When Restructuring, Follow The Process or Suffer the Consequences.

When business conditions have reached a situation where you are chronically short of cash and/or sales, you may have no alternative but to resize the business to fit the new environment you find yourself in. Delaying this difficult decision may in fact jeopardise the whole business and just as a ship may have to jettison some cargo in a storm in order to stay afloat, you as the captain of your ship may have to take similar action.

Having to face up to employees and make decisions on who goes and who stays is never easy. Don’t under-estimate it. You are dealing with peoples’ livelihoods and how this may affect their families, so the TV image of the steely eyed boss calmly saying “You’re fired” is far from reality, especially under New Zealand employment law!

What will help you both avoid costly personal grievance claims and the emotional trauma of loosing valuable and often long term employees is to FOLLOW THE SYSTEM. The key is to share as much information as possible with employees, consult with them and invite their suggestions, and then follow fair and reasonable selection processes, if that step is also required. The mere fact that you lay your cards on the table and show the difficult situation that the company is in will help minimise the likely shock and anger that employees naturally display when faced with the prospect of loosing their job. When faced with the cold, hard facts they are more likely to see your side of things and are more likely to come up with possible solutions to help, while of course at the same time saving their job in whole or in part.

On the legal side, the Employment Relations Act specifically states that where an employer proposes to take an action that affects the employment of the employee, or intends to make an employee redundant, it must act in good faith towards that employee. This means the parties to an employment relationship have to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are among other things responsive and communicative.

What the Act does not have are practical, step-by-step procedures to follow with suggested wordings for letters and meetings. This is where I can help and if you think that a restructure may be necessary to keep your company competitive, or perhaps even alive, I suggest you make contact with me at andyburrows@iconbusinesssolutions.com or visit my website at www.iconbusinesssolutions.co.nz

Andy Burrows - Business Advisor