid the pain of redundancies and rehires.
Dean Shoesmith, human resources director for the London boroughs of Sutton and Merton, tells Recruiter many local authorities have introduced rules to stop staff from being re-employed for at least a year after they had accept a redundancy package, and even then only in "exceptional circumstances".
Rather than simply making staff redundant, which comes at a cost to both employer and employee, the councils work with other local authorities in London to see if there are any positions that the employee could fill.
"Because of the austerity measures that [public sector employers] often face, we at least need to be maximising opportunities to have staff re-employed elsewhere.”
Shoesmith acknowledges that not all public sector employers follow this best practice, with short-term budget targets taking precedence over long-term workforce development and planning.
"If you've got very hard cuts, very deep cuts to be delivered in a short period of time, that sometimes leads to a more reactive response than a planned response,” he says.
“We refer to it as a salami-slicing approach to budget reduction — you just cut through without doing it in a planned, structured, business-critical way.
“It's not necessarily good or wise, but sometimes these measures are taken very quickly."
Shoesmith says the up-and-down nature of staff budgets makes life difficult for HR teams, and can lead to different recruitment decisions being made.
"It can affect the nature of the workforce. We may employ more temporary or agency staff; it does make people averse to permanent recruitment as it doesn't make sense to hire them in and then have to make them redundant."
Shoesmith says employers in the public sector have a duty to treat redundancies as a last resort, instead ensuring there are clear strategies and budget plans in place to avoid drastic measures that could later be regretted.
"There's a wider skills and competencies issue: it's incumbent on any employer, particularly public sector employers, to focus on redevelopment and reskilling and retraining rather simply making redundancies."
A spokesman for NHS Employers, which represents employers in the NHS, tells Recruiter that, while restructuring can often result in difficult decisions, the employers are accustomed to dealing with the challenges that the process brings.
"The impact of any change on staffing is thoroughly assessed, with redundancy considered as a last resort and never as a perk."
The spokesman says NHS organisations are constantly seeking ways to improve workforce planning to reduce the likelihood of redundancies, with technological tools and more predictable national pay reviews among the possible solutions.
When redundancy is necessary, employers have to respect an employee’s contractual entitlements, he says.
The spokesman also referred Recruiter to the NHS terms and conditions of service handbook, which states that employees cannot receive a redundancy payment if they are re-employed in the NHS within four weeks of leaving.
