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These days we hear of many organisations going through restructuring processes to ensure they remain afloat in the depressed business environment obtaining in the country.
While it’s all smiles in the retail sector particularly supermarkets as they reap from the dollarised economy, most businesses are finding the going really tough and have difficulty in recovering from the devastating effects of the “Great Recession” we experienced in the last decade.
Company restructuring thus has become a favourable option in order to cut down on costs and improve efficiency.
Corporate restructuring is normally accomplished through downsizing, re-engineering, retrenchments, mergers and acquisitions.
Restructuring is done to make the firm more competitive and efficient in the market place. Corporate restructuring often includes mass lay-offs as is the case with the situation obtaining at the Reserve Bank of Zimbabwe where 1 455 employees have just been sent home. It also involves selling off assets to recapitalise the firm, and outsourcing some services.
The Reserve Bank of Zimbabwe is reported to have carried out the retrenchments in order to concentrate on its core business as the monetary authority. This is welcome given the fact that it is now two years since the central bank was weaned from its quasi-fiscal activities meaning to say the excess workers were just idlers at the central bank who had become a mere drain to the bank’s meagre resources. The lay-offs also give the central bank an opportunity to exorcise itself from the ghost of employing father, mother, son and daughter all at the same time.
We also have read in the newspapers that CFX Bank and Interfin Banking Corporation have merged, and that there are other firms that are lining up to downsize and retrench staff as a cost-cutting measure and in order to survive the subdued business environment in the country.
The responsibility for managing change in an organisation lies with management and executives of the organisation. The manager has a responsibility to facilitate and enable change and all that is implied in the change process.
Change such as new structures and policies, mergers, acquisitions, retrenchments, relocations, etc, all create new systems and environments which need to be explained to people as early as possible so that people’s involvement in validating and redefining the changes themselves can be obtained.
Retrenchment is not without its own problems given the fact that it involves the termination of employment of some individuals, hence a likely change in the living standards of those retrenched. And it is because of these unavoidable changes that retrenchment laws try as much as possible to ensure that when retrenchment is decided upon by a company, both parties are as much as is possible left in a position that guarantees their continued existence.
According to the utilitarian view of ethics, corporate restructuring decisions should be based on their consequences to employees more than they should be focused on the survival of the organisation.
From the organisation’s point of view restructuring and layoffs bring efficiency to the organisation’s operations. What is right then for the firm therefore may be wrong for the employee and vice versa, so a balance should be struck between the two parties.
Retrenchments, downsizing , mergers and acquisitions as elements of change management in the organisation should involve careful planning and sensitive implementation, and above all consultation with, and involvement of, the people to be affected by the change. Companies should communicate their change processes for buy-in by those to be affected by the change. Forced change on people normally results in problems.
Change must be realistic, achievable and measurable. Before starting organisational change, company executives should ask themselves the following questions:
l What do we want to achieve with this change, why, and how will we know that the change has been achieved?
l Who is affected by this change, and how will they react to it?
l Have we considered the ethics of the change process?
l How much of this change can we achieve ourselves, and what parts of the change would we need assistance from outside consultants?
Today as companies engage in restructuring for any of the reasons given above, institutions should take advantage of these change processes to embed ethics management processes in their new structures.
Companies should move away from the traditional change management processes that merely give lip service to business ethics. Understanding the human side of change management by aligning the company’s culture, values, people and behaviour will guarantee the success of the envisaged change.
When new structures are put in place, management should know that listing of new values does not itself transform organisational cultures or create ethical cultures. Organisations should instead adopt deliberate processes that ensure that the newly envisaged ethical culture is implemented, practised, reinforced, trained, and evaluated through a formal business ethics management programme.
One critical point for organisations to note is that the ethical conduct exhibited by organisations during the change processes, be they lay-offs, mergers and acquisitions, is significantly correlated to employee performance after the exercise.
Managers need to know that the way they handle the departing staff will have an impact on those remaining. Exhibiting caring and supportive practices during the retrenchments increases employee trust and loyalty to the organisation and reduces employee misconduct.
Companies should exhibit duty of care and show respect to departing employees. Sending employees back into society with broken self-esteem is bad for society and the business.
“How an organisation handles its restructuring or downsizing exercise is a supreme test of its commitment to ethical values”, says Lorraine Spector, the executive director of the Jewish Association of Business Ethics in the UK.
l Bradwell Mhonderwa is the Managing Consultant of Business Ethics Centre, a Corporate Governance and Business Ethics Management firm. Phone 04-293 2948, 0712 420 090, 0912 913 875, or e-mail [email protected]