• Tue. Jun 21st, 2022

Fallout from European ferry company layoffs shows it pays to get redundancy work right

ByJanice K. Merrill

May 4, 2022

By Dan Cable, Professor of Organizational Behaviour, London Business School

There’s an old public relations adage that “you can’t communicate out of a crisis you’ve behaved in.” Never has that rang truer than against the backdrop of the recent layoff of 800 British workers by one of the UK’s major ferry companies. Since P&O Ferries decided to tell employees, without warning and via video, that March 17 “was their last day of work”, the company has been fighting a losing battle in the public relations stakes. No union was consulted, the crew received no notice, and security personnel were employed to escort the crew off their ships while cheaper agency personnel waited in ports to take on the vacant roles. In the resulting fury, passengers were stranded, unions took to the streets in protest and chief executive Peter Hebblethwaite was fired at the coals by British politicians for the callous way the situation had been handled .

Kate Hartley, author of How to communicate in times of crisis, summed up the public relations disaster quite succinctly in the British press when she was quoted as saying, “the plan appeared to be: laying off 800 employees with immediate effect via three-minute video message; manhandling those who refuse to leave their post (using handcuffs if necessary); leaving customers stranded in various ports because there is no one to man the ships; and replace all staff with cheap labor within weeks. What could go wrong?”

P&O of course got it wrong with its cynical and illegal approach. An employment lawyer told the BBC that while the approach taken by P&O is not unheard of, it is exceptional to waive proper notice and consultation processes. Another legal expert said P&O’s actions would affect the brand’s reputation because of “the seemingly fully planned approach taken to such a large proportion of its workforce, ignoring some of the fundamentals of employee relations”.

That the reputation of the brand, and that of its managing director Peter Hebblethwaite, has suffered enormously is indisputable. Hebblethwaite – asked a joint House of Commons committee if he was in this mess because he didn’t know what he was doing, or if he was ‘just a shameless criminal’ – was forced to admit that the company had chosen to act illegally by not consulting the union to ensure the survival of the company.

The company has been battered by the UK press, with headlines ranging from ‘P&O Ferries sacking new agency workers for drinking on the job’ to ‘Reform company law to avoid another P&O Ferries scandal, bosses say “. The bosses in question are from a coalition of 1,000 businesses, which has urged UK politicians to reform company law through a ‘Better Business Act’ to make environmental and social concerns just as important as profit .

There has been a widespread movement in recent years towards recognition of the interests of multiple stakeholder groups and recognition also of the importance for businesses to be seen as good corporate citizens, so the approach apparently to P&O’s short term “spreadsheet thinking” seems entirely out of place. double. Rabobank, for example, took a long-term view when it had to lay off 30% of its employees in 2016. It took the bank about a year to achieve this, helping to retrain employees and offering dismissal to others. Under these conditions, many employees were comfortable finding another job, and many preferred the changes once they arrived.

Treating people fairly helps improve an organization’s reputation, which makes it easier to hire good people once things improve and companies are able to increase their workforce. If you have a reputation for being a bad employer, it is much more difficult to recruit and even retain staff when they receive outside offers. Employees who survive a slaughter often suffer from survivor’s disease and fear they will be the next to lose their jobs, sapping morale and hurting productivity.

Ultimately, it’s about having a sustainable approach to business. Being sustainable is more than not polluting the planet. It also means having a long-term vision vis-à-vis the various stakeholders – including employees – because without a relationship of trust with employees, a company risks creating a negative employer brand.

Had P&O Ferries taken a longer-term approach, the company might not have faced criminal and civil investigations into the circumstances of the redundancies, the company’s brand might not have not suffered as much and the company’s results might not have been so damaged. as it did by the ship groundings and customer defections that resulted from the debacle.

Dan cable is Professor of Organizational Behavior at London Business School. Dan was selected for the 2018 Thinkers50 radar list, the Academy of Management twice awarded Dan the “Best Paper” award, and the Academy of Management Perspectives listed Dan in the “Top 25 Management Researchers more influential”.