Accessibility Information

Header Banner

What Impact Does Redundancy Have on Future Careers?

Date: Wednesday, 01 June 2011 10:00 AM

Redundancy is often a difficult experience for the employees involved. Financial pressures, feelings of failure and betrayal are commonplace. With the right support and advice these sentiments can lessen and to a degree disappear as people find new employment. However, for some individuals, the experience of being made redundant has a longer-term impact on their ability to build strong relationships with future employers, whether they are conscious of it or not.

Penna conducted a research project into the longer-term effects that being made redundant has on one's future career motivations, relationships with future employers and whether it impacts the various generations differently. The findings proved to be extremely interesting, particularly at a time when organisations face twin dilemmas – managing organisational change as well as maintaining the loyalty and motivation of key talent.

Unsurprisingly, the area most significantly impacted by redundancy is the psychological contract between employer and employee. The contract between the former employer and the employee is often completely destroyed. This has obvious implications for the organisation that is making someone redundant, but also has consequences for the recruiting company, as employees are more guarded and less trusting.

Loyalty is similarly affected. Self-protectionism increases as individuals switch from being loyal and committed to their employer to being loyal to themselves. High engagement levels that were founded on trust and loyalty decline as employees develop a more transactional interaction with their employer.

Paradoxically, unlike the psychological contract and loyalty, personal motivation appears relatively unaffected by redundancy. In fact our research findings demonstrated that individuals were actually "more likely" or "as likely" to be as motivated as they were before, with very few people making a correlation between redundancy and motivation – positive news for the recruiting organisation.

Redundancy affects people in different ways. However, age can be a significant factor in the degree to which people are affected. From our research, those in "mid" career are more likely to be adversely affected by redundancy, whilst older and younger workers took a more pragmatic view.

Generation Y were shown to be more resilient when faced with redundancy. This is a reflection of the way they approach their careers – pursuing actions that enhance their skills and increase their employability, and fully expecting to work for several companies over their working life. Whilst they may not welcome redundancy, their outlook indicates that they accept it as being part and parcel of working life and are therefore more adept at dealing with it in a more positive way. This makes it possible for the psychological contract with their new company to be rebuilt quicker.

At the other end of the age spectrum are the baby boomers, who – despite potentially being more cynical to certain aspects of the career deal (such as loyalty and trust) – appeared to accept the changing nature of the employment contract.

Taken as a whole, our findings show that an employee's personal experience of redundancy can have longer-term implications for future employers. There are two learning points we can take from this – providing departing employees with support to help them transition out of the organisation and into new roles will help to address issues of distrust, as employees feel that they have not been betrayed. For those organisations that employ these individuals, think about what measures you can take. Career management programmes will rebuild the psychological contract between employer and employee much more quickly and will demonstrate that you are an organisation that values its people. To adapt an oft-used phrase "Look after your employees' careers and they'll look after their employers' interests".

Click here to read the article on The Grapevine Online

Penna is not responsible for the content of external sites.

Keywords: Career Development | Outplacement |

News Type: In the press |