CSR360

Posted: Tuesday 10 March 09, 3.06pm GMT

The current economic crisis is unusual in the speed and severity of impact, but vital lessons learnt in previous downturns around issues of trust, reputation and organisational knowledge must not be forgotten. This briefing note offers ways to reduce headcount and restructure that minimise the negative impact to individuals and communities, and which ultimately pay dividends to the organisation involved.

These ideas and best practice should provide a timely reminder that organisations do have options over the way that they restructure and downsize, and making changes with care and respect for the individuals and communities involved is an investment that will both protect their business today, and place them in a better position for the future when economic conditions improve.

Good practice requires objectivity, lateral and innovative thinking and, above all, planned and considered communication. Important when times are good, communication is essential when times are bad. Key considerations are set out at the end of the briefing note in a useful checklist.

Why responsibility pays

The business benefits of responsibility are well articulated in terms of increased market share, loyalty, customer attraction and retention, employee engagement and productivity.

Responsible business practices deliver direct cost benefits and improved financial performance. A good reputation earned with customers, employees, local
communities and voluntary sector groups when times are good, can be lost rapidly if a business loses focus on its values when times are bad. Critically, a hard
fought reputation either with employees, customers or community stakeholders, once lost is extremely difficult to regain when the economic situation improves.

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.

David Gebler

Case study: Sabbaticals

Permanent tsb has offered staff up to €35,000 to take a 2-3 year career break/sabbatical. Another organisation is offering employees partly paid sabbaticals and/or a shorter working week.

Case study: Re-negotiating pay & conditions with employees

JCB entered into negotiations with its staff where employees accepted a pay cut of £50 per week to try to avoid redundancies.4 Despite this approach, significant job losses have since occurred.

The promotion of diversity and inclusion provides a great example. If unintentionally women, ethnic minorities, older or disabled employees are more adversely affected by a redundancy programme, when an employer has previously argued it makes business sense to have people with different backgrounds in the business, it can be impossible to regain the trust and commitment of these groups of employees. This also reduces remaining employees’ commitment to the policy in future as it calls into question the credibility of an employer’s business arguments to promote diversity. Organisations must be consistent. If it makes business sense in a time of economic growth, it must make even more sense when times are tough.

How an organisation behaves during economic recession is critical – irrespective of the choices it finally makes. Transparency, honesty, integrity, openness, keeping staff, suppliers and local communities fully informed and consulted, clearly explaining actions to customers and community representatives are all cornerstones of Corporate Responsibility and are more important today, than ever.

Read the full briefing note on Responsibility in a Recession which includes Alternatives to redundancy; Planning and implementing restructuring and downsizing with care; and a Checklist for restructuring and downsizing.