Categories
General Insolvency Rescue, Restructuring & Recovery Turnaround

Bosses don’t always know best

It is fantasy for directors to think that they can keep things under wraps when their company is in difficulties.
Too often they will engage in secret meetings in the belief that it is important to keep employees in ignorance while they decide on the way forward.
At one company where I was called in to advise, the directors were having secret meetings and believing their staff knew nothing.  But late one night, I happened to inspect the loos, something I often do to gauge when a company is in trouble.  If the ladies’ is less than clean or tidy it can often be an indication of disaffected or unhappy employees.  In this case, however, the facilities were clean enough but I could hear a phone ringing.
Further inspection revealed that the ringing phone was in the boardroom right next door with just a thin wall in between.
It is wise for directors to remember that not only do employees generally keep themselves informed of their rights for their own protection.
They also often have good instincts and sense when their company is not doing well.  In this case, it would have been easy enough if they had concerns to listen in from the ladies’ to confirm their worries.

Categories
General HR, Redundancy & Trade Unions Rescue, Restructuring & Recovery Turnaround

Can employers expect loyalty from workers on Zero Hours contracts?

Employee consultation and support can, in our view, make a huge difference to success when a company in difficulties is being restructured.
But it has emerged that as many as 90% of Sports Direct employees are employed on part-time, Zero hours contracts, and therefore are unlikely to be eligible for the company’s recently-announced bonus payouts. It has been reported that only full-time employees are eligible for the bonus.
Given that these contracts are now used for about 1 million UK employees we should question them. 
The advantages to the employer are obvious in that they only pay for workers’ time as and when needed and there are reduced, or even no, entitlements to sickness and holiday pay, thus enabling a company to keep its overheads under control.
Despite their flexibility, which may be appropriate for a very few employees, the contracts offer few guarantees or certainties and yet could result in considerable hardship for employees due to them being expected to be available at short notice without guarantee that they will earn enough to provide a living wage.
At the same time employees on Zero Hours contracts are viewed as being in employment and therefore not eligible for any state help in weeks when they have had no work or pay.  Nor can a worker on such a contract take on any other work to supplement their income if they are required to be available at short notice.
We believe they could be abused by employers and support Business Secretary Vince Cable’s initiative for a review of Zero Hours contracts and how they are being used.

Categories
General Insolvency Rescue, Restructuring & Recovery Turnaround

Involving employees can be crucial to successful company restructuring

It shouldn’t be rocket science to accept that giving employees a stake in their company’s future encourages commitment and efficiency.
The John Lewis Partnership, owners of John Lewis department stores and Waitrose, is perhaps the most famous example of a company that fully involves its employees in both decision-making and a share of its profits, and now Sports Direct has announced that its staff will receive bonuses following a record year for profits.
But what happens if a company gets into difficulties and needs restructuring to survive?
Often, the employees are the last to know and this can make turning around a company much more difficult.  While directors try to keep information to themselves employees will usually know that something is wrong and an atmosphere of uncertainty may only make things worse as key people start looking for other work and productivity drops even further.
While trades unions regularly suffer from a negative press we would argue that their involvement in negotiations during restructuring can have positive benefits, not only in consulting with workers about the way forward and keeping them informed, but also in negotiating agreements should shorter working hours or redundancies be necessary. To help reassure those concerned about trusting unions to keep turnaround plans confidential there exists a protocol confidentiality agreement that was developed by the TMA (Turnaround Management Association UK) in association with the TUC.
We would be interested to hear from anyone who has had experience of union involvement in turning around a failing company.