Project example :

"HR Manager for Downsizing"

HR Manager for Downsizing

The client was an international automotive supplier headquartered in the United States. The company has different production plants in Europe, which manufacture components for various motor vehicle corporations. In Germany, some of its factories had reached the targeted operating time. With that the case, the client now wanted to re-establish production at a location with a better cost structure. I was assigned as external HR Manager for the upcoming restructuring.

Project »HR Manager for Downsizing«

On the one hand, the client wanted professional Project Management for the upcoming plant decommissioning. On the other, the client was looking for support in implementing the staff reduction and setting up the transfer company. In addition, it was also in the client’s best interest to have the Works Councils supported professionally, since the Works Councils were organised and professionally trained when it came to the Trade Union. Aggravating the situation was the fact that the plant was to continue production after the announcement of the closure. How hiring an Interim HR Manager came about: The plant’s HR Manager had changed careers! Meanwhile, it so turned out that two employees in the HR Department, had taken charge of the operational side of Human Resources Management. This was working out well and retaining this status quo would give me, the interim HR Manager the scope to concentrate on HR Management, as well as the upcoming staff reduction.

My duties in the HR Manager for Downsizing project were:

Accompanying the negotiation of reconciliation of interests and social plan
Employee Communication on the shutdown
Accompanying the Town Hall ‘all-hands’ meeting
Implementation of the decommissioning
Establishment of a transfer company
Filing of the mass dismissal notification
Negotiation of termination agreements
Clarification of entitlements from company pension schemes (Germany’s BAV scheme)
Settlement of employment relationships
Conducting exit interviews

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Course of the project

The client commissioned me as HR Manager, with the focus on restructuring, to oversee the reduction of staff. Given the client’s awareness of how hard hit many employees would be by the closure of the plant, the understanding was that the job cuts should be carried out in a socially equitable manner. The company had an experienced and well-trained Works Council that actively engaged in exercising its rights. This meant that the workers, for their part, had high expectations of the social design of the job cuts.

When I started the project, the situation between Plant Management and the Works Council had escalated. The Works Council had to some extent made demands that were not realistic. At the same time there were articles in the local press to put pressure on the employer. The client was represented by an international law firm, dealing with the social plan negotiations on a very tight schedule. This set the timeline for the upcoming changes. Concomitantly, the employer had prepared possible proceedings on the Conciliation Board.

Project plan for restructuring

As HR Manager for Downsizing, I reported to the European HR Director in Hungary. The client attached great importance to thorough Project Management. I drew up a project plan for the client, which not only included precise timeframes for the negotiation of the social plan, the selection of the provider of the transfer company, but which also made provision for the contacting of the Federal Employment Agency (the main public provider of employment services in Germany) and the filing of the mass dismissal notification. The administrative implementation of the staff reduction was planned in great detail with the client. For argument’s sake, which resources were needed for winding up of the employment relationships on an administrative level?

Improving internal communications

Part of the client's corporate culture is the fair treatment of employees. Communication based on employee appreciation was important to the client. All employees of the plant were therefore to be informed in detail about the plant-closure decision in a so-called Town Hall ‘all-hands’ meeting. It was requested that I, as the external HR Manager for Downsizing, observe this meeting together with the Managing Director of the plant. Furthermore, the client commissioned me to compile the presentation documents on the upcoming plant closure. In it, the reasons for the entrepreneurial decision were to be communicated. In the meeting, we also presented the approach the transfer company would be taking, the volume the social plan would constitute and the severance pay factor.T

» Town Hall meetings for a plant closure aren’t easy for me either. An external HR Manager however can bring much-needed distance into the equation. I face difficult situations with objectivity – so the situation tones down after a short time. «

Lars Schott, HR Manager

Institution of the transfer company

The client and the works council had different ideas about what the provider of the transfer company had to bring to the table, for it to be selected. In the social plan negotiations, the client left the selection of the transfer company provider to the Works Council. My previous work as a consultant for a provider of outplacement & transfer companies put me in an excellent position when it came to knowing which factors were generally high on a transfer company’s list of importance. When selecting the transfer consultants, I focused on the provable networks these had with the local labour market, as well as closely querying their placement quotas and labour market contacts in the subsequent reporting.

Looking after the Works Councils

Another focus of my work as HR Manager for Downsizing was looking after the Works Councils in the course of the restructuring. The client had to implement various measures subject to co-determination, so that the plant could be closed by the aforesaid later. Various plants had to be dismantled and transferred to the new location. Of the Works Councils, some had a lot of frustration build up. With the situation having escalated like this, personal contact with the Works Councils became all-important to me. I personally attended all Works Council meetings and answered critical questions.

Clearly, Works Council meetings can be very demanding. However, as an HR Manager, I make it my mission not to hide behind lawyers. It’s important to look frustration and aggravation in the face and to find constructive solutions together!

Handling staff reductions professionally

((H2)) Handling staff reductions professionally

As part of the restructuring, the client decided to implement the downsizing in the form of staff reduction in two waves. A voluntary redundancy programme was implemented first in order to avoid having to announce compulsory redundancies. As HR Manager for Downsizing, I actively sought out contact with the workforce and offered all employees the opportunity to have me or my staff, personally answer any open questions they had about the calculation of severance pay or admission to the transfer company. What’s more, it became apparent that there was also a high demand for finding out about the tax treatment severance pay would incur; the entitlement to unemployment benefits; and how the restrictive blocking periods imposed by the Federal Employment Agency (as in the case of Germany) worked..

The challenge posed by staff redundancy

When implementing large-scale staff reduction programmes, the challenge for the HR Manager lies primarily in its administrative implementation. It requires expertise in the filing of the mass dismissal notice. Even more importantly however, is the meticulous drafting of all contractual documents and this under massive time pressure. As an external HR Manager for Downsizing, I responded to these exacting demands with careful Project Management and by having the results of the work performed, checked and approved by the different stakeholders.

A proven track record

The group was able to shut down its plant as planned within the scheduled time window. At the end of the day, the workforce also went along with this decision. The plant shutdown came into effect without a single labour court case. Neither the Works Council nor the employees filed a complaint against measures taken by the employer. The transfer company got off to a good start and it was possible to place all employees in the labour market. The chairman of the Works Council even came specially to thank me for the cooperative collaboration saying something along the lines of: It was not a situation you would wish on your worst enemy; still, together we made the best out of a bad situation.