Taking tough decisions as an EO business – practical steps
The UK might have narrowly avoided a recession so far, but that doesn’t change the pressure many companies continue to face. These are tough times, and tough times bring tough decisions – particularly when restructuring, redundancies and cuts to hours are involved.
Elon Musk’s approach understandably made global headlines (for all the wrong reasons) when he took over at Twitter last year.
In fact, the CIPD put the billionaire on the cover of its People Management magazine as an example of ‘how not to make people redundant’ and went on to explain the legal, commercial and personal considerations a good employer should instead apply, in its informative article within.
So if you’re the leader of an EO business taking tough decisions in the current climate, what should your priorities be? What is best practice?
Here, our Associates Lisa Fryer and Kathie Robb share their insight and five practical steps to support leaders to take tough decisions when they are EO.
Do your research – then clarify options
You have a tough decision to make. Start by investigating your options, clearly setting out each one’s pros and cons.
‘This will help when it comes to seeking the support – or even agreement – from stakeholders,’ says Kathie. ‘Remember that in an EO business you may need your Trust Board’s approval if redundancies or significant changes to your structure are being considered.’
Next, do your research and check current best practice with trusted sources, including the CIPD and your legal advisors or accountants. They will help you navigate the statutory requirements and meet minimum expectations.
You should be mindful of your business’s values, ethos and wider reputation too.
As Lisa (who is also JGA’s Operations Manager) explains: ‘There’s nothing wrong with working to minimum statutory requirements, but if your customer base values trust and respect highly, you should take this into account.
‘Younger customers and the power of social media mean that a poorly-considered action can have a significant impact on your reputation (as seen at Twitter) – risking your business’s sustainability in the longer term.’
Keep your employee-owners informed and engaged
One of EO’s benefits is that the best solutions can come from within.
In companies with a genuinely effective EO culture, the employees will already understand your business’s challenges and direction of travel.
‘While it might be scary to explain that tough decisions must be taken, if your employees are already informed and engaged it’s likely these won’t be a huge surprise,’ Kathie points out.
‘Values-led businesses tend to work with transparency and appreciate honesty, so bear this in mind.’
Avoid taking hasty action under pressure
So what mistakes might leaders make when taking decisions in today’s climate – and how can they avoid them? Lisa identifies the top two as taking ‘hasty action’ as a result of feeling pressurised because of rapidly evolving situations – and not seeking expert advice.
‘There’s a risk of just doing what might have been done before, even though legislation, attitudes and expectations might have changed,’ she says.
Another pitfall can be the informal leaking of concerns and challenges, causing unnecessary unrest, speculation and distress.
If your network is raising concerns, Lisa recommends working with ‘general observations rather than specifics’. Save those details for trusted specialist advisors instead.
Seek expert advice on best practice HR if you need it
Having the right HR policies in place (ideally from the start) will also support leaders when they face tough choices.
‘Investing time in an HR policy for restructuring and redundancy might not be your priority when all is well, but it will give your business a solid basis if needed later,’ Kathie explains. ‘Flexible working, career breaks and contractual flexibility as an employer might also afford a more open discussion / conversation when the tough times hit.’
Don’t forget to ensure any HR policy is updated to keep it legally compliant. You should also take account of changes in attitude and expectations, especially around restructuring and redundancy. Seeking expert external advice can be particularly useful here.
‘Any Trust Board worth its salt will be asking the operational leadership to identify the current top challenges facing the business and, more importantly, what plans are in place to mitigate their impact as early as possible’
Kathie Robb, JGA Associate
Draw on the insight and value of your Trust Board
As you’d expect, sound governance comes into its own when tough decisions need to be made.
In an EO business, the Trust Board can add real value, with its oversight of the business risk register and role as a conscience for the Operational Board providing a positive support for effective decision-making.
‘Taking a more measured approach and looking through the longer strategic lens, the Trust Board can ask difficult questions during the good times and increase scrutiny and challenge as situations change,’ Kathie reveals.
‘Any Trust Board worth its salt will be asking the operational leadership to identify the current top challenges facing the business and, more importantly, what plans are in place to mitigate their impact as early as possible.’
‘Smoothing the curve of change and helping to minimise any shocks – this is where sound governance can pay real dividends,’ Lisa adds.
Support your leaders to deliver change well
Of course, tough decisions don’t only affect those on the receiving end of difficult news. Leaders are people too so a good EO business should be providing them with the right professional (and personal) support to deliver change well.
‘It’s easy to assume that senior leaders will be capable and ready to communicate and support the delivery of tough decisions,’ says Lisa, ‘but the business should check that those who will be responsible for the execution of any plans are well-informed and up-to-speed on all communications, decisions and what is open for discussion.
‘The business should also provide the opportunity for this group to feedback and access specialist advice, even if it’s through an internal lead. Lastly, if you want to deliver and execute tough decisions well, you’ll need to demonstrate empathy at all levels – remember this isn’t the same as sympathy.’
Taking tough decisions as an EO leader – practical steps
It’s a lot to take in. So what five top practical tips would Kathie and Lisa offer to EO leaders taking tough decisions in challenging times?
1. Take time to take stock as soon as possible. Don’t get wrapped up in the day-to-day – you need to be heads-up to the horizon so you can limit any surprises. Check with your networks for any incoming trends or concerns to ensure nothing slips through. Chances are, other business leaders will be considering similar challenges so ask around and share what you can in exchange.
2. Speak to specialist advisors before you get to the crunch. Seeking their input early could save time, energy and keep the whole situation a lot calmer in the long term.
3. If you’re an EOT, fully utilise your Trust Board. Ask for their challenge and be prepared to listen and act on their questions. Trust Boards tend to have employees on them, frequently from positions that are not senior leadership, so their experience and perspective can be invaluable.
4. Engage with your governance and wider employee groups, where possible. If you’ve identified an incoming problem and they’re able to support with solutions (however creative) this may lead to a smoother outcome.
5. Don’t assume you’ll get everything right. Remaining alert to how any change is being managed and experienced by your employees can make a huge difference. If your business already supports open and effective two-way communication, fewer employees should be frustrated or begrudge any personal impact in the longer term. Graciously accept feedback from employees about their experiences, acknowledge where improvements could be made for the future and appreciate their honesty.
Want to know how JGA’s transition, people and governance services can support you and your EO business to take tough decisions in challenging times?