Desperate Times Call for Responsible Measures: Restructuring and the Global Economic Crisis
By Kit Blatt, Accountability International
On the heels of a global economic meltdown and the glacial pace of economic recovery, restructuring by employment downsizing has become commonplace often at the expense of social conditions and regional development. As companies rethink their operating models, having a more sustainable mindset is in order. One question that needs to be considered is whether or not businesses should take a more active role in minimizing the impact of business decisions on local economies and communities.
Mitigating the risk of restructuring by downsizing even before a decision has been reached to cut jobs is an integral part of responsible business behaviour. Retraining, redeploying, and seeking alternative opportunities for those affected can minimise the social and personal impact of structural transformation.
Global banking giant HSBC found that being transparent in uncertain times helped build trust with employees and reduced the risks associated with lower productivity, higher turnover and absenteeism, decline in product or service quality, and the loss of key talent.
Where downsizing is unavoidable, engaging with all stakeholders is essential. The impact on the local economy, communities, social enterprises, and businesses is likely to be significant. By offering these entities a voice in the process and encouraging community involvement, companies such as Aviva and SCA Packing successfully redeployed the majority of their displaced workforce while protecting their licence to operate. In stark contrast, Nokia did not fully anticipate the impact of its decision to move 2,300 jobs from Germany to Romania in 2008 and were met with opposition by German customers promising to boycott Nokia products. With this in mind, it will be interesting to see how English tea manufacturer Twinings (owned by Associated British Foods) will manage their recently announced relocation to Poland. Similarly, Kraft's creation of a new UK headquarters following its controversial takeover of Cadbury plc bears watching.
When product and service differences are slight, stakeholder perceptions of a company can be an important source of differentiation. When economic times are good, companies devote considerable resources on employee engagement and responsible restructuring in order to attract and retain the right people to do the right job. Should it be any different in challenging economic times?
On the heels of a global economic meltdown and the glacial pace of economic recovery, restructuring by employment downsizing has become commonplace often at the expense of social conditions and regional development. As companies rethink their operating models, having a more sustainable mindset is in order. One question that needs to be considered is whether or not businesses should take a more active role in minimizing the impact of business decisions on local economies and communities.
Mitigating the risk of restructuring by downsizing even before a decision has been reached to cut jobs is an integral part of responsible business behaviour. Retraining, redeploying, and seeking alternative opportunities for those affected can minimise the social and personal impact of structural transformation.
Global banking giant HSBC found that being transparent in uncertain times helped build trust with employees and reduced the risks associated with lower productivity, higher turnover and absenteeism, decline in product or service quality, and the loss of key talent.
Where downsizing is unavoidable, engaging with all stakeholders is essential. The impact on the local economy, communities, social enterprises, and businesses is likely to be significant. By offering these entities a voice in the process and encouraging community involvement, companies such as Aviva and SCA Packing successfully redeployed the majority of their displaced workforce while protecting their licence to operate. In stark contrast, Nokia did not fully anticipate the impact of its decision to move 2,300 jobs from Germany to Romania in 2008 and were met with opposition by German customers promising to boycott Nokia products. With this in mind, it will be interesting to see how English tea manufacturer Twinings (owned by Associated British Foods) will manage their recently announced relocation to Poland. Similarly, Kraft's creation of a new UK headquarters following its controversial takeover of Cadbury plc bears watching.
When product and service differences are slight, stakeholder perceptions of a company can be an important source of differentiation. When economic times are good, companies devote considerable resources on employee engagement and responsible restructuring in order to attract and retain the right people to do the right job. Should it be any different in challenging economic times?
