The Voluntary Redundancy Option: Carrot or Stick?
| Date | 01 September 2005 |
| Author | Marilyn Clarke |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00457.x |
| Published date | 01 September 2005 |
RESEARCH NOTE
The Voluntary Redundancy Option:
Carrot or Stick?
Marilyn Clarke
School of Management, University of South Australia, City West Campus, North Terrace, Adelaide SA 5000,
Australia
Email: marilyn.clarke@unisa.edu.au
Voluntary redundancy is a relatively new form of retrenchment that has become a
popular means of reducing workforce numbers in downsizing organizations. Voluntary
redundancy involves the offer of a financial incentive to encourage employees to
‘volunteer’ for redundancy. Using the findings of a small study of individuals who had
taken voluntary redundancy, this paper explores the voluntary nature of voluntary
redundancy and suggests that both organizational change and the financial incentive are
contributors to the redundancy decision. From an organizational perspective voluntary
redundancy does appear to smooth the downsizing process but at the same time tends to
mask underlying issues of morale and commitment.
Introduction
Downsizing and restructuring, it seems, are here
to stay. Not only have they become a normal part
of organizational life, researchers are predicting
that both the rate and the extent of job losses
through downsizing are likely to continue well
into the twenty first century (eg Appelbaum and
Donia, 2001a; Cascio, 2002; Dawkins et al., 1999).
The problem for downsizing organizations is how
to manage the process with the least amount of
conflict from employees and the least impact on
remaining staff.
One popular option has been to offer voluntary
redundancy. In Australia, voluntary redundancy
has been a widely used downsizing strategy for
over two decades. Although there are no official
figures, anecdotal reports in the news media
suggest that the number of people involved may
run into hundreds of thousands, and that dozens
of organizations in both the public and private
sectors have chosen this as a workforce reduction
strategy (Bagwell, 1996). Yet, the unanswered
question is whether voluntary redundancy really
does encourage employees to ‘volunteer’ for
redundancy and, if so, why?
This research note reports on the findings of a
study into voluntary redundancy from the
perspective of the redundant employee. It ex-
plores the voluntary nature of voluntary redun-
dancy and identifies the primary reasons why
employees ‘choose’ to become redundant when
redundancy has traditionally been regarded as
both undesirable and management initiated.
Downsizing: the context
Cascio, (1993, p. 96) defines downsizing as ‘the
planned elimination of positions or jobs’. It is a
process that ‘essentially implies job loss and
retrenchments’ (Dawkins et al., 1999, p. 7). From
an organizational perspective, the economic out-
comes of downsizing are open to debate (Cascio,
1993; Ryan and Macky, 1998) but it is widely
recognized that for the individual, downsizing
can lead to a wide range of negative outcomes.
For example, downsizing has been found to
impact on employees in terms of loss of morale,
British Journal of Management, Vol. 16, 245–251 (2005)
DOI: 10.1111/j.1467-8551.2005.00457.x
r2005 British Academy of Management
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