Company closures – Actions and Attitude needed

These days, employees know things even before they become public. If there are problems internally or if there is loss of market share, they will realize that something is wrong. And instead of them getting a wrong idea, it is better to be honest with them (employees) and tell them honestly as to what is going on.

Communicating with the employees is very important and the organization needs to come clean about what is happening with the company and the reason for taking such a decision. Instead of them knowing about it from a lower level employee, it should be the CEO’s responsibility to talk to them and let the employees know the true sate of affairs.

Working in an organization has its own share of highs and lows at all levels. Most of the highs would be signing an important deal or an increase in the revenue and the lows would be not meeting targets or losing an important client. The best way to deal with such situations would be to take every day as a new day and try harder. The critical lows are actions required by a company if they realize that they are going into losses and there is no next day to work things out. Most common answers to this question would be: file for bankruptcy or shut shop. So no matter the organization decides, it’s always the employee who suffers and bears the brunt.

The most important thing any company should do is to talk to their employees as early as possible and discuss with them a certain course of action. The CEO and the board of directors should be truthful as to what has happened and be transparent about the entire issues. It shows goodwill on the company’s side if they inform their employees personally about such situations. And if the company is closing due to legal hassles, then the same must be explained to them as to what is happening and what the current situation is like.

Informing employees will help to enable them to consider the job security, compensations to be provided, the status of the basic benefits such as wages, pensions, etc. Also it will help the employees to seek alternate employment.

When the organizations are shutting down, what next / the CEO and the MD have other issues to think about. But what happens to the employees?” an important issue to be considered is the placement of the existing employees. Companies can outsource their employees resume to head hunters and try to find new employment for them. There are outsourcing and research group that can help them find new jobs and all the CEO has to do is forward the resumes and put in a good word. In case the organization is a conglomerate then the CEO can plan for deployment to other units and divisions with the consent of Board of Directors and other unit heads.

Giving the employees’ problems a head start is important. If they cannot help them find new jobs, then tell them in advance so that they can start looking for new jobs. If the existing organizations have other sister companies, then they should try to place the employees with them. It is also very important that the company clears all its dues with the employees. They should also give additional compensation to the employees and end matters on a good note rather than the employees leaving the company feeling cheated and betrayed. A major bankruptcy may involve a great deal of litigation, must be given priority while closing down but in practice, they are rarely acknowledged.

Having a crisis management team in place helps a lot during times like these. These days all companies have a crisis management team that can help them deal with various issues. So when the CEO or the MD is explaining to his/her employees as to what is happening, the crisis management team can help them understand the issues and the fallback of the situation. The bottom line is that any company can shut shop or file for bankruptcy. What matters is that how they handle the situation. Bidding good-bye on a good note helps as the employees will remember how their previous employers treated them.