Adaptability: Key to Sustained Organisational Success

PONG - What a stench!

P and O _123742294_geograph-5663457-by-billy-mccrorie bbc.co.ukUnless you’ve been out of the UK for the past week or so, you will undoubtedly be aware that P&O Ferries has been in the headlines. This followed their firing of 800 employees and immediately replacing them with agency staff. Now, it is hardly unheard of to announce a redundancy programme of that sort of number of employees, but it is pretty unusual when that number represents 46% of your entire workforce! Yet even that wasn’t what created the backlash of this announcement.

No, what really created the storm is the way the whole affair was handled, because:

  1. The employees (a number with over 30 years’ service) were notified via a short (three-minute) video-link and expected to immediately evacuate their vessels and go home with security guards on hand to escort them off;
  2. Their agency replacements were waiting on shore to board immediately after they had disembarked.  

Not since I saw the redundancy of an entire division of employees who were all in the top ten percent of performers, have I witnessed anything like it. Headlines are referring to it as an extreme example of the ugly side of capitalism. But it isn’t. It is just a further revelation of asinine management and the complete lack of understanding of the value of people and the consequence of treating employees exclusively as costs.

A quick attempt to model the numbers gives a quick idea of the thinking behind the decision.

Even assuming that all 800 employees were on the 2022 minimum wage of £9.18 per hour (which clearly is not the case) reveals an annual salary bill of around £21.5 million. Now take an agency cost of £1.90 per hour – more than the £1.80 that has been reported – and your annual salary costs come to around £4.4 million. Even if you double this you end up with a saving of £12.7 million, so even given the likelihood of the conservatism of these random amounts, you can clearly see that savings are significant and why the company has done what it has.

Where you can, and perhaps should, challenge the management thinking is in the way they have handled the whole affair. It is abundantly clear that the whole situation was a bolt from the blue for the employees. Yet the fact that replacement agency staff were in place, clearly indicates that there had been plenty of planning beforehand. This may have been illegal without any discussion with the employees affected, and may have consequences which nullify the anticipated benefits of the ploy.

The same with the employee backlash. Even if management did anticipate a backlash but expected to overcome much of it by simply threatening employees with the reduction of their severance pay if they made a fuss, the scale of has perhaps surprised them. And here too the consequences are likely to be costly, both financially and in terms of the goodwill lost.

But perhaps the biggest oversight of all is the basic lack of understanding of business. Any corporation exists to serve its customers and service is delivered by people. That is why it is widely recognised that employees constitute 70-80% of a business's value. By treating their employees in the manner they did, P&O have:

  1. Shown a complete lack of respect for their employees and their contribution to the business;
  2. Revealed a complete failure to recognise that employees have invested their lives in the business;
  3. Demonstrated a complete failure to recognise the source of good customer service; and
  4. Failed to recognise the corporation’s obligation to be a good corporate citizen and look to meeting all stakeholder and community needs, including those of its employees. Indeed it is attempting to transfer a significant portion of its payroll costs to the state.   

This is unacceptable and leaves a pungent stench!

All this makes it imperative that we start to recognise employees as assets and to account for, manage and treat them as such. My Every Individual Matters Model does this and you would do well to explore how it can help you creating the kind of stink that P&O have made.

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