Whether small and medium-sized enterprises or large corporations, many companies cannot avoid reacting to the poor sales and earnings situation with job cuts and restructuring. What they must do is tough – especially for the employees and their families. But it is up to them, how they do it. And they can avoid undesirable consequences for their reputation and trust in the company and its management.

A typical example from the current consulting practice of Farner’s team of restructuring experts: The board of directors of a medium-sized construction company decided to cut jobs and close sites in view of the poor economic outlook. Together with lawyers from an external law firm, they worked out the key points of the process and the social plan. The date on which employees are to be informed has been set. Everything is clear. Really?

In our view, in the difficult process of making a decision about job cuts, too little attention is usually paid to important issues: how appropriate are the core messages for the various stakeholders (the so-called “framing”), communication during the consultation process, and the concrete implementation of redundancies.

Framing is crucial

We know from cognitive psychology that we do not listen to or read information and messages in an unbiased way, but always with existing “stories” in our heads and with (pre-)judgements. Effective communication anticipates these “frames”. It does make a difference whether the glass was already half full or half empty for the staff in the phase before the decision to reduce the workforce. It is important to take this into account as early as the decision-making process, to recognise possible contradictions between one’s own messages and the expectations of employees, but also customers and partners, and to shape communication – especially the “story” and core messages, but also Q&As – accordingly. This can ultimately have an impact on the job cuts. Therefore:

  • Involve your own or external communication experts early on.
  • Ensure that legal, human resources and communication experts work closely together

For many companies, the initial announcement is followed by a consultation phase. In Switzerland, this is mandatory for all restructurings involving mass redundancies in accordance with Art. 335f paras. 1 and 2 OR (see text box). This phase is a major stress test for management and employees. We come across many companies that fail to take their employees “with them” in terms of communication. In doing so, they risk a loss of confidence, especially among those employees who are not directly affected. Or they risk losing the communicative lead – to trade unions, for example. Our activities have shown that it is possible to counteract this situation with simple communication measures. Therefore:

  • Always provide information about the communication timetable: when will you (again) inform about what? And be reliable and walk the talk.
  • Ensure that all employees have access to the essential information; for example, record townhall events and make the recording available to those who cannot attend.

There is no George Clooney around the corner

This care also applies to the actual severance discussions – the moment when the individual employees are informed about the (individual) loss of their job. We rarely encounter a situation such as in the film “Up in the Air” with George Clooney, who is sent as a terminator to companies that do not have the courage to dismiss their employees themselves. However, it is widespread that managers are left largely alone in the preparation, implementation and follow-up of these separation talks, according to the motto: “A good manager can (also) do that!” Therefore:

  • Carry out a briefing, or better yet, a training session with all managers who are conducting separation talks.
  • Prepare a tidy outline and speaking notes as a guide for the managers.

Communicative basics that ignore the reality of the stakeholders, communicative air holes and inadequate preparation: All this leads to the fact that the side effects of job cuts and restructuring are often greater than they should be. If the management team is not sufficiently coordinated in this situation, damage to the reputation and loss of trust are inevitable, both internally and externally. And this reduces the basis for successful business operations after the job cuts and restructuring.

From our experience, we see that early consideration of fundamental communication issues is a key factor for future business success. External communications specialists can provide targeted support with their experience and know-how and complement the internal team. In cooperation with management and other specialists, such as lawyers, a solid bridge can be built between the difficult present and the more distant future.

Further reading
Farner’s expertise in “Reorganization & Restructuring”

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Mass dismissal and social plan: regulated by the Code of Obligations

In Switzerland, the law regulates what a mass dismissal is and how to proceed in such a case.

A mass dismissal occurs in companies with between 20 and 100 employees if 10 of these employees receive notice of termination within 30 days. Companies with 100-300 employees: dismissal of 10% of the workforce; companies with more than 300 employees: at least 30 notices.

Companies with up to 250 employees are obliged to negotiate a social plan if there are at least 30 notices of termination within 30 days.

In the event of mass dismissals, consultation with the employees is mandatory. Employees should have the opportunity to make proposals on how to avoid or limit the number of redundancies and mitigate their consequences. There is a full transparency obligation. A final decision on measures (e.g. individual job loss) may only be taken after the consultation procedure has been completed.