How can organisations build resilience into their structures and practices while facing the continued challenges of the pandemic and the climate crisis, and how does this impact restructuring?
One of the effects of the continuous COVID-19 waves of the past two years is that people have started looking at life in a different manner. This is not limited to their private and professional lives (as with the 'great resignation' and other post-COVID job movements), but extends to society and business in general. New 'buzzwords' are becoming a yardstick for success, and what the Founding Fathers called their 'pursuit of happiness', post-Covid, people may be calling 'resilience'.
All areas of life and work will be judged under this new heading, including restructuring and particularly the HR aspects of restructuring.
Resilience is not a new topic. With the entire discussion about a sustainable workplace, employment lawyers and HR specialists have already embarked on a new journey, guided by fundamental principles such as those embedded in the European Social Charter. For years, Article 10, the right to vocational training, has already required HR restructuring approaches to:
"provide or promote, as necessary, the technical and vocational training of all persons, including the handicapped, in consultation with employers' and workers' organizations, and to grant facilities for access to higher technical and university education in particular to better address fundamental technical changes in the workplace."
The new German government, guided by French and Scandinavian examples, will base its new programme on providing such fundamental rights.
But 'resilience' goes far beyond this. It requires a forward-looking approach, entailing agility and adaptability in an ever-faster changing world, while at the same time preserving the core stability of an organisation or industry. Looking at the coal, steel or energy industry in Europe, becoming 'green' is not only about changing to different resources; becoming 'resilient' will mean ensuring these resources offer increasing stability of supply. This will be the basis for stable and reliable jobs and good working conditions.
In France, for example, the specific obligation for organisations to inform and consult the economic and social committee or ESC (comité social et économique or CSE in French) on environmental issues is a relatively new phenomenon, which only came into force in August 2021 (see here), trailing behind Germany in this respect. This obligation to consult the works council on potential environmental consequences is triggered in the following situations:
- during the three large annual consultations on strategic directions, economic and financial situation, employment, social policy and working conditions; and
- during specific consultation exercises on any projects that have a significant impact on the organisation, the operation and the general running of the company (article L.2312-8 of the French Labour Code).
A failure to do so is technically a criminal offence (délit d'entrave) for the organisation and its legal representative(s), giving rise to a minor fine, but probably more importantly, there is a potential risk of injunctive action for an order to postpone the relevant decision or operation until consultation has been correctly carried out. In practice therefore an environmental element should now be included in the preparation of the general consultation process, to avoid this risk.
For the time being, most ESCs are not particularly active in this domain, but the general expectation is that they will become more proactive, in particular as organisations now also have an obligation to:
- organise training for ESC members on this subject, to enable them to exercise these new environmental consultation rights in practice;
- put specific data relating to environmental considerations at the disposition of ESC members in their database, the BDES, which has now become the BDESE (la base de données économique, sociale et environmentale, see here).
ESCs also have the right to appoint an expert (financed by the organisation for mandatory consultation exercises) to advise them notably on environmental issues and concerns. Experts are therefore also likely to increasingly refer to environmental issues in their reports and may even use these as leverage in potentially sensitive or tense consultations.
Finally, the general trend of increased employee activism on social media platforms, where employees are increasingly vocal in wishing to influence the strategic direction of their employers, may also encourage works councils and trade unions to become increasingly active in the environmental debate within organisations to ensure they continue to be representative and do not lose political ground to non-trade union-led movements, such as the gilets jaunes.
But how to approach this in an HR restructuring? There may be three elements to pursue:
1. Address resilience upfront
When approaching a consultation process with employee representatives, being forthcoming (maybe even beyond what is required by law) on the effects of the proposed changes on the organisation's resilience, and its impact on jobs as a core part of the restructuring may become much more crucial. French lawmakers have just introduced a whole set of consultation obligations on the 'green impact' of proposed measures, but it may be wise not to wait for legal obligations but to understand that an organisation's resilience will also be judged on whether the social partners can agree on this basis.
2. Approach restructuring creatively
When selecting the means of the restructuring, rather than the classical 'mass redundancy' approaches, organisations we will need to propose a completely different set of options, including training, requalification, right to return in better times, retentions and anything that will show that the employer is doing everything it can to maintain a good standing for the retained workforce and for future hires. In the age of social media campaigning, mass redundancies may prove to be a thing of the past.
3. Consider timing
Finally, we may need to think about a completely new model of timing. These days, HR involvement in a restructuring is mostly 'last minute', only deployed when the restructuring project is approaching 'execution'. Recent examples of successful restructurings have showed, however, that bringing in staff members and 'business angels' at a very early stage, making use of 'intelligent M&A' to create new service relationships and creative thinking in collaboration with responsible social partners, have shown magnificent results. This is an appeal to the union side, too, to move away from nineteenth Century approaches to restructuring announcements.
The insolvency laws, based upon an EU format (in the Directive on preventive restructuring frameworks), have already introduced a preemptive regime to avoid liquidation scenarios. Perhaps the HR world needs to think about a completely new set of consultation guidelines for complex restructuring operations, which would facilitate more resilient outcomes as we move on.
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