Cutting Without Breaking

There are moments when a business has to shrink to survive: a lost contract, a collapsing end market, an acquisition that duplicates whole functions. Avoiding the decision is rarely the kind option. The real test of leadership is how the decision is carried out — because the people who stay, the customers who are watching and the people who leave will all remember.

I have spent most of my career in industrial businesses, and my doctoral research was on corporate restructuring. The pattern is consistent. Organisations seldom suffer lasting harm from the redundancy itself. They suffer it from a badly run one: the wrong roles removed, key knowledge walking out of the door, a workforce that stops trusting what it is told. This piece sets out what that collateral damage looks like, answers a question I am often asked about last in, first out, and offers six lessons drawn from the JENOVA framework.

The Hidden Bill for a Badly Run Redundancy

The savings from a redundancy are easy to model. The costs are not, which is why they are so often underestimated. Writing in Harvard Business Review, Harvard Business School's Sandra Sucher and Marilyn Morgan Westner argue that the short-term savings are frequently outweighed by bad publicity, loss of knowledge, weaker engagement, higher voluntary turnover and lower innovation.

The evidence behind that view has built up over three decades. A Bain & Company study of 288 Fortune 500 companies found that those cutting 15% or more of their workforce during the early-1990s recession performed significantly below average over the following three years, and that companies announcing repeated rounds did worse still. Charlie Trevor and Anthony Nyberg, in the Academy of Management Journal, found that downsizing can trigger an exodus of retained employees, in some cases larger than the reduction the layoffs achieved. Most recently, Wayne Cascio and colleagues, analysing NYSE-listed firms from 1980 to 2016, found that companies that tried alternatives before cutting jobs went on to much higher two-year shareholder returns than those that moved straight to redundancies.

Where the collateral damage of a redundancy lands, by stakeholder.

The clearest UK warning remains P&O Ferries in March 2022. The company dismissed 786 seafarers without notice, and its chief executive later told a parliamentary committee that it had chosen not to consult the unions as the law required. The episode brought a criminal and civil investigation, sustained political criticism and lasting damage to the brand. It also showed that a process designed for speed can turn out far slower and more expensive than one designed properly.

Is Last In, First Out Still Used?

Rarely as the sole basis for selection, and for good reasons. LIFO is simple and appears objective, which is why it survived for so long in collective agreements and parts of the public sector. But in the UK it now carries real legal and commercial risk.

It is indirect age discrimination. Because length of service tracks age, LIFO disadvantages younger employees. In Rolls-Royce plc v Unite the Union (2009), the Court of Appeal accepted that length of service could be objectively justified as one criterion in a wider matrix — agreed with the union and by no means decisive. A selection based on service alone is much harder to defend.

It ignores capability. LIFO keeps the people who have been there longest, not the people the future business needs. It often removes the recently hired engineers, digital specialists and commercial hunters who were brought in to build the organisation's future.

Acas does not list it. Acas guidance points to criteria that are objective and measurable: performance, skills, qualifications and expertise, attendance (excluding absences related to disability, pregnancy or maternity) and disciplinary record.

Our view is simple. Start from the organisation you need in two years' time, define the capabilities it requires, and assess people against those capabilities. Tenure can play a modest role as a recognition of loyalty or a tie-breaker. It should never decide on its own who stays.

Six Lessons from the JENOVA Framework

The JENOVA framework rests on six pillars: Judgement, Expertise, Networks, Opportunity, Vision and Action. Applied to a redundancy programme, each pillar gives one practical lesson for the leaders who have to carry it out.

Lesson 1 • Judgement — Be Sure It Is the Right Answer, Then Cut Once

Judgement begins before anyone is told anything. Test the case properly: would a hiring freeze, less overtime, fewer contractors, reduced hours, pay restraint or redeployment close the gap? In Germany, short-time working (Kurzarbeit) exists precisely to bridge temporary downturns. Cascio's data suggest that companies that exhaust these levers first come out stronger.

If redundancy is still necessary, design the future organisation first, then the roles it needs, and only then decide who fills them. Size the reduction realistically and make it once. Repeated rounds do more damage than a single, well-judged cut, because every round resets the uncertainty for those who remain.

Lesson 2 • Expertise — Run a Process That Would Stand Up in a Tribunal

A fair process is a matter of expertise, not good intentions. Define the selection pool carefully, use a capability-based matrix, ask two assessors to score each person independently, and calibrate the results. Run an equality impact check on the outcome before anything is announced.

Get the legal timetable right from the start. In the UK, 20 or more proposed redundancies at one establishment within 90 days require collective consultation of at least 30 days (45 days for 100 or more) and notification to the Secretary of State on form HR1. Since April 2026 the protective award for failing to consult has doubled to 180 days' pay per employee. From January 2027 the unfair dismissal qualifying period falls to six months and the compensation cap is due to be removed. In Germany, the works council must be consulted before any dismissal, and a reconciliation of interests and social plan usually follow.

Lesson 3 • Networks — Communicate With Every Stakeholder, in the Right Order

A redundancy is seen by a whole network of people, not only those directly affected. Plan the sequence of communication as carefully as the selection itself.

• Those affected first, individually and in person, by their own line manager supported by HR — never by email, video broadcast or a locked access card.
• Those staying the same day, with an honest account of why, what happens next and what it means for them.
• Employee representatives and unions early, as genuine consultation partners rather than a box to tick.
• Customers and key suppliers before the news reaches them indirectly, with a named new contact and a handover plan for every relationship held by someone who is leaving.

In engineering and industrial markets, the people you let go will reappear at customers, competitors and suppliers. The way you treat them becomes part of your reputation across the whole sector.

Lesson 4 • Opportunity — Treat Leavers as Future Alumni, Customers and Advocates

Every leaver is an opportunity to show what the organisation stands for. Look actively for redeployment, offer outplacement, agree references, and be flexible on notice so that people can start new roles quickly. Encourage leaders to make personal introductions to their own networks.

Airbnb's 2020 reduction of nearly 1,900 roles, around a quarter of its workforce, is still widely cited for this reason. Departing employees received at least 14 weeks' pay plus a week per year of service, extended health cover, accelerated equity vesting, a public alumni talent directory, a team of in-house recruiters to help them find new roles, and their laptops. Few industrial businesses can match that package, but every one of them can match the principle.

Lesson 5 • Vision — Give the Survivors a Reason to Stay

The organisation that remains is the one you now have to lead, and it will judge you on what you say next. Survivors need a clear, honest story about the future: why the change was made, what the business is now for, where it will compete and grow, and what part each team plays in that. Without it, people fill the silence with rumour and assume another round is coming.

Set out that vision within days, not months. Make it specific enough to be believed — the markets, customers and capabilities the business will now focus on — and repeat it consistently at every level of management. A credible picture of the future is what turns survivor guilt into commitment.

Lesson 6 • Action — Prove It in the First Ninety Days

A vision only counts when people see it acted on. Removing roles without removing work simply spreads the same load over fewer people and accelerates the exodus Trevor and Nyberg describe. Leaders have to show, quickly and visibly, that the change was made for the reasons they gave.

• Redesign the work, stop low-value activity and reset priorities, so that fewer people are not simply asked to do more.
• Identify the people the business cannot afford to lose, speak to each of them personally within days, and consider targeted retention measures.
• Keep senior leaders visible: on the shop floor, in team meetings and in front of customers.
• Measure what happens next — regretted attrition, engagement, customer service levels — and act quickly on what the data shows.

A Leadership Checklist

Before Announcement

• Alternatives tested and documented. Future organisation designed before people are selected.
• One realistic reduction. Capability-based criteria, calibrated scoring and an equality impact check.
• Legal timetable, HR1 and consultation plan in place.
• Customer handover plans prepared.

On the Day

• Individual conversations first, in person, by line managers.
• Survivors briefed the same day.
• Representatives engaged.
• Key customers and suppliers contacted directly.
• Written information for everyone affected, including the support available.

The First Ninety Days

• Redeployment, outplacement and references delivered as promised.
• Work redesigned, not just redistributed.
• Critical people retained.
• Leaders visible.
• Attrition, engagement and customer metrics reviewed monthly by the leadership team.

A redundancy programme will never be painless. Run with judgement, expertise and respect, it can be the start of a stronger business rather than the beginning of a long decline. The difference lies almost entirely in how leaders choose to carry it out.

Jenova Partners advises boards, founders and investors on organisation design, restructuring and senior appointments, including interim leadership through periods of change. If your leadership team is about to have to make this decision, it is worth talking it through before the announcement rather than after it.

Sources

1. S. J. Sucher and M. M. Westner, "What Companies Still Get Wrong About Layoffs", Harvard Business Review, December 2022.
2. Bain & Company study of 288 Fortune 500 companies, as reported by Workforce.com, "Why deep layoffs hurt long-term recovery".
3. C. O. Trevor and A. J. Nyberg, "Keeping Your Headcount When All About You Are Losing Theirs: Downsizing, Voluntary Turnover Rates, and the Moderating Role of HR Practices", Academy of Management Journal, 2008.
4. W. F. Cascio, A. Chatrath and R. A. Christie-David, "Antecedents and Consequences of Employee and Asset Restructuring", Academy of Management Journal, 2021; summarised by the authors in HR Magazine, September 2021.
5. Euronews, "P&O Ferries: outcry as boss admits breaking UK law in sacking nearly 800", 24 March 2022.
6. Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387.
7. Acas, "How you're selected — your rights during redundancy".
8. Airbnb, "A message from co-founder and CEO Brian Chesky", 5 May 2020.
9. CMS, Employment Rights Act 2025 tracker.
10. German Protection Against Dismissal Act (Kündigungsschutzgesetz), section 1.

This article is for general information only and does not constitute legal advice. Employment law differs between jurisdictions and changes over time; the position is stated as at October 2026. Take specialist advice before planning or announcing any redundancy programme.

Jenova Partners Limited is a private limited company registered in England and Wales (Company No. 17240640), with its registered office at 128 City Road, London EC1V 2NX.