I have approached a number of UK trades unions with a view to forging a collaborative approach to dealing with companies in financial difficulties.
In my view, currently, employees are rarely involved in the decision-making when a company’s survival is threatened, but a successful business turnaround relies very much on the support of its employees.
Unlike formal insolvency procedures, turnarounds are consensual. Leadership, teamwork and communication are key to implementing change. Engaging with staff and involving them in the business introduces accountability and responsibility to a business and is crucial to its success. This is even more so with a turnaround where change is necessary.
Historically turnarounds have been co-ordinated by banks as secured creditors, or by new investors who drive change from a purely financial perspective, oriented towards achieving single stakeholder objectives. What gets measured, gets managed.
Many stakeholders have compromised their credibility with employees by this pursuit of short-term objectives of repayment of their investments with little interest in a company’s survival.
So who is really interested in the employees let alone securing their employment for the future?
The trades unions are still believed to be the true representatives of employees’ interests and while the relationship between management and union representatives has in some instances become polarised this is not helpful when trying to save a fragile business. It is rather like the surgeon fighting with his medical team when a patient’s life hangs in the balance on the operating table.
This new initiative to collaborate with trades unions is based on developing a mutual respect and understanding of each other’s objectives outside the constraints of a turnaround situation.
Union input can be valuable when considering the thorny problem of how to reduce staff costs, where hard choices might have to be made between cutting numbers, wages, hours, or benefits. Their involvement helps remove fear among staff by reassuring them that their interests have been taken into account when developing the turnaround plan.