INSIGHT. 11/08/18

Using Common Sense in Change Management

By Chris Gillick

Layoffs are never easy.

In our business, clients seek our advice on how to handle these unfortunate events. In recent years it has adopted its own jargon: change management.

A well-constructed communications plan around a negative event like layoffs or outsourcing can minimize fallout, but a poorly executed rollout could be costly. Regardless of scope or scale, all such plans must address stakeholders’ concerns with clarity, humanity and tact.

Which brings us to the curious case of Verizon.

In late September, the country’s largest wireless carrier announced that it was offering voluntary severance packages to 30 percent of its 150,000-person workforce. Telecom companies like Verizon tend to be stable employers, so a massive restructuring like this one will make waves with employees, investors, customers, the media, and the general public.

On the surface, the company made clear its business rationale for doing so: free up resources to build a faster 5G network, an investment requiring billions of dollars. In addition, the severance offer to affected workers is quite generous: 3 weeks of pay per year of service, up to a maximum of 60 weeks.

So far so good. But at this magnitude, residual issues will no doubt arise. In Verizon’s case, roughly 2,500 IT workers were not offered the same package. Instead, they were going to be “re-badged” to new jobs at Infosys, Verizon’s new outsourced IT vendor.

According to a report in the Wall Street Journal, the IT workers “could accept the new job offer with a guarantee of similarly valued benefits for one year or refuse and forfeit access to their 2018 bonus and a special share award granted after this year’s tax overhaul.”

This did not sit well. While their non-IT colleagues were offered a mini-windfall, IT workers received a downgrade in employer brand, reduced job security, and a potential forfeiture of earnings. After pushback and the threat of a class-action lawsuit, Verizon relented, offering about 1,000 of the IT workers the option of taking the exit package or moving to Infosys with a guarantee of comparable pay and benefits for two years, according to the WSJ report.

This could have easily been avoided with some strategic thinking, staggered execution, and common sense. By completing the outsourcing first, then announcing a greater restructuring, the company could have achieved its personnel goals with fewer headaches. In a corporate transformation of this size, there is a greater risk of employees who feel shortchanged to seek out both lawyers and the press. That happened here, creating incremental headline risks. In the process, Verizon management cost its shareholders millions more in transition costs.

For any company going through something similar, here are some steps to take before announcing a reduction in force:

  1. Outline Rationale: Whether it’s a decline in sales or shift in strategy, all employees must have clear answers to the inevitable questions that come up. Avoid jargon and create a Q&A sheet that addresses all stakeholder concerns.
  2. Analyze All Stakeholder Audiences that Might be Impacted: Companies need to be aware of all transformation-related work streams in order to identify interdependencies and ensure consistency in messaging. Workplaces – especially large ones – are complex organisms and a one-size-fits-all approach is usually not the correct one.
  3. Ensure Proper Delivery: Once a company announces major staffing changes, employees’ reactions will run the gamut from relief to anger. While messages will be customized by audience, companies must show empathy in their delivery in a way that reduces backlash. Generous severance packages certainly don’t hurt either.

Altogether these steps will minimize business and reputational risk and allow everyone to move on with their dignity intact.


 

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