Business

Rob Campbell: The thinking behind sacking workers

Company director Rob Campbell outlines the options businesses he is involved in went through before making staff redundant in the economic crisis.

A Newsroom article by Cat McLennan has called out a number of local listed businesses for their actions in sacking large numbers of people while claiming to have principles based on good people relationships and social wellbeing. Two of those businesses [Sky City and Tourism Holdings] are my responsibility.

I welcome the scrutiny and understand why the call out is made. No one else cares whether I struggle with the tension between the kaupapa and the action. But I do care and think about it a lot and thought it might be useful to write down my thoughts. This is really for me, not a reply to Cat nor an apology to those sacked by my decisions.

In any business there are trading ups and downs. Very few are blessed with fully consistent customer spend forever. Accordingly businesses are often adjusting the number of people they employ, whether it be by utilising casual staff or by allowing the resignations and new applications to adjust to the demand for whatever it is we sell.

I’ve never been much of an admirer of businesses which claim some altruistic “we provide jobs” title. That business creates jobs is a fact but the obverse is equally true when a business fails or demand falls. The jobs follow the investment and trading decisions.

This is not a particularly capitalist phenomenon. Government agencies, charities, churches and unions all adapt their job numbers to the funding available.

Sometimes this happens incrementally and no-one really notices. Sometimes a sudden event creates a crisis of funding and the need for more urgent reduction. Just as, for example, the opening of a new facility or business creates a sudden need for new employees. The sudden reduction is why we quite rightly have redundancy processes and payments agreed between unions, employees and business.

Pretty obviously the shocks are greater when the sudden shock affects a wide range of businesses. The reductions in jobs are bigger and the options for re-employment are fewer. This is why we have government level responses such as the current schemes which delay impact or provide adjustment support. Like the level of redundancy pay, these schemes can be questioned as to their adequacy and/or equity. The point here is that our society does recognise and respond to the situation.

That in turn does not absolve the business from acting reasonably and equitably.

In the businesses where I know what has been done recently and I have been part of the decisions the questions asked were:

- how substantial and sustained do we think the downturn in revenue we are experiencing is going to be? In this case the downturn was very large and the future very uncertain.

- what options do we have to raise revenue in a different way ? In this case the options were very limited but in the casinos we spent a lot of effort and money on adjusting our processes and physical facilities to enable ongoing business as soon as we were out of full lockdown. In the motor home business we found static accommodation uses and when travel was possible launched a massive heavily discounted domestic offer. Many jobs were kept in place as a result.

- what costs can we reduce? In both cases substantial capital expenditure was immediately stopped, balanced really only by not undermining the future operation of the businesses and the jobs that will be associated with that.

- what arrangements can we make with our financiers which enable us to maintain the operations we are able to do? Financiers have a lot of power under these circumstances - ours did not do everything we wanted but they have their own issues and were reasonably responsive. Without that more jobs would have been lost.

- what use can be made of government support ? In our case the government schemes were and are very useful and prevented having to make much larger and more long lasting job cuts. Some of the crisis damage is long lasting and there is no credible scenario in which complete avoidance of staff cuts was possible.

- if we do need to reduce staff costs how can we make the impact as fair as possible among different groups of employees? We made cuts first at management and supervisory levels in both pay and job numbers. In the wider staff, there were intensive examinations of which jobs could not be sustained, what alternative roles might ameliorate the impact and so on. Initial reviews were re-examined and tested for their impact on diversity, training and other fairness grounds.

Did we make errors? I’m sure we did - but not for want of trying to get it right and fair.

Sometimes, though, you just have to make the decisions that are necessary.

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