Category Archives: Sustainability

Responsibility in a crisis: Checklist for restructuring and downsizing

In January 2009 as the last financial crisis swirled around us I was leading Public Affairs at Business in the Community.   Sam Mercer, who was also then at BITC, and I authored an advice note on ‘Responsibility in a recession: Checklist for restructuring and downsizing’.  In this blog post I have dusted it off and reframed it for businesses grappling with the much faster pace that the coronavirus is unfolding in the real economy.  For some businesses Government support has simply not come fast enough.

Businesses are currently operating in extremely difficult circumstances facing intense pressure on cash flow as demand for many goods and services dries up, while ease of access to short term funding relief from banks with vary depending on size and type of business.  Redundancy and restructuring, including the closure of operations, are becoming a necessity as some organisations are forced to reduce overheads in order to survive.

The coronavirus crisis is of exceptional speed and severity of impact, but vital lessons learnt in previous downturns (notably here the 2008/9 financial crisis) around issues of trust, reputation and organisational knowledge must not be forgotten.  This blog post offers ways to reduce your headcount and restructure in ways that minimise the negative impact to individuals and communities, and which ultimately pay dividends to your organisation.   

These ideas and best practice should provide a timely reminder that business leaders do have options over the way that we restructure and downsize, and making changes with care and respect for the individuals and communities involved is an investment that will protect your business today, and place you in a better position for the future when we get to the other side of the coronavirus crisis.

“If an organisation can do the right thing during a lay-off, it will reap the rewards for years to come with all of its stakeholders.”

David Gebler

Good practice requires objectivity, lateral and innovative thinking and, above all, planned and considered communication.  Important when times are good, communication is essential when times are bad.  Key considerations are set out at the end of the briefing note in a useful checklist.

Why responsibility pays

The business benefits of responsibility are well evidenced in terms of increased market share, loyalty, customer attraction and retention, employee engagement and productivity.

Countless studies show that responsible business practices deliver direct cost benefits and improved financial performance. A good reputation earned with customers, employees, local communities and voluntary sector groups when times are good, can be lost rapidly if a business loses focus on its values when times are bad. Critically, a hard-fought reputation either with employees, customers or community stakeholders, once lost is extremely difficult to regain when the economic situation improves.

CASE STUDY: SABATICALS
During the 2008/9 financial crisis Permanent tsb offered staff up to €35,000 to take a 2-3 year career break/sabbatical. Other organisations offered employees partly paid sabbaticals and/or a shorter working week.

CASE STUDY: RE-NEGOTIATING PAY & CONDITIONS WITH EMPLOYEES

JCB entered into negotiations with its staff where employees accepted a pay cut of £50 per week to try to avoid redundancies. Despite this approach, significant job losses subsequently occurred.

The promotion of diversity and inclusion provides a great example. If unintentionally women, ethnic minorities, older or disabled employees are more adversely affected by a redundancy programme, when an employer has previously argued it makes business sense to have people with different backgrounds in the business, it can be impossible to regain the trust and commitment of these groups of employees. This also reduces remaining employees’ commitment to the policy in future as it calls into question the credibility of an employer’s business arguments to promote diversity. Organisations must be consistent. If it makes business sense in a time of economic growth, it must make even more sense when times are tough.

How your organisation behaves during the coronavirus crisis is critical – irrespective of the choices it finally makes. Transparency, honesty, integrity, openness, keeping staff, suppliers and local communities fully informed and consulted, clearly explaining actions to customers and community representatives are all cornerstones of Corporate Responsibility & Sustainability and during this crisis they continue to be vitally important.

Alternatives to redundancy

Explore every possible alternative to redundancy as it does not always reduce costs and retaining skilled employees is essential for survival and speedy recovery.  While redundancy cuts the salary bill it does not always result in savings; in a recent case shared by an employer a press officer was made redundant and the business then had to increase the amount it paid to its PR agency in order for someone else to provide press office facilities. Organisations often underestimate the costs of losing talent, breaking employee trust and motivation, increased stress, damage to their employer brand and the costs of recruiting when conditions improve.

You may choose to explore alternative options such as:

Redeployment

Placing employees with another employer on a temporary basis.

Temporary reduction of hours  

Reducing hours for reduced pay following consultation with employees.

Part-time working/Job redesign

Extending part-time/flexible working opportunities (employees may embrace the option to improve their work-life balance).

Paid or part paid sabbaticals

Career breaks (can be attractive to people who have not taken time off for themselves since university or school). Offering continued contributions to employee pension funds can make this a more attractive offer to employees.

Contracted back services

Buying back former employees’ time for specific pieces of work but leaving them free to pursue other opportunities (requires an agreed change in contract or a consultancy arrangement). 

CASE STUDIES: CONTRACTED BACK SERVICES

Over Christmas 2008 Michelin asked their staff to take extended leave to prevent a tyre stockpile situation escalating, thereby reducing costs.  Honda, Jaguar Land Rover and other manufacturers took similar steps.

CASE STUDY: INDESIT – INCENTIVISING RAPID TRANSITIONS TO ALTERNATIVE EMPLOYMENT

Indesit Company (Turin, Italy) offered incentives to other local organisations to employ workers that it was forced to make redundant on an indefinite term contract basis.  Such incentives were inversely proportional to employees’ grades.

CASE STUDY: GENERAL MOTORS – DISCUSSING ALTERNATIVES WITH THE UNIONS

Vauxhall parent company General Motors approached unions at their plant in Ellesmere Port.  They explored whether staff would stay away from work for up to nine months between January and September 2009 on less than a third of their basic salaries. The ‘sabbaticals’ were seen as providing a means of ensuring that skilled staff were retained long term, but that this short-term solution could address immediate production challenges.

Planning and implementing restructuring and downsizing with care and respect

When redundancy is the only viable option:

  1. Understand the legal requirements

Make sure from the outset that you are fully aware and understand your legal obligations.  The following websites provide useful guidance, but it is also sensible to seek specialist advice:

Email Elliott Parker if you need an introduction to an HR advisor or lawyer that is a member of West London Business.

2. Go over and above the legal requirements 

Early and ongoing communication is absolutely vital, as are appropriate redundancy packages, selection procedures of redundancy candidates and execution of any redundancy programme. Organisations can protect their reputation by investing in the ‘soft’ elements around redundancy (up-skilling, training, employee volunteering opportunities (this also supports community investment activity), job search support, mentoring).  Refer to the checklist below for further guidance.

Checklist for responsible restructuring and downsizing

Ensure you…

  • Understand legal requirements – See links above.  Then consider where you can go over and above the legal requirements to protect long term business value.
  • Treat employees affected by downsizing with respect and dignity – Both those exiting and those staying with the organisation; Policies are perceived to be fair to surviving as well as departing employees.
  • Involve and listen to colleagues and share information – Most criticism around redundancy (and exit from a community) comes from poor communications and a perception that not all information is being shared.  Trade unions, staff associations, employee networks etc should all be informed and involved. 

CASE STUDY: EDF ENERGY – IMPROVING EMPLOYEES’ EMOTIONAL RESILIENCE IN PERIODS OF STRESS

Redundancy and downsizing induces great stress on both departing and remaining employees. EDF Energy operates an Employee Support Programme (ESP) which provides fast access treatment and advice for mental health difficulties.  This programme has resulted in financial and morale benefits, and reduced the scale of ill health.

CASE STUDY: BOOTS – Up-SKILLING EMPLOYEES

Using Skills for Life provision in a variety of contexts to support the business through a sustained period of change and restructuring.  Review Resilience First’s guide to Emotional Resilience for business when preparing for, and recovering from, major incidents.

  • ‘Over’ communicate before, after and during a redundancy programme – Ensure top management is visible and openly supportive of changes.  Wherever possible, ensure announcements of job losses are communicated internally before being released to the media.  Examples of employees learning of cut-backs in the media have proven very bad for engagement and morale.
  • Consider all stakeholders affected by downsizing – Not only employees will be affected.  Suppliers, from local shops to transport providers, will all be affected.  Advance planning, consultation and communication with all stakeholders – local community groups, politicians, government agencies and the media is good practice.
  • Provide support for both departing and retained employees – Offering job search support, stress/wellbeing programmes, employee volunteering opportunities and developing skills for those leaving and left behind is critical both to increasing individual employability and wellbeing.  It also ensures organisations are in a position to recover rapidly when the economy improves.  Do not forget, redundancies also impact negatively on the morale of those employees that are left – often facing increased workloads and continued job insecurity.
  • Support and work closely with managers – Managers require additional support, advice and guidance during any downsizing exercise – particularly where their own jobs may be at risk.   They may also need support in considering the impact redundancy, including changes in terms and conditions, will have on an individual and the wider business. 
  • Maintain a diverse workforce – Both in a voluntary and compulsory redundancy situation there is a risk that different employee groups (women, older, disabled) are disproportionately affected – this must be carefully monitored.
  • Manage the environmental and community impacts of any facility closures.
  • Actively manage your talent pipeline – Wherever possible try to maintain contact with skilled and valuable staff – they may be needed in the future. This is a key lesson learned from previous recessions.  Stopping graduate schemes, not taking advantage of options like sabbaticals could leave employers with gaps in their talent pipeline that delays recovery.

CASE STUDY: WOOLWORTHS – WORKING WITH PARTNERS TO REDEPLOY STAFF

Woolworths worked with Usdaw, Job Centre Plus and Nextsteps to ask companies purchasing Woolworths’ premises to take on outgoing Woolworth staff.

Getting the scale of your approach right

The size of an organisation impacts on the number of people affected by redundancy programmes and the community impact, and therefore the scale of response required.

In remote areas, where there may be only one major employer, closing down a facility will have a much greater and more negative impact, and means planning and investment is even more critical. But any employer – irrespective of size – can adopt a responsible approach.

Values-based decision making applies whether you are cutting one job or making thousands redundant and closing down an operation.

How West London Business is supporting our members during the crisis

My team know that our work with businesses and our West London community has rarely been more important and we are working to focus our capacity where it is needed most to provide businesses with flexible and responsive support during the coronavirus crisis.

Visit our coronavirus resource on westlondon.com for links to the best advice we can find on everything from HR, to Finance to sector specific responses.  If we have missed something e-mail Pim Ungphakorn and we will help share it with the wider business community.

Andrew Dakers is CEO of West London Business and a Fellow of the Institute for Corporate Responsibility and Sustainability.

Why I changed my view on Heathrow expansion – but climate change remains a real threat

For most of my life I have stood firmly against expansion of Heathrow airport, largely on the grounds of aviation’s impact on climate change.

As both a Councillor and Parliamentary candidate I committed to lie in front of bulldozers and joined the Heathrow Climate Camp, where I was the only elected politician to put up a tent!  I also called for the Cranford Agreement, which was designed to protect the residents close to the eastern end of the northern runway from high noise levels, to be codified in law. Furthermore, in 2007 I was moved to take part in non-violent direct action as a protester interrupting a keynote speech at Chatham House by then MP and Secretary of State for Transport, Douglas Alexander.

However, in late 2012 my views changed on Heathrow expansion.  As the debate reaches a critical juncture this autumn, I feel that now is the time to expand on the reasons why a significant shift in the debate – and a more dialogue-based approach from the operators of Heathrow – has led to my new outlook on this complex and tough decision facing our community.

The national debate has shifted from should we expand aviation? To where should we expand aviation?  

The key milestone in my change of outlook was the announcement of the Davies Commission in September 2012.  With the commission’s launch and despite the best efforts of the environmental movement, the national debate moved from not whether we should expand airports at all, but to where a new runway in the South East of England would be built?

Whilst the climate change impacts of aviation still give me huge cause for concern, as a West Londoner I think we would be mad to give up the economic advantage that Heathrow offers, particularly given the changes Heathrow have now made to their proposals.  I say this despite living directly under the flight path and suffering the 4.30am aircraft wake-up calls!

West London’s economic strength is intrinsically tied to Heathrow and its leading international position

We would be naive to think that our quality of life in terms of factors such as good quality jobs and high levels of employment is not linked to Heathrow airport.  As a nation we need to think carefully about whether directing investment towards Gatwick, rather than ensuring Heathrow remains a world-class airport, would risk a number of major employers taking the opportunity to simply relocate their headquarters outside the UK.  From the conversations I have with senior business leaders I am in no doubt that this is a very real danger.

Mothballed company HQs would be disastrous environmentally, socially and economically.  It took some 20 years for the EMI factory at Hayes to find a new lease of life as The Old Vinyl Factory.  Some 202 of the top 300 companies in the UK are clustered within 25 miles of Heathrow, compared to only seven around Stansted and two around the Thames Estuary.  In total we have 60% more international companies in the area around Heathrow than in the rest of the UK, as firms that rely on international long-haul flights choose to locate themselves around Heathrow.  Not surprisingly, the economy around Heathrow reflects some 60 years of investment by these firms.

International trade

Heathrow suggest their proposals will enable 40 new long-haul destinations to be introduced.  At a time when the UK economy is still struggling to recover from recession giving business people easier access to new global markets would be a really helpful economic driver.  Nevertheless my one caveat to this is that we need to be smarter about how we use this capacity.  Placing capacity constraints on Heathrow is economically and carbon inefficient on the basis that direct flights to destinations, providing the seats are fully utilised, are lower impact.

Heathrow debate slide 2

However, none of the arguments above for expanding Heathrow, rather than Gatwick, is to say that the climate change and other environmental impacts including air quality, CO2 emissions and noise, and it is essential that the aviation industry maintains an unrelenting focus on these areas.  If these key issues are not addressed meaningfully, then West Londoners’ quality of life will slide backwards and suburban living and working will become less and less appealing, which will create its own problems for our community.

Heathrow debate slide 10

How are Heathrow proposing to mitigate their impacts?

2010 v 2015 proposals

Heathrow’s 2015 proposals have changed significantly from those put forward in 2010 to try and reduce the impact of expansion on our local communities.  The Airports Commission’s final report recognises this, stating that the 2015 proposals are ‘a radically different plan from any previous proposals’.

Heathrow debate slide 1

On the face of it, the 2015 proposals might look like a scheme with greater impact.  However, this is a more carefully considered set of plans that is designed to respond to the feedback from local consultations regarding the key issues of noise, air quality, transport network capacity and carbon emissions.Heathrow debate slide 4

Noise

After sustained campaigning by the local community and more dialogue, Heathrow has put together a fairer deal than previously for those home-owners that would have to move as a result of expansion and those of us that would continue to experience significant noise.

Published in June 2015, Heathrow’s Blueprint for noise reduction sets out the airport’s top ten priorities for action on noise on areas which include the early phase-out of the noisiest planes, quieter approaches and better distribution of night time landing noise, as well as bigger fines for noisy departures.

Heathrow debate slide 6

Air quality

The Heathrow debate has been subject to some rather muddled arguments from politicians regarding the Airports Commission’s consultation on air quality and the validity of data collected from monitoring sites located next to the airport and its contribution to London’s pollution crisis.  The reality is that the monitoring sites located further away from the airport are failing to meet EU limits, and this is due to a variety of factors.

Heathrow debate slide 7

Data from the Hillingdon and Hayes air quality monitoring stations further away from the airport shows that air quality readings based on an annual average are breaching EU limits.  At Hillingdon the airport contributes 16% of emissions, and at Hayes it is 6%. As can be seen in the charts, at both these locations, after background contribution, it is non-airport related traffic which is the most significant emissions source.

Heathrow debate slide 8

Heathrow is doing a lot to address emissions from the airport-related activity as set out in their blueprint for reducing emissions . These measures, along with the mitigations to reduce emissions through the design of the expanded airport, demonstrate how the airport can expand and remain within pollution limits.  In addition, the Airport Commission concluded that the Heathrow North West Runway proposal would have a Nitrogen dioxide metric of 34.7 micrograms per cubic meter, below the EU air quality limit of 40.

Transport network capacity

As I set out above, surface transport is the most significant factor affecting local air quality in the Heathrow Area.  In recognition of this, Heathrow has developed a strategy that will transform rail connectivity in all directions.  This aims to help ensure that the majority of passengers use public transport at the expanded airport.  In addition, major projects such as Crossrail will deliver improved connectivity through West London with more trains and faster journey times.  With its strategy in place the airport believes there could be as many as 40 trains per hour, equating to a train every 90 seconds, with an increase in capacity from 5,000 seats per hour today to almost 15,000 seats per hour by 2040.  I have no doubt that most West Londoners would like to see this investment happen even faster!

Heathrow debate slide 3

With its Heathrow Commuter programme the airport has successfully reduced the number of airport workers who travel by car over the last 20-25 years.  The programme includes the world’s largest single site car share scheme, Heathrow Cycle Hub and a wide range of discounted travel products to support use of public transport.  This and other investment in sustainable transport will help the airport to deliver on its commitment to deliver expansion without increasing its contribution to traffic on the road network, an important factor in meeting the challenge of meeting air quality limits.

To reduce Heathrow’s air quality impact through the transport activity the airport generates even more may be required.  Perhaps we will need to see London’s Low Emission Zone (LEZ) expanded to include the airport?

Carbon emissions

The figure below from the the Committee on Climate Change’s progress report to parliament in July 2014 shows how the contribution of different sectors to the UK’s CO2 emissions has shifted between 1990 and 2013.  Fortunately for Heathrow, the aviation sector and their customers, aviation is forecast to get a significant share of the UK’s CO2 budget in 2050, even after taking technological innovations into account.  It takes a lot to get us sky-borne.

Heathrow debate slide 9

Sustainable Aviation’s roadmap published in December 2014 sets out how the sector believes it can expand whilst remaining within the UK’s international commitments on carbon reduction.  This will be achieved through a combination of high carbon trading and offset; the use of sustainable fuel such as from waste and fuel-burn reduction through a more efficient aircraft fleet.

Heathrow debate slide 5

Are all these actions sufficient for the scale of the challenge?

As I have reflected again in recent weeks, as I take on my new role as Chief Executive of West London Business where my team will develop our work on environmental sustainability in the months ahead, realising the ambitious plans of Heathrow and the wider aviation sector for a more sustainable business model will only be achieved through partnership and some healthy competition to find solutions.  With the right combination of collaboration and competition we can but hope we are successful in getting better at protecting the planet we pass onto the next generation.

As for practical steps to support the transition and make sure that Heathrow delivers on its commitments I would like to suggest the following measures:

  • Sustainable Aviation and Heathrow’s corporate responsibility initiatives must be open to external scrutiny and robust audit on an annual basis. The toughest international standards from the Global Reporting Initiative to independent verification of reports must be in place to help ensure that annual targets are achieved.
  • The right incentives for the technical innovation that reduced CO2 emissions requires must be put in place by government and industry.
  • Families and individuals’ homes impacted by the proposals, Harmondsworth most significantly, should be supported by local leaders and the airport in exploring a full range of options to assist in what will sadly for some be a traumatic experience. In fact a dedicated team should be put in place to provide support. It is important to reminder that some residents, I suspect, will be delighted at the compensation package and opportunity to relocate.

In West London I hope our business community can do far more in the years ahead with the Ellen McArthur Foundation, leveraging their insights into designing a Circular Economy.  This may also see us start to draw more on the visionary work by Andrew Simms in ‘Collision Course’ which encouraged us to start to think more strategically as to where and how the production and distribution of goods, as well as their supply, is best organised.

Collision_course_slide2

Collision_course_slide2b

The bottom line of course is that whatever capacity we have in airports such as Heathrow we need to make the smartest, most efficient use of what is a finite resource to drive our economy forward.

My ecological footprint

To help reduce my ecological footprint over many years I have worked with friends, neighbours and community organisations on food (Sustainable Food in Hounslow, 2007), energy and transport issues.

In May 2013, Brentford High Street Steering Group, which I chair, relaunched the now hugely popular Brentford Market, which is helping more people buy local food and providing a great focal point to our community.

Why not find out your footprint by visiting http://footprint.wwf.org.uk ?

If you want to take action you might want to consider getting an allotment, and if you live in London Boroughs of Hounslow or Ealing join Hounslow Community Farming Association, Transition Ealing or volunteer with Cultivate London?