Managing Redundancy In Sainsbury's: A Case Study Report

This assessment draws on students’ case studies of one organisation. The case work investigates one of the following issues:

• The talent development of a diverse workforce in the public or private sector.
• Resourcing in a flexible international labour market
• Resourcing and managing employees in a cross-cultural environment

- Managing redundancy or dismissals ethically and in compliance with legal procedures (please choose either redundancy or dismissals but do not choose both).

Write a report on your chosen issue. The report is directed to the Chief Executive Office of an organisation that is currently improving its policies or practices to manage the identified issue.

The report must include:

• A review of the literature around the chosen topic

• An explanation of how you have derived your results

• The results of your analysis.

• Conclusions

• Recommendations for good practice

This study deals with managing redundancy in Sainsbury’s. Organizational redundancy is one of the issues recently in every organization. In this particular assignment, proper emphasis has been given to understand how redundancy can be managed at Sainsbury’s so that the company can attain future goals as well as objectives. Sainsbury’s is one of the supermarket retail giant in UK that are facing a string of tribunal cases that follows redundancy attributes from past years (Sainsburys.com 2017). This supermarket retail chain faced more than 100 cases nationwide that refers to redundancy activities. It was claimed by the lawyers that the company did not follow the proper procedures in their business operations. Sainsbury’s shed more than 1100 managers as a part of its Customer First Management Program that aims at putting more staff members on the front line dealing with customers (Brewster, Mayrhofer and Morley 2016). The measure will mainly affect human resources as well as payroll staff members as it comes as the company can reduce costs for competing with discounters such as Aldi and Lidl. The current segment elucidates about redundancy that is one of the form of dismissal that takes place when the job of an employee no longer exists. Redundancy takes place when organization or company layoff their employees in order to reduce their workforce and costs (Sparrow, Brewster and Chung 2016).

Sainsbury’s is one of the second biggest supermarkets chain that plan to cut up to 2000 jobs from its present human resource staff members so that it reduces costs. Cutting jobs of so many staff members is a difficult decision and this action will immediately affect roles in stores and central offices of that company. The company further plan to make 1400 payroll as well as HR clerks redundant and these changes will result in another removal of 600 other posts. By doing this, company is looking to save 500 million Euros from the discounters as well as rising food costs in order to face amid fierce competition (Renwick, Redman and Maguire 2013).

The identified issue in this study is about managing redundancy issue at Sainsbury’s as the company is planning to cut jobs of several staff members for reducing costs (Brewster, Mayrhofer and Morley 2016). The majority of headcount losses will be staff members who are working in supermarket stores of Sainsbury’s. It was sense of disappointment among the staff members or human resources that were working under Sainsbury’s when there was announcement that hundreds of them will be removed. This news of pulling off human resources was depressing for those dedicated workers as they were affected by the planned job losses (Reiche, Mendenhall and Stahl 2016).

Redundancy at Sainsbury's

The supermarket retail chain in UK (Sainsbury’s) is axing 2000 store as well as back office rules to slash costs by 500 million Euros so that they can compete with other supermarket retail giant such as Aldi and Lidl (Brewster, Mayrhofer and Morley 2016). The management of Sainsbury’s is changing at a rapid pace as well as it is crucial that they transform in the way it is operated for meeting future challenges and continues to offer products with excellent services within given period of time. In order to compete with the German discounters such as Aldi and Lidl, all the supermarket chains are announcing recent job cuts (Sparrow, Brewster and Chung 2016). In situation where human resources is made redundant, the they may be eligible for some of the rights like looking for work, notice period as well as redundancy pay and consultation with the employer. Human resources or staff member’s workers have the right not to be unfair selected for redundancy. Even, these human resources may be entitled for a statutory redundancy payment as well as notices. Therefore, redundancies can be either compulsory or voluntary (Marchington et al. 2016).

Sainsbury’s employs more than 1, 19,000 full-time staff members who are moving towards a centralized HR model as well as overhauling for saving hundreds of millions of pounds. In addition, the human resources of Sainsbury’s are facing redundancy or a dramatic cut in their working hours as the company looks to cut costs (Alfes et al. 2013).

From employee’s perspective, being redundant means loss trust towards the organization. Trust is the closest significant factor here as it includes several social benefits such as health as well as happiness and social cohesion (Jackson, Schuler and Jiang 2014).

Cost of mistrust- From this study, it is understood that being made redundant not only makes individuals less willing to trust but even increases sense of distrust as well as cynicism where the employees are forces out of work. Trust being the closest factor for both employee as well as brand loyalty. With advanced digitization world, there is more risk to employer reputation from disgruntled ex-employees who have certain grievances from the company (Anderson 2013).

Restructure and redundancy- It is important to understand the fact that both restructure and redundancy is an inevitable part of the evolution of business activities (Brewster, Mayrhofer and Morley 2016). In addition, downsizing actually reflect upon market pressures or growth restructuring where management select to implement redundancies as it have huge impact on how employees are displaced and feel about the business for longer period of time (Sparrow, Brewster and Chung 2016). Furthermore, management has the power to minimize the effects of redundancy and this is possible by fully supporting the affected employees through transition. Therefore, the management can provide support by sending out positive messages to those employees by fostering trust level in the present workplace (Hoque 2013).

Impact of Redundancy on Employee Trust and Organization's Reputation

Outplacement support- One of the effects of redundancy is to offer Outplacement support. It is important to look at the fact that there is a greater responsibility for employees for lessening the social impact of redundancies as it is not avoidable by any chance. The social impact of redundancies has some implications by handling these situations where the management will minimize the long-term and short-term effects for the individual, society and organizational as a whole (Budhwar and Debrah 2013).

An eligible employee claim unfair dismissal if they feel that they are unfairly selected the employer for redundancy or incorrectly applied the selection criteria. If the employee feels that they have failed to offer suitable alternative work as and when needed and did not follow up consultation process (Armstrong and Taylor 2014).

On critical analysis, it is noted that Sainsbury’s are losing market share that adds 390 million Euros to their sales (Brewster, Mayrhofer and Morley 2016). More than 600 jobs at Sainsbury’s are at risk as it had shaken up its store management after sealing a 1.4 billion Euros takeover of Home Retail Group. In addition, the supermarket chain named as Sainsbury’s said that they were axing its existing store trainer role that is further held by 870 employees and introducing around 280 more senior learning as well as development management positions (Ashman 2016). It was stated by Sainsbury’s that current employees would be encouraged for applying for new positions as well as redistributed throughout the supermarket chain. In addition, not all employees were guaranteed to get new roles or designation. As a result, more than 590 employees had the possibility to face redundancy (Sparrow, Brewster and Chung 2016). The company actually has a good record of redeployment of staff members in these circumstances for exploring every avenue for ensuring continuous employment for all the members. Current redundancy legislation need employers for entering both collective as well as individual consultation where it is noted more than 20 redundancies at a time. The reason behind redundancy should be genuine by nature as well as set out clearly in front of staff members in a factual way. Most of the employers struggle with the issues about redundancy (Aswathappa 2013). It is difficult for the management to decide when they should be makes an employee redundant and if so, then how much the activity is going to cost them in the near future. The management needs to be meet requirements under a specific award or enterprise agreement about redundancy. It takes into account discussions about employee on the matter of redundancy in case of operational changes or restructuring at the same time. It is important for the management to know about redundancy that does not meet the criteria and exposes an unfair dismissal claim (Brewster et al. 2016). There need to be consultation with overall workforce not just these are affected by the redundancy. In addition, the collective consultation needs to be with trade union where it is recognized in an effective way. Furthermore, the seniority of the people needs to be involved as it does not affect lawful obligations (Jackson, Schuler and Jiang 2014).

Legal Procedures for Managing Redundancy

This is due to the reason as consultation will encourage human resources to speak on their behalf and express their views, thoughts and opinion that should be known to the management at the time undertaking final-decision making process (Brewster, Mayrhofer and Morley 2016). Consultation is a powerful approach that should be undertaken by the management in order to reach into agreement with specific representatives on issues like avoiding dismissals or reducing the number of employees that are needed to be dismissed. It is the duty that is needed to be applied even when the human resources are made redundant. In case, the management fails to comply with the consultation requirements, it will directly result to a claim for compensation that is termed as protective award (Beardwell and Thompson 2014). The study properly explains the concept of redundancy that is faced by Sainsbury’s in their business operations.

Conclusion 

At the end of the study, it is concluded that managing redundancy at Sainsbury’s is important for attainment of future goals and objectives. Under Section 389, it explains about genuine redundancy section where the employer needs to be complying with the applicable consultation obligations in a modern award as well as enterprise agreement. It is advisable to seek redundancies because of competitive pressures when there is no imminent threat to the business but there has to be a demonstrable need for making savings in the most appropriate way. In addition, selection criteria for redundancy need to be objective as well as fairly applied taking into account possible solutions. There need prior consultation from the employer where the criteria normally follows absence record, disciplinary record, ability to redistribute the work as well as skills and experience. Furthermore, consultation needs to be at all levels, be it individual or organizational.

It is important for Sainsbury’s to plan changes carefully where they should make strategies to help human resources who are losing their jobs and avoid any of the unfair dismissal claims as well as minimizing the potential of negative publicity. The first thing that management of Sainsbury’s needs to understand is that the redundancies planned should be genuine by nature. The management who are involved in undertaking decisions on redundancies needs to understand the fact on what they are dealing with as it is one of the most critical aspect. The management removes staff members from job and the reason behind that is poor performance or misconduct.

Need for Outplacement Support

It is essential for Sainsbury’s to understand their obligations before planning any change management process and when there is any potential for redundancies. It is recommended to start with an audit terms as well as conditions of employment of all the impacted employees working at Sainsbury’s. In addition, the obligations take place from a range of sources like legislation, employment contracts, company policies as well as industrial agreements and modern awards.

It is recommended to Sainsbury’s for planning as well as implementing a communication strategy to ensure clear and effective communication with its human resources. The management should avoid issuing mixed messages to staff members and circulating inaccurate information that damages the redundancy process as a whole. It is advisable that management of Sainsbury’s should always consult with the human resources working under them about making any redundancies by providing them information.

References

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Anderson, V., 2013. Research methods in human resource management: investigating a business issue. Kogan Page Publishers.

Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Ashman, I., 2016. Downsizing: Managing Redundancy and Restructuring. In Reframing Resolution (pp. 149-167). Palgrave Macmillan UK.

Aswathappa, K., 2013. Human resource management: Text and cases. Tata McGraw-Hill Education.

Beardwell, J. and Thompson, A., 2014. Human resource management: a contemporary approach. Pearson Education.

Brewster, C., Houldsworth, E., Sparrow, P. and Vernon, G., 2016. International human resource management. Kogan Page Publishers.

Brewster, C., Mayrhofer, W. and Morley, M. eds., 2016. New challenges for European resource management. Springer.

Budhwar, P.S. and Debrah, Y.A. eds., 2013. Human resource management in developing countries. Routledge.

Hoque, K., 2013. Human resource management in the hotel industry: Strategy, innovation and performance. Routledge.

Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. Academy of Management Annals, 8(1), pp.1-56.

Marchington, M., Wilkinson, A., Donnelly, R. and Kynighou, A., 2016. Human resource management at work. Kogan Page Publishers.

Reiche, B.S., Mendenhall, M.E. and Stahl, G.K. eds., 2016. Readings and cases in international human resource management. Taylor & Francis.

Renwick, D.W., Redman, T. and Maguire, S., 2013. Green human resource management: A review and research agenda. International Journal of Management Reviews, 15(1), pp.1-14.

Sainsburys.com. 2017. Sainsburys.com. [online] Available at: https://www.sainsburys.com [Accessed 12 Nov. 2017].

Sparrow, P., Brewster, C. and Chung, C., 2016. Globalizing human resource management. Routledge.