Business Re-organisation: Forward-Thinking Businesses Have an Advantage
Creative people, processes and thinking could assist a business in not only avoiding legal risk occasioned by forced redundancies, but also enable the company to position itself for future growth and opportunities.
Businesses restructure for various reasons, ranging from the need to focus on core activities, aligning the corporate structure to changed strategy, and carving out successful (or unsuccessful) sections to restructuring following mergers or take-overs. Whatever the reason for the restructuring, legal pitfalls abound. Under South African law, to use two typical examples:
- employers are prohibited for making staff redundant where the reason for the proposed redundancy relates to the transfer of a business as a going concern;
- where redundancies are permitted (meaning the termination is not protected), our courts can - and will - interrogate the business rationale and scrutinise the preceding consultation process followed to determine the fairness of the termination.
The Labour Court recently confirmed that not only is it sound business practice, but employers are indeed obliged to consider and implement all reasonable alternatives short of termination before making staff redundant.
When you consider the unstoppable wave of change represented by the Fourth Industrial Revolution, it is clear that businesses should spend time considering how it will position its staff when it has to restructure the business. The question no longer appears to be whether a business can deal with the people issues related to restructuring if it ever had to restructure the organisation, but rather whether the business can deal with the employee relations aspects that typically arises when the business restructures. The certainty is that businesses will restructure - whether for typical business reasons or by being forced to do so due to the onslaught of new technology in the workplace.
Making staff redundant often results in unintended consequences in any workplace. Projected savings occasioned by a smaller staff contingent often do not materialise in quite the same way as forecasted in the spreadsheet. Staff remaining in the organisation often suffer from survivor's guilt or feel animosity towards the employer because their friends and colleagues were axed. These feelings can translate into lower productivity, increased absenteeism, unwanted staff turnover and other cost drivers that are difficult to measure in advance. Clients may also have an adverse reaction to a business when the person with whom they have been dealing for years was made redundant. These and other intangible factors typically erode the anticipated savings flowing from staff reduction.
If redundancy is not the cure to all overstaffing ails, is there anything else a prudent employer may do? In a country with unemployment hovering at 27%, the social imperative seems to be retraining staff to take up roles relevant to the new economy.
In 2016, the World Economic Forum projected that by 2020 a third of job functions will be ones not required by the role at present. Other forecasts suggest various roles becoming redundant through the advent of driverless vehicles and extended use of artificial intelligence and robotics in the workplace.
Wily entrepreneurs will position their businesses to make use of employees whose skills will become redundant but can be retooled to take up new roles. The driver who will be replaced by a driverless car could be trained to manage the company's driverless vehicle fleet. The receptionist (who will be replaced by a robot greeting customers upon arrival) could be redeployed to the call centre providing interactive assistance to visually impaired customers. Come to think of it - the truly creative entrepreneur will be the one establishing a subsidiary company that places staff at call centres, or develop apps that allows people in remote areas to have access to technology or experts sitting in centrally located call centres.
Our law requires employers to exhaust viable alternatives before effecting redundancies. Avoiding adverse arbitration awards or court orders that orders employers to reinstate staff or pay them up to twelve months' remuneration should be enough motivation for employers to don their creative caps when pondering staffing options. Being able to make a meaningful, positive contribution to our unemployment crisis should excite all of us.