Redundancy

Written By Ellise Walsh

Mon 3/21/2005 3:20 PM

Redundancy is a term that gets thrown around a lot these days. As more and more companies find that it makes sense to merge, eliminating redundancy is always a major goal in the merger.

Simply put, a redundancy means that there are more than one person, group or organization performing the same function. For instance, a company with twenty different branches may a purchasing department at each branch. Each purchasing manager at each branch is responsible for purchasing supplies for that branch alone. In a case like this, it would probably be more cost effective to centralize the purchasing function in one location. Not only would this type of setup be easier to manage, but since they would be buying in larger quantities, the company would most likely be able to realize lower prices from their various suppliers.

Of course, eliminating redundancy can have its downsides as well. There are unique situations in each location of a company, and these unique situations are not always properly addressed by a centralized business unit. Reducing redundancy should be done slowly and carefully. It may be difficult and costly to roll back a decision later if it does not work the way you expected.

When two companies merge, there is always a temptation to go full steam ahead with slashing payroll and eliminating redundancy. However, the slow and cautious approach is often the winning strategy. It will take some time for the new owners to establish exactly what each business unit does. It may turn out that there is less redundancy than they thought. Once the true redundant functions are identified, it is essential that the best people be retained. Having years of experience walk out the door is a big blow to any organization. The executive team in charge of the reorganization should take the time to review the employment records of all people in the department to determine who the real standouts are.

Once the major functions are centralized and redundancies are eliminated, it is essential that you get the support of both the management team and the rank and file employees. I think business executives often underestimate how resistant people are to change. They can sometimes see resistance to change as a weakness or a character flaw. In fact, being frightened of change is a natural human reaction. Every person has a comfort zone, both in their professional as well as their personal life. Removing your employees from that comfort zone can be quite disconcerting, and you should expect some grumbling from the troops. Instead of trying to quash that discontent, the smart business executive will understand it and address the concerns of the troops.

Effective, honest communication is a vital part of any effort to reduce redundancy. Any time a company is purchased by another or two companies merge, the employees at both companies know that there will be changes. Many people automatically assume the worst and assume that they will be one of those eliminated in the redundancy reduction. The smart executive team will take the time to honestly communicate the company’s plans and address the concerns of the workers at both firms. Of course, you will not be able to share every business decision. You may not know exactly the way things will go until you start digging in, but communicating a basic strategy and giving the rank and file employees an idea of the way things will go is a smart strategy.

Of course, employees should also be understanding when it comes to merging companies and reducing redundancy. If your job is in the private sector, your employment is dependent on your employer’s ability to make a profit and stay in business. In the competitive world market we find ourselves in, it is more challenging than ever for companies to make a profit and stave off competition from leaner and meaner companies. It makes perfect sense for a business to take advantage of every cost savings they can find. It is difficult any time job cuts are necessary, but the smart employee will remember that if the company goes out of business it will cost everyone their job. Helping the company reorganize effectively is in your long term best interest as well as that of your company.