Human Capital Australia Magazine - June Cover Story
issue 7.5 cover story
How will your corporate culture shape
up following redundancies? Iain Hopkins
investigates why some organisations will
thrive and others will falter
The culTural Toll of redundancies
cover story issue 7.5
piece of academic research from the US
conducted in the airline industry in the months
after 9/11* provides a fascinating glimpse
into the cultural aftermath of redundancies
and financial turmoil. Following 9/11 the airline
industry experienced a rapid decline. From a researcher’s
perspective it provided a controlled experiment. There
were very few external environmental factors for the
organisations involved – just a sudden, sharp decrease in
The researchers looked at the airlines that laid off
staff verses the airlines that did not. They longitudinally
studied how these companies ‘bounced’ – or showed
resilience – in terms of how quickly they came back from
such a dramatic fall. In particular the study examined
the existence of relational reserves (the maintenance
of positive employee relationships). The researchers
concluded that companies are better able to cope with a
crisis when they maintain strong relational reserves and
have adequate financial reserves needed to avoid layoffs.
Quentin Jones, managing director of culture
consultancy Human Synergistics International, says the
results were hardly surprising. “It was one plus one equals
two stuff – if you lay off staff, guess what? You’ve lost
capability, trust, goodwill – the fundamentals of human
capital management. When things picked up, those
companies weren’t in a good space.”
Fast-forward eight years and that research provides an
interesting insight into the current challenges facing the
business world in general. Following the global financial
crisis and the subsequent dip in the Australian economy,
many organisations are facing the same dilemma as those
airlines. Do we lay off staff? Do we have a corporate
culture that can survive the external and internal turmoil?
Values and behaviours
Resilience is suddenly a buzz word: graduates should be
hired if they show traits of resilience; leaders are urged to
demonstrate resilience; and those corporate cultures that
show resilience are deemed more likely to survive. But
what does resilience mean? On one level it could simply
mean that when an organisation is sideswiped from
the left or right, it can bounce back without being
cover story issue 7.5
survived,” Jones explains. The new- around that. “Take a sales organisation,” he says. “The leaders
look water utility didn’t have to deal should say ‘we have upped the sales expectations for all of you
with the infighting, lack of trust, because there are fewer of you but we need to keep the same
and all the other intangible costs of numbers flowing in – so this is what it means’.”
having a negative culture. “It’s like
a relationship. If you’re married and handling redundancies
the relationship already has some Unfortunately many organisations are operating without trust,
cracks, and you put pressure on it truth and transparency, especially when it comes to redundancies.
like another child or a job loss, it The way these organisations handle redundancies will be dictated
falls apart. But there is what we by their culture. Jones cites the approach of a well-known
call capability in the business to Australian financial institution: employees were told to sit by their
bounce. That is where trust and deep desk, and if they received a phone call they knew they had to exit
relationships come into play – they Quentin Jones the building. It was typical of that culture.
are all intangibles but an essential “The predictor of how organisations handle their redundancies
part of the outcome: resilience,” Jones says. will be their culture. Aggressive styles will do it the way
Similar feedback was received from other CEOs in the demonstrated by that financial institution. Constructive styles
study. Most claimed that if they had aggressive, blame-ridden, will do it with real compassion but in a very strategic way and
competitive dog-eat-dog cultures, they would have had no be very clear, open, rational, even caring if they have some of
compunction about cutting staff. Now, if they still have to cut staff those humanistic values. With the passive styles, leaders will
after trying other alternatives, they are being smart about where acknowledge they need to cut people but they won’t do it overtly,
they cut. The blanket 10% cut across the board is out; instead they but rather under the table. People will just disappear,” Jones says.
will look at where productivity and innovation is low, examine the Perhaps more importantly, the post-redundancy aftermath is
causes of that, and then make the call. “This is a big turnaround. a product of the culture. “If it’s done with fear and with people
We actually have companies out there saying they won’t make disappearing without explanation, of course that will reinforce
cuts. At QBE the CEO has come out and said no cuts. I’ve talked anxiety and all those security-oriented behaviours,” says Jones.
with the HR director at Woolworths – again, no cuts,” says Jones. When organisations cut staff, they tend to place emphasis
on those leaving, but to ensure the people left behind remain
The three Ts productive Jones says it is essential for leaders to focus on culture
Moving away from theoretical cultural models, Papps believes and prioritise ways to inspire and motive remaining staff.
the key to an organisation that can say ‘no cuts’ with some This is easier said than done. Many leaders – especially mid-
confidence is the three Ts: truth, trust and transparency. “For level managers – are witnessing an economic downturn for the
whatever reason, in some organisations truth is the first victim of first time in their working lives. Papps notes there can be some
a downturn, followed closely by transparency. Organisations that survivor guilt, particularly when trust and transparency are not
stay true to the three Ts or try to focus on them during these times present.
will come out the other side much stronger.”
The truth piece is critical because in the absence of real facts leaders
people make up rumours, and rumours will undermine a culture. There are six of drivers or levers of culture. They are ‘hard wiring’
“The worst thing we hear is when people are told that last week’s levers such as structure, systems and symbols; and ‘soft wiring’
round of redundancies was the last round, and then the following levers including leadership, mindsets and the resulting behaviours.
week there is another round,” says Papps. He notes that a trait of By general consensus the most important lever is the leader. “A
successful and sustainable business leaders is their ability to tell simplified model is that leaders are the primary drivers of culture
the truth whatever the circumstances – they explain the current at all levels, and then culture drives business performance. Those
situation and why cuts have to be made, and don’t make empty leadership norms are also embedded in the systems, processes and
promises about further cuts not occurring. “People just appreciate structures,” says Jones. “For example, if I’m a constructive leader
being told the truth, which leads to the other part: trust.” I expect people to be constructive and I will reward constructive
Papps cites an example of the ultimate trust breaker: a mid- behaviours. If I’m an aggressive leader then I expect people to do
sized company of around 100 employees that had a round of what they’re told, follow the rules. Aggression actually produces
redundancies on a Tuesday and the next day the management passivity, and what do aggressive leaders complain about most?
team went to Noosa for a four day retreat. “How do you expect Their staff don’t take initiative, don’t think for themselves. It’s a
people to react to that? Do it in the boardroom instead!” he says. vicious circle.”
Transparency is also crucial. Papps urges leaders to be clear on Papps says the most successful leaders will be the ones who
what is important and how success will be measured in the future continue to communicate with their people. Even if there’s no
– and if the goalposts have changed be completely transparent news, he says it’s still important to stress the company is tracking
issue 7.5 cover story
ahead and there are no changes. “That in itself is great because in
the absence of fact gossip starts,” he says.
human synergistic’s top culture tips
In the post-redundancy aftermath employees are searching for
1. Be honest about the situation; you don’t know the
motivation, inspiration and the assurance that they are valued by
their bosses. “Despite corporate mythology, fear is not an effective 2. Be accessible – open door policy is a must, walk the
motivator,” Jones adds. corridors – employees need to voice their concerns
and feelings in order to deal with them.
Turning it around 3. Be empathetic – acknowledge the loss and how
The positive news is that cultures can be transformed – the only people might be feeling.
catch being that it takes extraordinary leadership to do so. Jones 4. Focus on the big picture and purpose and remind
uses Andrew Mohl at AMP as an example. Back in 2003 he was people about core values.
dealing with a basketcase. His company had been reduced from 5. Keep language positive and action driven.
27,000 to 3,000 employees, it was struggling financially and was 6. Reset goals and share them amongst the organisation
on the brink of extinction. Mohl turned it around. – maintain a long-term focus.
“Andrew Mohl spoke at a conference just before he retired 7. Make sure the focus is on ‘working together’ – this will
as CEO and we listened to this cool-headed, rational, but in his ensure motivation levels are maintained.
8. Show that you are responding effectively to the
own way incredibly people-oriented leader. He did some smart
current situation – staff will be more forgiving if they
things financially and technically but also smart things in terms
know redundancies were the last resort.
of communicating to all staff. He used open e-mails and always
responded to queries. He shared
with us his e-mail from when There are countless examples of employees making suggestions
they were in the thick of it, that management teams would not be able to introduce without
saying ‘it’s tough but we’ll see employee support.
this through’. It was leadership “We’ve seen employees volunteer to drop their hours or
of a different calibre. We don’t change rosters to prevent the company having to make colleagues
have too many of those leaders, redundant. This approach shows that the organisation is inclusive,
but Andrew Mohl knew it was respects the opinions of their employees and is open to change. It
through the people that he also says to the workforce that management don’t necessarily have
would get to the bottom line.” all the answers in dealing with these unprecedented economic
The rebuilding and conditions, but they value the thoughts and insights of employees,”
reinforcing of a culture needs to Hewitson adds.
start the moment redundancies
are being considered, not the The broader picture
day after people leave the The fictional Gordon Gekko once said that greed is good; indeed,
organisation. “How you plan greed perhaps best summed up the 1980s. How will the last
it, how you go through the decade be summed up? Jones believes the corporate cultures of
process for the employee and passivity and aggression have brought the world’s economies to
organisation, and those messages people receive from that process the current crisis point. Fortunately, he says, the landscape is
are vitally important. The culture is built through that process, not changing. “The raison d’être for organisations by the community
the day after it’s happened. If leaders wait and do the cleanout and is being renegotiated as we speak and that’s exciting to witness.
then start thinking about the culture, you’re already starting two We can’t do this again but there’s an environmental crisis that will
steps behind everyone else,” says Papps. make this economic crisis pale into insignificance.”
Papps believes that truth may make a comeback. “We’ve seen
unity = strength the results of not having truth in the current GFC – yet there’s
Ironically, it is during these times that corporate reputations can great liberation for companies that have it. CEOs can say, ‘we’re
actually be enhanced. “Organisations that behave in a way that not doing as well as we thought we would, but here’s what we’re
is consistent with their espoused values, even if they are making doing about it. We’ll do our best to keep the company going if you
people redundant, will build and maintain their employment put your trust in us and stick with us’. If you are truthful with
brand. Whilst the wordings of the values are different, typically your people they will understand why the tough decisions are
they are centred on integrity and respect for the individual,” says being made.” HC
Matt Hewitson, lead talent manager, Harrier.
Organisations taking an employee-centric approach to dealing *Relationships, Layoffs and Organizational Resilience: Airline Industry Responses
to September 11 by Judy Hoffer Gittell, Brandeis University; Kim Cameron,
with the current crisis will also benefit from employee goodwill. University of Michigan; Sandy G.P Lim, University of Michigan