Redundancies come at a high price as six-figure payouts for senior staff spark audit request
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Auckland Council has undergone significant restructuring over the past 12 months and it seems the major change has come with a hefty price tag.
According to the council’s most recent annual report, redundancies have cost the governing body $12.5 million with some senior staff earning six-figure settlements.
In fact, Auckland Mayor Phil Goff has asked Audit New Zealand to investigate after one manager was paid $405,000 in a confidential settlement.
However, council chief executive Stephen Town says he is confident the correct processes were followed while deciding on compensation sums.
"Any severance payment made by Auckland Council is done with great care,” he said. “While we aim to resolve any issues within the terms of employment agreements, there are occasions where a severance payment is the most pragmatic option.”
Most of the $12.5 million went to 227 council workers who lost their jobs across a number of sectors, including IT, libraries and customer services.
However, the struggle may not be over for Auckland Council as leaders may now have to contend with a disillusioned and disengaged workforce.
According to Hamish Kynaston, a partner with Buddle Findlay law firm, organisations executing major change initiatives can’t afford to neglect employees who remain following mass redundancies.
“You’ve got to think about them – they’re seeing their friends, family and colleagues go down the road to redundancy,” he told HRD.
The most effective way to keep staff on board, according to Kynaston, is to conduct the change initiative in the most considered and respectful way possible.
“Going through the process in what is clearly a fair way, where you’re not trying to rush it, where you are providing good information, where you are providing personal support and giving feedback to employee comments – that’s key to avoiding reputational harm,” he said.
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Why HR shouldn’t treat everyone the same during major change
Common mistakes HR makes during major change
According to the council’s most recent annual report, redundancies have cost the governing body $12.5 million with some senior staff earning six-figure settlements.
In fact, Auckland Mayor Phil Goff has asked Audit New Zealand to investigate after one manager was paid $405,000 in a confidential settlement.
However, council chief executive Stephen Town says he is confident the correct processes were followed while deciding on compensation sums.
"Any severance payment made by Auckland Council is done with great care,” he said. “While we aim to resolve any issues within the terms of employment agreements, there are occasions where a severance payment is the most pragmatic option.”
Most of the $12.5 million went to 227 council workers who lost their jobs across a number of sectors, including IT, libraries and customer services.
However, the struggle may not be over for Auckland Council as leaders may now have to contend with a disillusioned and disengaged workforce.
According to Hamish Kynaston, a partner with Buddle Findlay law firm, organisations executing major change initiatives can’t afford to neglect employees who remain following mass redundancies.
“You’ve got to think about them – they’re seeing their friends, family and colleagues go down the road to redundancy,” he told HRD.
The most effective way to keep staff on board, according to Kynaston, is to conduct the change initiative in the most considered and respectful way possible.
“Going through the process in what is clearly a fair way, where you’re not trying to rush it, where you are providing good information, where you are providing personal support and giving feedback to employee comments – that’s key to avoiding reputational harm,” he said.
Related Stories:
Why HR shouldn’t treat everyone the same during major change
Common mistakes HR makes during major change