Business in the Community: Socially responsible downsizing
Business in the Community is acutely aware of the challenges and constraints that its members are currently facing in light of the economic climate, and we are committed to supporting its members through such challenging times. We recognise that some organisations will be forced to restructure and downsize in the near future in order to remain operational. We believe that socially responsible downsizing is not an oxymoron – in today’s current economic climate, it is becoming a reality. Being socially responsible is often more than just engaging in an activity – in many instances, it is about how an organisation engages in an activity. Business in the Community believes that while not being a desirable option, downsizing can be done in a socially responsible way by putting the points below into action.
Consider all potential options
Research has demonstrated that downsizing does not always result in the desired savings, as organisations underestimate the costs of losing talent, damage to employee trust and motivation, increased stress and damaged brand image. With this in mind, it makes sense to consider alternatives to downsizing, and recent months have seen organisations adopting an innovative approach to cutting their costs:
- Permanent TSB has offered staff up to €35,000 to take a 2-3 year career break (www.reutors.com)
- As opposed to forcing redundancies, JCB entered into negotiations with its staff, which culminated in employees accepting a pay cut of £50 per week in the hope of keeping their jobs
- Michelin have asked their employees to take extended leave over Christmas to prevent a tyre stockpile situation escalating, thereby reducing costs.
Planning and implementing downsizing
If you have little other option other than to downsize, be sure to plan the process carefully. Research has suggested that almost half the effort to implement downsizing should be done before downsizing is announced.
- From the very outset, make sure you are fully aware of your legal requirements. Begin by visiting sites such as www.businesslink.gov.uk or www.berr.gov.uk for free advice on employment law. For more specific advice on the necessary steps to redundancy in Northern Ireland, visit: https://redundancyni.gov.uk/.
- Once this is done, set about giving careful thought to exactly what you hope to achieve by downsizing, and give due consideration to how you are going to provide for both departing and remaining employees. If appropriate, use Business in the Community’s ‘8 principles of CSR to guide you’: http://www.bitc.org.uk/news_media/corporate.html
- Consider all stakeholders affected by downsizing. Clearly, this will involve employees, but may also include other local organisations, politicians, government agencies and the media. For example:
- Indesit Company offered incentives to local organisations to employ the workers that it was forced to make redundant. The amount paid was relative to the skills of the individual.
- Consider how you can best cater for the needs of employees that are both leaving and remaining in the organisation. Use the expertise of other organisations, such as EGSA to help employees increase their employability. To get a greater insight into how other organisations can assist and support employees during downsizing, click on www.egsa.com or www.acas.org.uk. For example:
- In 2007, Seagate took the decision to close its Limavady branch. The site closed in September 2008. The company used the intervening time to put in place a range of support for its employees. With a strong focus on developing skills, Seagate provided its employees with independent information, advice and guidance for learning and work. Organisations, such as EGSA provided information days, in depth career guidance and tailored factsheets on training pathways in related and/or relevant career areas.
- In 2007 Sanmina SCI were employing 250 staff (200 blue collar, mostly male). Many had few or no qualifications, and some had worked at the company for over 20 years. The company wanted the employees to feel they had taken action to answer their “what next?” questions. EGSA were brought in to challenge preconceptions held by some workers about their ability to engage in learning again and to support them in seeking new career directions.
- Link with organisations such as Business in the Community to give employees the opportunity to gain valuable experience in other local community and voluntary organisations in a volunteering capacity.
- The outstanding characteristic of responsible companies are that they treat employees affected by downsizing with respect and dignity, that their policies are perceived to be fair to surviving as well as departing employees, that they over communicate throughout the implementation process, that there is continuous top management presence and support for the effort, and that the time span for realizing reductions is sufficiently long to minimize layoffs or render them unnecessary.
Maintaining a sense of trust
By being open and honest and truly trying to make the very best of a bad situation, organisations are demonstrating that they are trustworthy, and value their employees and other stakeholders. As Mallen Baker notes: “If an organisation can do the right thing during a lay-off, it will reap the rewards for years to come with all of its stakeholders. Furthermore, recent evidence clearly demonstrates that those organisations that demonstrate CSR are financially rewarded in the long term – organisations engaging in CSR outperform the FTSE 350 on total shareholder return by between 3.2% and 7.7% per year. Thus, while downsizing may not be a desirable option, doing it in a socially responsible way makes sense.
