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.

“Hindsight is 20/20” is an expression that means, it is easier to analyse and evaluate situations when we are looking back on them in the future, than when we are in the present moment. The decisions we will make in the year 2020, may never be more reflective of this expression.

Making structural change

This concept of reviewing in hindsight is extremely relevant when speaking specifically about changes to roles and responsibilities, and the number of roles responsible for each activity. Organisations will be assessed concurrently and retrospectively, on both the process they followed and the substantive justification for the outcome they landed on.

In the NZ marketplace, we are already seeing many organisations undertaking structural change, with others considering it in the coming months, particularly when government wage subsidies are no longer available.

Risks of being critiqued in hindsight

As a business owner or leader if, or when, you undertake change you need to be aware of the implications of members 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 Cameron Fraser, Associate 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 climate, security of employment is so valuable and employees may have lesser prospects of finding alternative employment. Organisations may be held to a higher degree of scrutiny (than may have previously occurred) to ensure that they have sound rationale for change resulting in job losses” says Cameron.

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.

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.

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.

The formula for success

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.