K3 Insights

Organisations will be making decisions now, which could have the potential to impact them for months or years to come. Risk is inherent, whether actioning strategy, assessing a market to determine a competitive response, designing an organisation to determine role requirements and quantities, managing assets, or making other critical decisions about the way forward.

Making structural change

When we specifically think about changes to roles and responsibilities, and the number of roles responsible for each activity, the level of risk is may not only be evaluated by the organisation itself but can also be critiqued in an Employment Dispute setting.

An organisation’s role changes, can be assessed on both the process they followed and the substantive justification for the outcome they landed on.

The risks of being critiqued in hindsight

As a business owner or organisation leader if, or when, you undertake change you need to be aware of the implications of employees of your organisation raising concern around your reasons for this change, or process you have followed. While sometimes you may be able to address these concerns at the time they are raised, there may also be occasions where these concerns unfortunately escalate.

Should you as the employer be faced with a personal grievance raised by a disaffected employee, which cannot be resolved prior to or at mediation, the claim can be progressed to being heard by the Employment Relations Authority (“ERA”) for a determination.

According to Robert Lim, Solicitor and employment law specialist at K3 Legal, “If the ERA finds that the personal grievance is established, it may order the organisation to pay compensation to employees for hurt and humiliation, lost income, and other claims by the employee. It may also order the organisation to pay penalties if it has breached required standards of employment law (e.g. for lack of a signed employment agreement), and/or order the organisation to make a contribution to the employee’s legal costs”.

This is additional to the costs that the organisation will itself incur, relating to time involved in preparing and attending a hearing, and any direct costs of expert advice or support.

We expect to see that, in this potential recession environment, security of employment is valuable and employees may have lesser prospects of finding alternative employment. As a result, organisations may be held to a high degree of scrutiny to ensure that they have sound rationale for changes resulting in job losses.

Guiding thoughts for challengeable rationale

Firstly, develop a robust business case. In doing this you should consider:

• What is likely to happen if you do not change?
• What outcome are you trying to achieve? Why is that necessary? And what benefit is it likely to deliver?
• What data do you have to measure your current achievement against that outcome?
• How would you measure future success against that outcome?
• What are the alternative ways that you could achieve this? e.g. asset management, process improvement, system improvement, reassignment of resources etc.

The development and finalisation of your business case are discoverable documents. Therefore, right from day one of consideration, ensure you mark these as being a draft for discussion. Also ensure they are always focused on outcomes, capabilities, and roles required, not specific people, their level of performance nor their personal fit to the organisation.

Be prepared that you are obliged to transparently share your business case development with employees. There is little that is considered “commercially sensitive” and therefore confidential (and able to be withheld from employees) when engaging in a consultation process about role changes with your employees. Also be aware that any documents containing personal details of employees (including internal emails bearing their names) may be the subject of an information request under the Privacy Act 1993.

Before presenting to employees, test your thinking! Having been involved in in-depth thinking about your options, it is likely that you are several steps ahead in understanding the journey forward, and therefore no longer see the gaps in information or the questions that others may ask. Find a confidential, neutral party to identify the level of clarity in your presentation. Also, find someone with a level of expertise, to identify and discuss any undiscovered risks, and to actively critique your process and outcomes – effectively bringing hindsight to the forefront.

Guiding thoughts for a robust consultation process

When presenting your background and rationale for change to employees, then also be sure to give them specific and detailed information, so that they can genuinely and thoroughly contribute to the thinking about any potential options going forward. This may include presenting alternative options that you have considered but are not proposing, or the other actions that you are or will be taking which do not affect roles, to achieve your desired outcome.

Don’t rush! The commercial reality may require urgent action, however, giving employees appropriate time to ask questions, contribute ideas, and have those ideas heard is core to a genuine consultation process.

During consultation change, this is a prime example on a time when leaders need to take into consideration diversity, equity and inclusion. Not all employees will understand, absorb or articulate themselves with the same skillsets or approaches. Consider how you deliver information and receive information to facilitate true two-way communication e.g. giving people time in small groups or 1-1 settings to raise questions, giving them multiple contacts to approach, giving them guidance on the type of thinking that would enhance outcomes etc. Be clear that whilst you have given robust thought to the rationale, you recognise that there could be gaps or alternatives, and therefore feedback is for:

• Acknowledging where proposed changes could support the objectives set out
• Challenging where the proposed changes could hinder the objectives set out
• Raising new ideas that could achieve the objectives set out

And lastly, as leaders, be present! Sometimes leaders shy away from employees during change, as they do not want to be seen to unduly influence them, or they feel uncomfortable when they changes propose job losses. Whilst using discretion to give employees, most employees want to know that their leader still is available, and can demonstrate empathy and listening skills, even where answers are not yet confirmed.

Rationale AND Process

Clear rationale combined with a structured consultation process, supported by a detailed and engaging communication plan are all essential to having the acceptance, support or (in the best case) advocacy of those who have been impacted by a restructure.

If you want to discuss where your change is at, and how to better manage your risks, or ensure a legally robust process, contact the team at K3 Consulting.