Employee relations: What is the way forward now for Northern Rock?

The latest instalment in the soap opera that is Northern Rock sees the troubled bank entering into a 90-day consultation period with the Unite union and employees over 2,000 proposed job cuts.

A quick scan of Northern Rock’s website flashes up the latest announcement from new chairman Ron Sandler yes, changes are afoot, but nonetheless the bank’s ‘valued’ customers shall continue to receive an excellent level of service. Apart from the issue of how he proposes to deliver this with a 30% reduction in the bank’s workforce, surely someone should also pose the question: what about the level of gratitude his management team owes those employees?

How much more can be thrown at them? Since the story broke last September, the bank’s mostly loyal workers have been subjected to scores of negative headlines, revelations about juicy pay-offs for senior management, constant job insecurity, and now, following nationalisation, the prospect of redundancy. Front-line employees have also had to deal with angry, worried and sometimes aggressive customers venting their frustration.

Exit strategy

Unite is calling on Northern Rock not to make compulsory redundancies. Clearly, there will be many employees who deeply fear the prospect of losing their jobs, particularly in the current economic downturn, and it is these people that the union will be fighting for. But on the flip side of the coin, we have to wonder about the prospect of a significant proportion of the bank’s employee base that has simply reached the end of its tether, and will now jump at the chance to request voluntary redundancy – a position that will, quite rightly, be supported by the unions if job cuts are inevitable.

The road ahead marks an intense and difficult period of change littered with challenges. So, in dealing with a voluntary redundancy situation, what should Northern Rock prepare for?

Prepared for the worst?

First, an internal communications and damage limitation exercise is required. The challenge for management is to communicate proposals to employees in a positive manner with clear and consistent guidelines – and succeed in pulling this off, despite the constant press speculation (which may be far from accurate), and do it under the eagle eye of the union.

With that box checked, the next headache for senior managers will be how they stave off what may effectively become a ‘brain drain’. Sandler has confirmed that the cuts will affect all grades, but he still has a business to run, however lean, and talented people with a proven track record will be a much needed commodity.

Northern Rock may well find that it has its work cut out in preventing them from exiting, even if they are not given voluntary deals. This problem will be exacerbated if the voluntary proposals are generous and based on length of service. The chances are that more experienced people with a greater tenure will be sorely tempted to jump ship.

Then there’s still the possibility, however remote, that the 2,000 quota announced last week may not be met by voluntary methods alone – or that the balance of volunteers from a skills perspective is uneven. What strategy (if any) exists to address this? The logical conclusion is that the bank will seek to pursue compulsory redundancies, despite union resistance. No longer a public relations headache – more a severe migraine.

Throughout everything, the ability to make quick decisions and see them through is a quality that is needed in times like these. For the sake of Northern Rock’s battle-scarred reputation, a speedy resolution and a return to ‘business as usual’ is vital.

An active focus on employee relations and engagement is essential if the company is to stand any chance of regaining the trust of employees, building and maintaining morale, and rebuilding the goodwill built up over many years as a local employer with strong community links. These challenges will need to be met if Northern Rock has any chance of safeguarding its reputation for future years as a credible employer.

Andy Cook, Managing director, Marshall James HR

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