'Staff can raise legitimate concerns about hidden costs and consequences of managerial decisions,' says academic offering tips for HR
Dark times are foretold. With New Zealand’s GDP contracting by 0.5% in the 12 months to June 30, and Australia’s growing by a measly 1% – the lowest result since 2021 – business owners have reason to worry. Any they are.
About 45% of employers in Australia are planning to cut salaries in the year ahead and 41% are considering laying off staff in a bid to trim costs, according to a new report.
HR platform Deel’s Australian Business Leader Pulse Check research showed that 70% of Australian businesses will implement cost-cutting measures this year as they anticipate weaker trading conditions.
In New Zealand, the latest data from StatsNZ showed a 6.9% fall in admin and support jobs year-on-year, as 7,250 workers were cut loose.
Engagement in an economic downturn
Workers are as tuned into the economy as company directors, so there is no use in pretending they don’t need to be prepared for a downturn. It may not be pleasant work for HR, but it is their job.
“Be transparent and as honest as you possibly can be around strategies, because rumours are going to be flying, so be upfront,” said Geoff Plimmer, an associate professor in the school of management at Victoria University of Wellington. “You’ll get credit for being honest, not duplicitous.”
Messages to employees must be pitched right. A patronising tone does little to settle anxiety levels. “Sometimes I see HR material that can be condescending,” Plimmer told HRD, quoting a few cliches such as “this is a very difficult time” and “if you’re feeling anxious and stressed, you can contact EAP” and so on.
“They are realistic messages, but it’s important to think very carefully about the tone in which things are communicated,” he said.
Invite employee participation
When it comes to the meat of the matter – the immediate outlook for a company – emails can be used to explain the company’s position, its plans, a process around decision-making and maybe a deadline for a decision.
“Be upfront and use multiple communication channels, because you reach different people through different ways,” Plimmer said. “And let people have a say, particularly if you’re undergoing some sort of restructuring process – sometimes that is a legal requirement.”
Employee participation is not a natural process in business, he said, and companies often fumble.
“People make suggestions but they are not listened to, even when the suggestions are quite good,” he said. “There must be genuine participation in listening to people and picking out their ideas and concerns, and not just playing people along with ‘comms speak’.”
Managerial resistance to employee feedback is dirty little problem. Sure, not every suggestion will fly, but engaging with ideas is better than brushing them off.
“Some suggestions won’t be realistic, and some may be emotional, but there are often some really good suggestions in there as well,” Plimmer said. “Staff can raise really legitimate concerns about hidden costs and consequences of managerial decisions.”
Communicating through tough economic times
Of course, HR teams may have their own reasons to worry. The occupation has grown over the past decade and management might have doubts about the value it provides, especially in a downturn.
“There is a long-term discussion for HR to look at itself and reflect on how it goes about what it does,” Plimmer said. “They are in the difficult position of both being change managers and the change-managed, in some situations. That’s something a lot of line managers have experienced as well.”
HR is caught between working for management and seeking credibility and the respect of staff, he said, “and it often loses that by taking a very one-sided managerial approach”.
“It severely damages the credibility of HR when it doesn’t do its basic job properly, of maintaining fairness and in terms of people’s reasonable sense about how they should be treated and listened to,” Plimmer said. “That is a real challenge to HR, one that it hasn’t really come to grips with yet as a profession.”
Managing change as business struggles
It’s never too late to start. The best way to handle low levels of satisfaction permeating through an organisation and directed at HR, Plimmer said, is to be clear and truthful.
He is aware of plenty of research that shows employees are resistant to change, but his work has found an important caveat.
“Actually, employees are often quite open to change, but they want good change, and they want well-thought-through change,” he said. “But when they make suggestions for good change, they are not listened to – instead, they are explained away with glib responses.”
If it comes to redundancies, again, be upfront and honest – and think about giving targeted support where needed, Plimmer said.
“After the restructuring, you’re going to have people with survivor’s guilt or who feel anxiety and uncertainty, so have a plan about rebuilding broken trust,” he said.
“People want predictability and honesty as much as possible, and fairness around process and around outcomes. If you have to select staff, design a process that is valid, so people feel they had a fair crack at it.”
