Breaking gently the news of a factory closure

Our family-owned factory is losing money due to the high cost of maintaining its operations, including the salaries and benefits of the workers who are receiving double rate of the metro minimum wage. There’s no hope of survival as the workers’ pay package is increasing every year due to a collective bargaining agreement (CBA) with the union. Finally, we have decided to close the factory. Now, how do we break the bad news to our employees? — Yellow Submarine.
A man had posted himself in front of a posh office building with a box of various shoelaces. One executive made it a daily habit to give the unfortunate man P20 which is equivalent to the price of laces being sold, but the former never took the laces out of pity. One day, the peddler, on receiving the P20 that morning, immediately tapped the shoulder of his daily patron and said:
“I don’t want to impose, Sir. But the laces now cost P30.”
At times, due the nature of the relationship between a unionized workforce and its management, there will be instances when union members forget how to reciprocate with a generous employer, resulting in a situation where the company’s financial condition is imperiled.
Given this, management should not stop communicating with the union. Rather, it must continue to initiate a proactive, two-way communication process with every worker, every step of the way. The workers must be apprised of what is actually happening and their cooperation sought to reduce operating costs, among other interventions.
As a quality and productivity specialist, I would recommend that your factory seriously implement lean production methods designed to dramatically reduce, if not eliminate costs in your work process.
Keep accurate figures on the factory’s output, so you can monitor results, including improvements, if any. Be prepared to do battle against all forms of controllable costs, including overtime work, which could happen due to inefficient work systems and wasteful practices.
It’s always valuable to keep tabs on such controllable factors, quantify their adverse effects, and keep everyone in the communication loop so they are not be surprised if the bad news comes. If there’s no hope, and closure is the only option left to management, you have to bite the bullet and face the workers and their union leaders with the news of the impending closure of your plant.
The best approach for breaking the bad news is to follow the terms and conditions of the CBA, and if there are things that are not clear or absent from such agreement, you have no choice but to follow the applicable rules of the Labor Code and related jurisprudence. This necessitates the assistance of a labor lawyer to make things run smoothly.
Sure, it is not an easy task for top management to do just that given all the guidelines prescribed by law. In addition, however, there are a number of extrajudicial strategies you can use to reduce the destructive impact of the factory’s closure. These include the following:
One, treat all union members with dignity and due respect. There’s no point in perpetuating a fight with everyone by blaming them for the situation as top management is equally responsible for the high cost of your factory operations. Instead, make the process easy. Make every effort to release the workers’ clearance and terminal pay at the soonest possible time.
Two, hold a general meeting presided over by the company owner. The chairman must not hide behind the back of the factory general manager, human resources head, and the management team. Allow the chairman to answer all questions from the workers. More important, the owner must not be tempted to make false reassurance that everything will work out alright.
Three, formalize the announcement through a clearly worded memo. This memo must be released on the following day after the general meeting with the employees. It should contain the highlights and the important points of the meeting, including the answers to some employee questions. There should be no inclusions and omissions.
Four, ensure the active support of all line supervisors and managers. Everyone must be on the same page. Remind all factory leaders about their responsibilities because you don’t want them as stumbling blocks in your attempt to soften the blow of the impending closure of the factory. Just the same, be prepared to “do battle” with the line leaders as they will also look out for their own interests.
Last, avoid making any statement or firm decision about the future. Chances are, the workers may ask if the owner is planning to start a new company or merge with another organization. The best approach is to level with the workers about what you know and don’t know.
Naturally, top management may not be able to get all the answers to the workers. Therefore, it’s best for everyone in the management team to stick to the planned closure. Don’t be in a position to be misinterpreted, giving some people a false sense of security.
ELBONOMICS: Bad times don’t last, but good people stay forever.
 
Send feedback or any questions to elbonomics@gmail.com or via https://reyelbo.consulting