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Measuring the Cost of Redundancy

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ChairsWith a new round of redundancies being offered it is timely to reflect on the impact of the loss of long serving public servants to government and to the country. As the ABC alone sheds 400 jobs and reaps a $250M “efficiency dividend” will there be grieving for colleagues passed? Will those left behind resent the wealth and freedom of those who have left, will they resent their increased workload as they struggle to maintain services or answer calls from irate listeners and viewers who resent the concentration of services in Sydney and Melbourne. Will surviving staff want to storm the barricades with protesting intellectuals, academics and thinkers protesting about the dumbing down of the ABC?

There is plenty to consider about those left behind. There is even more to consider about those who depart. If they are young will they be able to find another job or pay their mortgage? When senior staff leave will their networks and knowledge wither on the vine? Will older staff know what to do with themselves when they have finished their renovations and returned from their world cruise/trip around Australia? Will there be an outbreak of “Redundancy Depression” putting an increasing burden on our already stretched health system?
Throughout the 1980’s Thatcherism, Reaganomics and economic rationalism saw the rise in popularity of metrics as a management tool. We all undertook training on systems of management like Total Quality Management and Six Sigma that were based on the notion that “If you can’t measure it you can’t manage it”. In Western Australia this resulted in an attempt to amalgamate corporate services across 80 government agencies based on a premise that centralising all government accounts and HR transactions would save money. The scheme ignored, overlooked and explained away the intangible value of locally based finance and HR staff who worked with people and customers, not just numbers. I was one of many senior workers and managers throughout government who protested about the decision to get rid of locally based finance and HR services but we could not demonstrate the measurable value that they added. The restructuring of corporate services went ahead. Services were centralized, long serving staff based within agencies were made redundant.
After 8 years the scheme was abandoned after a report found that:
…there had been “no net savings” to the government from establishing … the program… nor were there likely to be future savings.
In actual fact, up until 30 June this year, the (program) is expected to have cost the WA Government $189 million in capital costs and $254 million in operating costs. The agency has only received $43 million in revenue from agencies. Four years after the initial 2007 due date, only 58 of the planned 80 agencies to use the new platform have been rolled in — and the majority of those are small to medium-sized agencies.
Ignoring the intangible assets that local staff delivered and discounting the resistance to a centralised model contributed to the demise of centralized shared services.

To make business decisions based on financial considerations alone is simplistic and dishonest.
In the mid 1990’s I went to a retirement morning tea for five long serving TAFE principals who had been made redundant through an organisational restructure. Their wives sat stony faced in the background as over 200 years of commitment and family sacrifice was skated over in a perfunctory speech by a CEO whose secretary had to remind him to go to the event. The lack of respect and recognition of the loyalty and value these men embodied was shameful.

Financial savings made by getting rid of the five senior managers cannot be set against the costs that the department incurred through their departure. One unmeasurable cost was the despair of senior managers made redundant without choice and the impact that had on me and my colleagues who witnessed their abandonment. We were no longer sure about values of hard work, loyalty and goodwill. The principals had been our leaders, providing wise counsel and advice. They took their wisdom with them leaving a void in its place. There was no one there to answer our questions, to phone a friend for information, to keep us in line or support us when we were in trouble. In a time of significant change and uncertainty our leaders had gone and with them had gone governance stability. The stress on many was significant. Some were angry about what had happened, all took a step back and disengaged a bit from our work. Our world was changing and we had no control, we tried to survive by withdrawing.

One of the principals said to me, “If I’d known how my career was going to end I would never have lived my life the way I did.” The pathos of such a realisation still makes me cringe.

Fast forward 20 years and I am the one in the workforce departure lounge. I am one of the many baby boomers aged between 50 and 68 who is going to retire soon. I have struggled up the career ladder for 40 years, gained degrees, won scholarships and undertaken some world first projects. I am the one who is now looking around for some way of passing on my knowledge and connections to the next generation. Management leaders Gary Hamel and Seth Godin stress the importance of a knowledge driven, networked economy. I have developed deep understanding and complex networks that make things happen, but there is no system or process that captures those assets to support the new ideas of the next generation. The succession planning that is currently in place is ill equipped to identify, capture and apply my knowledge and experience before I move on. There is no mentor program for me to help younger staff to launch their ideas, no program for me to help new staff to learn the ropes and no program to help me to plan out the next 30 years of my life. The loss of the knowledge and networks of baby boomers and the impact on baby boomers as they undergo significant life changes is not being measured.

The costs of staff turnover is usually grossly underestimated. Even the staggering costs calculated by HR consultants fail to consider the cost of lost knowledge, customer and industry networks, leadership and decision making skills of senior staff. As baby boomers depart the financial costs of replacing them are proving to be significant. I am hearing stories about baby boomers being replaced by three staff. I know of a Facilities Manager who has been replaced by a Fleet Manager, a Contracts Manager and a Facilities Manager and an architect who has had her region broken up into three regions, each with its own manager. Even when baby boomers are replaced by more staff there are other ramifications like broken connections with long term clients, budgets being blown and grant funding being allocated to competitors. It is difficult to measure the costs of intangible assets and the consequences of ignoring what can’t be measured will be grim.

The 2011 Australian Population Census identified that 36% of the broad category of Managers are 50+ and 43% of Chief Executives, General Managers and Legislators are 50+. The knowledge and networks of these managers are not being identified, valued and captured before they head out the door to a new life. The knowledge and networks of senior workers who have not made it to the top of their careers are even less likely to be valued.

At the other end of the age scale Gen Y workers are causing one of the biggest problems facing corporate Australia:
”The corporations are tearing their hair out trying to keep them in the business, but when the graduates are bedded down to work in one position, there are record drop-offs. They’re offered bonuses, big money, and they still leave.”
Not taking time to value people in the workplace is having a significant impact:
A study by Direct Health Services found a quarter of respondents said they took time off due to lack of engagement…. The number one reason people disengage from their work or quit their job… is not because they are not paid enough or do not like what they do, it is because they do not feel valued for the work they do and this leads to disengagement.
Regardless of whether you’re a cleaner, team leader, creative or sales person; we all want recognition for doing something that is useful and valued.
Pressure to achieve measurable results like the number of Aboriginals in prison, the NAPLAN results of school students or the waiting time of patients in emergency waiting rooms is too blinkered to capture the full picture of what is happening at work and that pressure is actually costing money:
AUSTRALIANS are suffering from a serious case of workplace malaise, with a report finding more than 70 per cent are either ambivalent about or completely disengaged with their jobs.
The malaise is costing the economy about $54.8 billion a year, the report states.

Australia, of all countries, should recognise the value of people. “Mateship” is deeply embedded in our traditions and culture. Mates help each other. Mates value and care for each other. They play together at school, join teams together and are kind and considerate to each other when things go wrong. Mateship is widely recognised as a contributing factor that lead to survival rate of Australian’s POWs being higher than that of the British and Dutch prisoners.
Any POW who didn’t have a mate had nothing.
Mateship is about valuing people and who they are. This is a much broader concept than measuring the skills that they bring to a Six Sigma team. If our purpose and actions are grounded in underpinning values that include mateship we will stop making stupid decisions that discount the value that people bring with them to work. Actions built on mateship ignore barriers of age and rank and deliver understanding and support and may even result in workers feeling valued, enjoying themselves and becoming energised.
I started work in the 1970s before the economic rationalists gained power. At that romantic time I believed that becoming a public servant was a noble goal and that through service to the public I would be making Australia a better place. I am sure that the five principals who were made redundant in 1995 were shocked that these values were no longer driving decisions. New recruits to the public service are unlikely to imagine themselves striving for such lofty ideals which have been relegated to the archives. New recruits bring shiny new ideas and enthusiasm but their ideals are clearly not being valued either as worker disengagement is as significant for Gen X and Y workers as it is for baby boomers.
It doesn’t seem like rocket science to develop a program that brings together the creativity and innovation of young workers with the know-how of baby boomers who can help them to bring their ideas to life. The sharing of values and cultures, know-how and ideas could re-engage workers from across generations to reinvigorate the workplace.
If we are to restore the health of the Australian workplace our knowledge of the symptoms and cause of the malaise must be translated into goodwill and meaningful momentum that values the whole person. If mateship could be embraced as the bright new shiny thing we could strive to take actions that value ideas and enthusiasm of the young, support the unique talents of Generation X and Y’s and unleash the knowledge and connections of baby boomers.
Australia recently signed free trade agreements with China, Japan and Korea. We are embracing change and it is happening at exponential speed. If Australia is to maintain its quality of life within an increasingly fast moving, global economy efforts to revitalise our workplaces must gain traction. Australians are not cheaper, smarter or more technologically advanced than their competitors. It is difficult to find a measure where Australians have the edge. Perhaps it’s time to stop trying to measure everything that is of value and to start making decisions based on intangible assets that people bring to the workplace, like a commitment to mates. Identifying, valuing and harnessing the unmeasured value of Australian workers is the key to your future prosperity.


Author: Bev Johnson

SEE SOMETHING! GET EXCITED! TELL EVERYONE!!! That pretty well sums up my approach to life. As I find the next bright new shiny course, unbelievable job offer or prediction about the world of work.......I now apply a "Bulldust Filter" honed through years of mistakes. I don't want my grandkids to be blinded by information or be to scammed by a con artist selling a quick course to success..... so I filter the bulldust so that they get the right information at the right time to help them to engage with the emerging world. I share my filtered knowledge because... I SEE SOMETHING. GET EXCITED. TELL EVERYONE.

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