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Published on 10 December 2010 by Tony Groom

Working With Trades Unions to Promote Consensual Turnarounds

A Company Doctor and former President of the Turnaround Management

Association, who seeks to save companies, and who does not work for banks, has

approached a number of UK trades unions with a view to forging a collaborative

approach to dealing with companies in financial difficulties.

Currently, employees are rarely involved in the decision-making when a company’s

survival is threatened, but a successful business turnaround relies very much on the

support of its employees.

Unlike formal insolvency procedures, turnarounds are consensual. Leadership,

teamwork and communication are key to implementing change. Engaging with staff

and involving them in the business introduces accountability and responsibility to a

business and is crucial to its success. This is even more so with a turnaround where

change is necessary.

Historically turnarounds have been co-ordinated by banks as secured creditors, or by

new investors who drive change from a purely financial perspective, oriented

towards achieving single stakeholder objectives. What gets measured, gets

managed.

Many stakeholders have compromised their credibility with employees by this pursuit

of short-term objectives.

Why should investor shareholders care about survival after their financial engineering

has repaid 100% of their acquisition investment? Are secured creditors more

interested in reducing their exposure or saving a company? Professional managers

tend to have their own attractive exit packages and new management can make a

quick buck more easily if they pursue short-term objectives.

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Call Tony Groom on 0844 8040 540

So who is really interested in the employees let alone securing their employment for

the future?

The trades unions are still believed to be the true representatives of employees’

interests. It is acknowledged that the relationship between management and union

representatives has in some instances become polarised. Negotiations are often

characterised as confrontational, with management and unions trying to hold each

other to ransom.

None of this is helpful when trying to save a fragile business. It is rather like the

surgeon fighting with his medical team when a patient’s life hangs in the balance on

the operating table.

This new initiative to collaborate with trades unions is based on developing a mutual

respect and understanding of each other’s objectives outside the constraints of a

turnaround situation.

It is intended that the respect and understanding of each other’s roles is brought to

the table by involving union representatives early in the process and especially when

considering turnaround options.

For example, union input can be valuable when considering the thorny problem of

how to reduce staff costs, where hard choices might have to be made between

cutting numbers, wages, hours, or benefits.

The great advantage of having union representatives involved in the decision

making process is their commitment to helping implement the agreed measures. It

helps remove fear among staff by reassuring them that their interests have been

taken into account when developing the turnaround plan.

A recent turnaround was achieved with support from a union representative.

It resulted in agreement to reduce contractual hours for staff from 60 to 32.5 per

week at a slightly increased rate with scope for overtime above this level when

business picked up.

The union negotiator was tough but realistic and introduced some valuable initiatives

that led to improved facilities for staff and an upgrade to the staff handbook.

Although largely non-financial these initiatives helped reassure the employees that

they were essential to the business’s survival. The employees accepted the changes

and the turnaround was a success.

K2 Business Rescue The Emergency Service for Business

Call Tony Groom on 0844 8040 540

We are not Insolvency Practitioners. We operate within the law to protect our clients and their wealth. Our team has worked for over 20 years to help stabilise and return hundreds of businesses to profitable growth. Once appointed, Insolvency Practitioners do not work for you, they work for creditors and use your company’s assets to pay themselves. We work for you, not creditors.

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