Helping companies become chameleons

by 14 Apr 2009

Adapting systems and responses within an organisation in response to the credit crunch – from retraining to redundancies and communicating change – has become an integral part of the HR role, writes Sarah Sharples

As a result of the global economic downturn, the focus for HR depart ments has shifted from the “talent war” of acquiring employees to assess ing the needs of business. This focus includes working within the law in rela tion to redundancies and performance management, ensuring sound systems are in place and targeting training to meet the needs of the business. Meeting legal obligations, however, should not be HR’s only consideration.

Unfair dismissal

Law firms specialising in workplace laws have seen a marked increase in employees seeking advice about either threatened or actual terminations of employment.

Joydeep Hor, managing partner at Harmers Workplace Lawyers, says the rise of unfair dismissal claims has come in phases over the past three years. For the first year that WorkChoices was introduced, there was a drop off in claims because a public perception existed that unfair dismissal had been “killed”, he says.

“The next phase, which I think is still cur rent, although it has metamorphosed a bit because of the economic situation, was an increase in the number of claims because peo ple were starting to understand that there were … other avenues available, notwith standing what was publicly stated about WorkChoices,” he says.

“Then, currently, we’ve seen a bit more of spike driven more by the fact that there are more terminations at the moment actu ally occurring and that’s largely driven by the economic climate.”

Hor recommends that employers obtain advice before making the decision to down size and enforce redundancies.

“[The firm] gives people really sound commercial guidance, advice, tips and strategy that go above pure ‘this is the legal consequences’.

“So people are giving thought as to what shape their organisation might take in the future and really being able to push back on some of their planning and say ‘Look, yeah, you’re talking about get ting rid of 30 people now – but do you think that there’s a possibility that if you wear a little bit of pain over the next three months, then you might not lose ten of your best people?’” he says.

“So [they ask] ‘Is there something that we can do with those ten people who we recognise are pretty good and who you’d be paying a premium for in 12 months’ time through recruitment agents?’ These are the kinds of ques tions we’re trying to work through with businesses,” he says.

The HR hand

Graham Seldon, founder of Seldon Gill Consulting, which places mar keting, business development and HR professionals in employment., says HR departments are also a part of the planning needed to avoid redundancies by implementing train ing and development for employees whose practice area or service line has dried up and left them without work.

“Rather than making those people redundant what they’re saying is ‘We’re busy in other areas, we need to retrain [them]’, and so HR and the HR community has been able to develop some very good training and development initiatives and put some really good systems and processes in place so that they can identify areas where people can cross-train really quickly,” he says.

“So, for instance, we’re seeing lawyers move into marketing – that’s a trend. We’re seeing junior and sen ior associates in law firms move prac tice groups to go where the work is – so I think the HR community has really helped organisations in this current time.”


In some situations, however, redun dancy may be unavoidable. Giri Sivara man, associate at law firm Maurice Blackburn, says that part of the problem HR department’s face is the miscon ception that all employees are entitled to redundancy. He says many employees believe a process must be followed before a redundancy can be actioned.

“For example, consulting with employees about proposed redundan cies, discussing redeployment, asking for voluntary redundancies first and then only resorting to redundancies as the final option, those are the kind of typical examples of the process that should be followed. [But] if they’re not provided for in an award, or an agree ment or in the contract of employment, then the obligation doesn’t necessarily arise,” he says.

However, putting aside legal techni calities, he says HR departments need to consider the value to a company’s rep utation of making payouts even if employees are not entitled.

Geoff Officer, managing director and CEO of career management com pany the Donington Group, goes so far as to argue that companies should invest in outplacement support for peo ple they have let go as part of social corporate responsibility.

“There is a huge reputational risk issue – you want your reputation to be seen as a place that people want to work. We know two firms in the recession [in the 1990s] that just dumped people on the streets and it took about 15 years to really recover their reputations.

“People wouldn’t go and work there and, consequently, their competitors had a field day because all the best peo ple went to the competitors,” he says.

“So it’s very short term to say ‘I don’t need to look after people now’. From a sustainability point of view you want your reputation to go on and people have long memories and they talk all the time. Politicians work on one person equals ten, so if one person is aggrieved, they say there must be ten others [also aggrieved] and it’s the same with this if people lose their jobs.”

Performance management

HR departments can be credited for implementing systems and processes in the last five years to handle perform ance management, says Seldon.

“That has meant, in the downturn, that being able to identify areas of weakness within an organisation has been a lot quicker and they have been able to base that on solid facts. So I think HR has actually really massively helped firms identify where they can make savings and where they need to make cuts,” he says.

HR departments have to be cautious about the performance management process, warns Hor, who is seeing increased cases of people claiming that such systems have been implemented and enforced only since the change in the economic climate.

“The message always is that honesty and candour are absolutely critical, a business or a manager has every right to address poor performance … Having said that, performance management is a two-way street, it requires proper information, proper opportunities to improve and all of that can only happen with the passage of time,” he says.

Officer argues that Australians are not good at performance management because of our culture of matesmanship and that the secret is ensuring key per formance indicators are clarified so employees know what they need to achieve within their role.

“The bottom line is people ought to know what the benchmarks are and how their performance will be judged. That is a fundamental right and you can’t, therefore, change the rules on peo ple without giving them fair warning,” he says.

Room for improvement

Seldon says managing the unknowns of the current climate means HR depart ments need to improve their internal communication with employees.

“When an organisation is going through dramatic change, that is when you need to communicate to your staff continuously and openly and honestly all the time about what you’re doing about that change and how you’re managing that change,” he says.

“I think that too many of the pro fessional services firms have not invested enough in internal systems communication and processes.”

Seldon says the organisation needs to be the first point of call for informa tion, rather than the trend in some sec tors of the market where people are finding out about change from friends or contacts who work for competitors, before the announcement is made within their own company.

“I got a call from a senior profes sional in one law firm telling me that another law firm was about to make 10 of its marketing people redundant and we knew before they did. It’s not very wise – so internal communication is really key,” he says.

“So I think that what HR profes sionals need to do, they need to man age upwards, manage the CEO, manage the managing partner and insist that if there is any change that is about to happen, that a strong inter nal communication strategy is aligned with that change and that if they don’t have the internal resources to do it, they need to outsource it.”

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