It’s a stark warning to leaders pushing through change. Tread carefully, or the people you’re firing may figure they’ve got nothing to lose by airing your dirty laundry.
› Closing a division requires communication
In organisational change, there are always winners and losers, says Brian Gardner, general manager at career advisory The Donington Group.
“There’s always going to be people who think it’s a good move and others who think it isn’t. Decisions will have to be made, and the question is how you communicate to make the best of the situation,” Gardner says.
Listed companies have a legal obligation to reveal all material information to shareholders, which can make it difficult for them to keep staff in the loop without revealing incomplete information to the market and to their competitors.
But while it is difficult, it’s best to aim for openness.
“I’m actually a great believer in communicating as clearly, early and openly as one can. People are not stupid. If you treat them as objects instead of people, you can do a lot of damage to your workforce and to your brand.”
› Procedural justice
The key to treating employees well while closing a division, says change consultant Jennifer Frahm, is procedural justice.
“Employees can cope with most bad news, provided there’s a sense of procedural justice. They want to know the process and procedure leading up to a decision is fair,” she says.
“When to communicate is important, but so is how you came to the decision. If their poor performance is entirely new to employees, it’s seen as not fair.”
In his missive to colleagues, Iron said he was “the last to know” about the decision to shut his division. This is despite Linwar having been downsized in the previous few months, which could be seen as a clear signal of ANZ’s concerns about the broking firm.
“’No surprises’ is the mantra,” Frahm says. “If there is change coming, you want people to know it’s coming. That’s the best-case scenario.”
› The costs of getting it wrong
ANZ’s problems are likely to play out far from the media’s gaze. While the leaked letter makes for good headlines, it’s the effect on morale that will have a long-lasting impact on the organisation.
Downsizing or dismantling a division are both just terms for firing people. And firing people badly can make all your staff unproductive and insecure.
When people see their colleagues let go, they often suffer survivor’s guilt, says Frahm. “The big problem is, typically management perceives that anyone who is left will be grateful and work harder. That’s not what happens.
“Those who remain go through a whole range of repercussions – grieving for colleagues who have left, guilty they have a job, and anxious about the future. They have to process that before they can get into a productive mental space.”
The key to not losing trust with the rest of your workforce is to not lose it with those you’ve sacked.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
