Although New Zealand is technically out of recession, many businesses are still feeling the squeeze of cost increases and the growing economic uncertainty.
So what should you do as an employer when your business is feeling the pinch?
Should you hold onto your employees for as long as possible in hopes that work will pick-up again, or do you save costs early by downsizing your team?
Which option is riskier?
Who gets a say?
These questions are not easy at the best of times and many local New Zealand business owners have never had to answer them … until now. Over the past three months, businesses of all sizes have come to us for guidance through this tricky process.
Here are three of the most common mistakes we see and how to avoid them.
LAY THE GROUNDWORK
Time and again we see businesses get into hot water by defaulting to a restructure for a reason that could be disingenuous. Regardless of whether your business decision is good or not, you must have a genuine business reason justifying your restructure. Common examples of genuine business reasons might be financial reasons, changes in market requirements, more productive business processes or insufficient work to support roles.
Taking some time to lay the groundwork at the start of the process by looking into supporting reasons for your proposal can make the rest of the process much easier later on. In the case of cost saving, your groundwork may indicate that staff salaries make up the majority of monthly costs, making a restructure easier and more effective than other cost-cutting methods.
This information will be helpful in forming the background for a nice and clear restructure proposal that makes sense to your employees, allowing them to ask questions and provide effective feedback.
DON’T PLAY FAVOURITES!
Another common mistake we see is employers using restructures as an excuse to terminate employees they don’t get on with. Affecting employees for personal reasons during a restructure can be a breach of fair process and can result in employment claims. Remember, you are restructuring according to the need for certain roles, not your personal likes and dislikes of individual employees.
For new roles, you should clearly set out your proposed selection criteria such as staff experience, qualifications, KPI’s or a combination. This allows staff to submit feedback on the criteria for you to consider, which helps ensure that the process is fair and reasonable.
REMAIN OPEN TO ALTERNATIVES
The third most common mistake is when employers do not consider alternatives. Often, employers are busy and want to push through the restructure process as fast as possible. They set their sights on the new proposed structure and forget that it should remain open to change until staff feedback is considered.
Fair process requires that employers genuinely consider staff feedback, including any alternatives that may be raised by employees. While you aren’t required to follow these alternatives, it is important to remain open and carefully consider each proposed alternative suggestion.
WE CAN HELP
While these may be the more common mistakes, each business is different and there are many other complicated issues that can arise throughout this process. Bringing in specialist legal advice early on can help ensure you are on the right path and save you a lot of unnecessary time, costs and stress down the line. If you are considering a restructure in the future, please contact our specialist employment team at Gaze Burt for friendly, reliable support from start to finish.