5 Tips to Manage a Redundancy Process in Banking

In 2023, many bulge bracket banks implemented restructuring initiatives and staff reductions to align their workforce with market activities, deeming the existing headcount as excessive. As the threat of an economic downturn looms, employers must approach potential redundancies with caution.

Regardless of the rationale behind it, overseeing the redundancy process remains one of the most formidable challenges for HR professionals. Whether it stems from business restructuring or occurs amidst a recession, the importance of handling it with utmost professionalism and sensitivity cannot be overstated. Failing to do so not only poses a risk to organisational morale and culture but also carries the potential to significantly tarnish the company's reputation.

In this blog, we will explore 5 effective strategies for managing the redundancy process in the banking and financial services industries.

1. Clear communication & transparency

Effective communication is paramount when it comes to managing redundancies. Transparency about the reasons behind the redundancies, the criteria for selection, and the timeline of the process helps in maintaining trust and morale among employees.

Given the emotionally charged nature of such situations, it is essential to recognise the challenges employees may face during this period. Providing a clear and comprehensive explanation of the circumstances, along with necessary information, is imperative. Hence, be prepared to answer any questions they may have to facilitate a smoother transition through this challenging period.

2. Fair & objective selection criteria

Establishing fair and objective criteria for selecting employees for redundancy is crucial to avoid potential legal implications and maintain employee morale. Criteria can include factors such as performance, skills, qualifications, and future business needs. It is essential to ensure that the selection process is unbiased and free from any form of discrimination.

3. Support & guidance for affected employees

Redundancy can be a challenging experience for employees, both professionally and personally. Offering comprehensive support and guidance throughout this transitional phase can make a profound difference in their career journey. In addition to providing access to counselling services, career coaching, and relevant training opportunities, it is beneficial to consider implementing an outplacement service. Collaborating with relevant agencies can further aid employees in exploring new career avenues and bolstering their employability. This proactive approach not only assists individuals in navigating the challenges of redundancy but also demonstrates a commitment to their long-term success and well-being.

4. Compliance with legal obligations

Compliance with legal obligations and regulations related to redundancy can be a complex undertaking, varying significantly from country to country and industry to industry. However, it is an important aspect that cannot be overlooked. HR professionals must possess a comprehensive understanding of employees’ rights, and the correct processes and procedures to be followed during the planning stage.

This thorough understanding not only ensures legal compliance but also provides reassurance to key stakeholders that all employees are being treated fairly and with respect throughout the redundancy process.

5. Maintaining morale & employee engagement

Redundancy can have a significant impact on the morale and engagement of remaining employees. It is crucial to proactively address concerns, provide reassurance about the future of the organisation, and recognise the contributions of the team. Engaging employees in discussions about the changes, seeking their input on future strategies, and fostering a culture of openness and collaboration can help maintain morale during times of uncertainty.

Managing the redundancy process requires a delicate balance of empathy, transparency, and strategic planning. By implementing these 5 tips, organisations can effectively manage redundancies while minimising the negative impact on employees and maintaining business continuity. Ultimately, handling redundancies with sensitivity and professionalism can contribute to building a resilient and adaptable workforce capable of navigating through challenging times.

If you are a banking or financial services firm seeking to hire top talent, or a banking and financial services professional currently on a lookout for new opportunities, consider partnering with Ambition. For further enquiries, please reach out to me at rita.lee@ambition.com.hk.