Opinion
Being made redundant can have a serious effect on your health
Jonathan Rivett
Careers contributorI was made redundant as part of a major change at the company I worked for. Dozens of colleagues were made redundant at the same time. A friend found out and called me, worried about my welfare. I told him I was sad but realistic. I said something like, “These kinds of things just happen, and they always have”.
He fired up and told me that, no, “mass layoffs” had not always happened. He said they were a relatively recent phenomenon that had only become “normalised” in the past few decades.
I looked into it, and it seems he is right. And it got me thinking: why are mass redundancies necessary?
Mass redundancies are more common now, but they have been around a long time. Not that this helps much when it happens to you.Credit: John Shakespeare
I’m so sorry to hear you were made redundant – and that your sacking came as a shock. The sudden loss of a job can have a serious effect on your psychological and even your physical health, and I hope your former employer has offered expert help in this regard. I’m pleased to hear you have friends thinking of you at this time and providing you moral support.
I asked Dr Gary Bowman, the MBA director at Adelaide Business School, about your specific question. I told him that in your longer email you mentioned the wide-scale redundancy didn’t seem to accompany any major crisis or financial problem at the company you worked for.
“Redundancies are an inevitable, albeit unfortunate, part of corporate life. Of course they are more common during economic downturns – or when there is the anticipation of a downturn – but they are not always a sign of trouble or failure. In fact, often, quite the opposite.”
Bowman used Microsoft, Meta and Google’s parent company Alphabet as examples of this last point.
“[They] have made significant redundancies in the last few years. All were performing well and had significant financial reserves. All three, and many, many other companies around the world are also now paring back their over-expansion during the rapid post-COVID growth.”
Bowman said that although a company such as Microsoft has specifically talked about “redirecting its strategy towards AI and cloud-based infrastructure”, AI did not account for all major redundancies over the past few years. That said, many mass redundancies do have a major technological shift in common.
“Typically, redundancies also accompany significant strategic change, efficiency-based restructuring, as well as mergers and acquisitions. Most working professionals have gone through some restructuring process, whether it’s centralisation or outsourcing. The pursuit of efficiency is a natural part of strategic change initiatives, and more often than not they result in the need for staff changes.”
Before the advent of the shareholder primacy doctrine, workers had enjoyed higher levels of job security.
Your friend mentioned that mass redundancies had only been “normalised” in the past few decades. And that’s true to an extent, although Bowman said that “in reality, technology has always disrupted the workforce”. The whole history of technological shifts in industry, employers’ approaches to job security and mass sackings is, naturally, very complicated so forgive me if we barely scratch the surface in this column. I think a good place to start is 1981.
That was the year in which Jack Welch became CEO of the huge US company General Electric (GE). He began implementing massive reforms almost immediately, and in the first few years of his 20-year tenure, he was responsible for 100,000 people leaving the organisation. He zealously adhered to the concept of shareholder primacy (although in his later years he said it wasn’t a “strategy”, but an outcome of good management). He made mass sackings routine at GE – in fact, an annual occurrence – and influenced other CEOs to consider similar practices. Bowman told me that in the 1990s, for example, IBM made thousands redundant as they “pivoted from hardware to software and services”.
Before the advent of the shareholder primacy doctrine, workers had enjoyed higher levels of job security. But not all of them and not always. It almost goes without saying that the Great Depression led to extraordinary numbers of jobs ceasing to exist. And, centuries earlier, technology we now think of as utterly antiquated was so revolutionary it swept away entire existing work practices. Bowman mentioned that in the early 1800s, for instance, the power loom, an automated weaving machine, “put tens of thousands of skilled professionals out of work in a very short period of time”.
While mass redundancies as a specific business practice is not necessarily linked to an organisation’s performance, or even to economic upheaval (and is often applauded by shareholders), I wouldn’t label it a recent phenomenon – companies have been getting rid of large proportions of their workforce at the same time for a very long while.
Of course, what happened in the past doesn’t affect you in the present. As for the future, I know you’re taking a short break before looking for a new job, and I hope you can enjoy the time off before you return to a rewarding new role.
Send your questions to Work Therapy by emailing jonathan@theinkbureau.com.au