Structuring for the new ‘normal’ – Redundancies and lay-offs during Covid-19 pandemic
Analysts predict more than 1 million Australians will lose their job by November 2020 as result of Covid-19 and subsequent economic shutdowns.
Employers have been given greater powers to exercise workforce cost savings through temporary Award legislation amendments as a result of Covid-19, with employers applying some or all the following measures to keep a-float:
- Arranging flexible work
- Working from home
- Reducing the number of hours an employee works
- Altering start or finish times of employees’ shifts and/or rosters
- Changing the type of work undertaken by employees
- Directing employees to take accrued annual leave and/or other paid leave such as long service leave
- Agreement for employee to take unpaid leave if they have no accrued leave
- Under JobKeeper, arranging paid annual leave at half pay
- Permanent reductions in workforce establishment through redundancies and lay-offs.
These extra powers do not remove the requirement for employers to consult with their employees or comply with any applicable award, agreement, employment contract or workplace policy, including providing correct entitlements such as notice; redundancy pay and any accrued leave entitlements.
Exercising permanent reductions in workforce numbers during an economic downturn is expected to be harsher then when undertaken in ‘normal’ times. The key difference here is that revenue streams have disappeared, removing any financial leverage to maintain a workforce establishment at current numbers or the luxury of ‘discretionary’ roles. The key purpose is to survive the current economic downturn and to bounce back reasonably quickly to whatever the new ‘normal’ is.
To achieve this, the underlining principle of restructuring amid harsh financial difficulty is geared towards cutting costs quickly and protecting the ‘core establishment’. This is achieved by removing ‘non-mission critical’ roles from the organisation structure. Basically, any role that does not directly contribute to the business’ core purpose and secondly, determining the right number of employees to maintain in those mission critical roles (where multiple employees undertake similar roles).
At times organisation structures can morph into unnecessary layers of hierarchy and they become too top heavy and/or streams of analysts and program managers and contractors are hired on an interim basis but for various reasons may be kept beyond the intended engagement – mainly because the business has existing capacity and capability challenges within the current operating model.
A redesign focused on ‘mission critical’ roles and subsidiarity ensure a leaner, flatter operating structure.
- Mission critical – minimum workforce establishment necessary to delivering the business’ core purpose (according to the available finances)
- Subsidiarity – delegation of accountability be placed as close as practical to the delivery.
Targeted separations through genuine redundancies of non-mission critical roles will enable an organisation to right size and continue operating through these challenging times. Though the pain would be significant it could be done quickly, enabling the “smaller” organisation to then consolidate, rebuild and focus on the core business. The introduction of supporting flexible workforce models and a greater contingent workforce can then be applied according to revenue, and demand – without increasing ‘core’ moving forward.
Taking care of each other – If you are personally impacted, please contact our office – we are here to listen and support in whatever way we can – it is complementary. Stay safe. The road to recovery will come soon, but we need to be prepared for a new ‘normal’.