May 2009 Working Paper no - University of Leedslubs...pre-layoff period, to develop our understanding of how layoffs are strategized, implemented and experienced (Cameron, 1994; Feldman

Socially responsible restructuring in an era of mass redundancy

Dr. Chris Forde, Prof. Mark Stuart, Jean Gardiner, Ian Greenwood, and Dr. Robert MacKenzie

Leeds University

Robert Perrett Bradford University

May 2009

Working Paper no.5

CSR and restructuring in steel

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Chris Forde, Mark Stuart, Jean Gardiner, Ian Greenwood, Robert MacKenzie, Robert Perett

Socially responsible restructuring in an era of mass layoffs CERIC Working Paper 5 Series editor Ian Greer

Centre for Employment Relations Innovation and Change Leeds University Business School

May 2009 ISSN 1758-3136

© 2009 by the author(s)

Dr Chris Forde is Senior Lecturer in Industrial Relations at Leeds University Business School (LUBS)

[email protected]

Professor Mark Stuart is Chair in Human Resource Management at LUBS and Director of CERIC

[email protected]

Jean Gardiner is Senior Lecturer in Employment Relations at LUBS [email protected]

Ian Greenwood is Lecturer in Industrial Relations and Human Resource Management

at LUBS [email protected]

Dr Robert MacKenzie is Senior Lecturer in Industrial Relations at LUBS

[email protected]

Dr Robert Perrett is Lecturer in Human Resource Management at Bradford University School of Management

[email protected]

CERIC Working Papers are peer reviewed and represent the output of CERIC-affiliated researchers. These papers can be downloaded free of charge (PDF) at

http://lubswww2.leeds.ac.uk/CERIC/ (go to publications / working papers). For a fee of £5, paper copies can be ordered from the editor at the following address:

Centre for Employment Relations, Innovation and Change

Leeds University Business School Maurice Keyworth Building

The University of Leeds Leeds LS2 9JT United Kingdom

+44 (0)113 343 6321 [email protected]


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Contents

Abstract ....................................................................................................................4

1. Introduction ..........................................................................................................5

2. Layoffs and socially responsible restructuring: a review of the debates .......6

3. Research methodology ..................................................................................... 10

4. Results ................................................................................................................ 13

4.1 Corporate social responsibility ...................................................................... 13

4.2 Prior to the announcement of layoffs ............................................................ 14

4.3 The announcement of layoffs and the consultation process ...................... 16

4.4 The implementation of layoffs ........................................................................ 18

5. Implications and conclusion ............................................................................ 20

Works cited ............................................................................................................ 24

Appendix 1: Three phases of socially responsible restructuring ..................... 28


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Abstract

Amidst a deepening economic recession, there has been rising interest in the anticipation and management of restructuring and layoffs. In this paper we develop a new framework for measuring and assessing ‘socially responsible restructuring’, in which the interests of all stakeholders, internal and external to the organization, are taken into account during mass layoff programs. Drawing on intensive qualitative case studies of mass layoffs in the steel industry in the United Kingdom, we evaluate how corporations’ practices measure up to our indicators of socially responsible restructuring. We find considerable gaps between the rhetoric of socially responsible restructuring and the realities of the anticipation and management of layoffs. Finally, extrapolating from our case study evidence, we assess the extent to which the corporate social responsibility agenda can offer a route for the development of socially responsible restructuring at the organizational level. We argue that the current economic crisis offers an opportunity for refocusing the CSR agenda around labor and employment issues, in which the boundaries between human resource and ethical stewardship responsibilities of HR managers are likely to be redrawn.


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1. Introduction Amidst a deepening global economic recession, there has been a rapid rise in the incidence of layoffs (Welbourne, 2009). Between December 2007 and April 2009, over 5.7 million US jobs have been lost (Bureau of Labor Statistics, 2009). In April 2009 alone, the number unemployed in the US rose by 600,000 and the unemployment rate increased to 8.9 per cent, the highest level since 1983 (Bureau of Labor Statistics, 2009). Layoffs are expected to rise even more sharply in the short to medium term. Globally, there are predictions of between 25 to 50 million job losses between 2008 and 2010 (International Labour Organization, 2009). Research into the process and management of layoffs remains surprisingly limited. During the last major global economic recession in the early 1990s, there were calls within the human resource management literature for more detailed studies of the pre-layoff period, to develop our understanding of how layoffs are strategized, implemented and experienced (Cameron, 1994; Feldman and Leana, 1994). Yet, subsequent studies have remained largely focused on the post-layoff period, examining the effects of job loss on ‘victims’, ‘survivors’ and ‘executioners’, and exploring the coping strategies used by these groups (see for example, Devine et al., 2003; Shah, 2000) The current economic downturn has generated renewed interest in the pre-layoff period amongst policy makers and human resource specialists. Governments have begun to put in place policies to promote the effective anticipation and management of restructuring within the context of a globalized knowledge-intensive economy (European Commission, 2008; US Congress, 2009). Particular importance has been attached to the idea of ‘socially responsible restructuring’. Socially responsible restructuring seeks to ensure that the interests of all stakeholders, internal and external to the organization, are taken into account during restructuring and mass layoff programs. The corporate social responsibility (CSR) agenda has been advocated as a mechanism through which socially responsible restructuring can be promoted and coordinated (European Commission, 2008; Uchitelle, 2006). However, to date, there remain key gaps in our understanding about what specific corporate actions would we expect to see as part of a socially responsible approach to restructuring. The potential and limitations of CSR-driven approaches to socially responsible restructuring also remain very under-explored in the literature. We have three aims in this paper. First, we develop a new framework for measuring and assessing socially responsible restructuring in terms of actions that occur prior to the moment of layoff. Synthesizing contributions from the fields of human resource management, employment relations and business ethics, our framework identifies three key phases of the pre-layoff period during which socially responsible restructuring activities should be developed: the period prior to the announcement of layoffs; the period covering the announcement of job losses and the consultation process undertaken with stakeholders; and the period covering the implementation of layoffs. Secondly, we draw on our own intensive case study research of mass layoffs to evaluate how corporations’ practices measure up to our indicators of socially responsible restructuring. Finally, extrapolating from our case study evidence, we


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assess the extent to which the CSR agenda in particular can offer a route for the development of socially responsible restructuring at the organizational level. We address these issues through an in-depth qualitative study of layoffs in the steel industry in the United Kingdom. Steel is an interesting sector for analyzing socially responsible restructuring. The steel industry has been subject to periodic bouts of restructuring and mass layoffs since the 1970s, with estimated global employment falling by 60 per cent over the last 30 years. This restructuring is set to continue as global supply outstrips demand and as concentration levels continue to increase in the industry. The steel industry has also played a key role in the evolution of CSR. Our study draws on results from case studies of layoff programs involving over 3,000 workers at three steel plants in the UK. Employment in the UK steel industry has contracted particularly sharply over since the 1980s, with employment falling from 112,000 in 1980, to 30, 000 in 2007. We conducted 142 in-depth interviews with steel workers experiencing layoffs, their partners, senior management, union representatives, support agencies and community stakeholders. The cases reveal considerable gaps between the rhetoric of socially responsible restructuring and the reality of the management of layoffs. We argue that in an era of rising mass layoffs, the need for socially responsible restructuring is particularly pressing. We explore potential routes for promoting socially responsible restructuring at the organizational and national level, including CSR-led approaches. We argue that the current economic crisis offers an opportunity for refocusing the CSR agenda around labor and restructuring, as a means of promoting socially responsible restructuring. The remainder of the paper is structured in four sections. The paper begins by reviewing the literatures on layoffs, developing a framework for understanding socially responsible restructuring and exploring the connections between this and CSR. Secondly, some background to the research is provided. This is followed by a presentation of the findings, and finally we offer some implications for practice and conclusions.

2. Layoffs and socially responsible restructuring: a review of the debates In the recession of the mid-1990s, symposia in the US and Europe devoted to downsizing and layoffs bemoaned the state of human resources research in this field. Cameron (1994: 183) for example, argued that ‘the literature reporting systematic, empirical investigations of the multiple causes, consequences and dynamics of downsizing is paltry – downsizing is probably the most pervasive yet understudied phenomenon in the business world’. The literature that did exist on downsizing was increasingly focused on the post-layoff period and conceptualized in terms of the relative experiences of ‘victims’, ‘survivors’ and ‘executioners’ of downsizing programs. Analysis of the pre-layoff period, a key part of seminal studies of downsizing (see for example, Leana and Feldman, 1992), was increasingly neglected. Since the mid-1990s, studies of the post-layoff period have continued to dominate downsizing research (see for example, Devine et al., 2003; Shah, 2000; although see Cascio and Wynn, 2004).


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The current economic downturn has stimulated renewed interest in the actions that employers take prior to implementing layoffs and during the downsizing process. Governments and policy makers are developing policies to assist companies and sectors with restructuring, and where necessary, with implementing layoffs. These policies are underpinned by ‘anticipating and managing change’ agendas, which see restructuring as an essential element of economic and social progress (see European Commission, 2008; US Congress, 2009). These strategies are dependent upon both the anticipation of change, achieved through improvements to adaptability and flexibility, and the effective management of change, achieved through the alleviation of the social costs of corporate restructuring, and the promotion of alternative jobs. The concept of socially responsible restructuring has featured prominently within these recent debates about the anticipation and management of restructuring. Commonly defined as ‘the use of one or more approaches to consciously take into account the interest of all the organizations stakeholders – managers, owners/shareholders, workers, as well as the larger community’ (International Labour Organization, 2002), socially responsible restructuring involves an anticipatory or forward-looking approach to restructuring, and ongoing social dialogue and negotiation over the effects of restructuring. Legislation such as the Worker Adjustment and Retraining Notification (WARN) Act in the USA places some requirements on employers regarding actions during restructuring. Beyond this, the use of active labor market policies is becoming increasingly important as a means of promoting socially responsible restructuring. The most notable example of this is the European Globalization Adjustment Fund, introduced in 2007 to assist workers laid off as a result of changing global trade patterns, through funding for re-training, job-search and job counseling (see European Commission, 2008). The model for this fund is the long-standing USA Trade Adjustment Assistance program, introduced in the 1960s to accompany trade liberalization policies, and which has funded job search activities, training, and time-limited income support for over 1 million laid-off workers. The corporate social responsibility (CSR) agenda has been proposed as an alternative mechanism through which socially responsible restructuring can be promoted and coordinated (European Commission, 2008; Uchitelle, 2006). The connections between socially responsible restructuring and CSR can be traced to the mid-1990s. Under the Clinton administration, a White House Conference on Corporate Responsibility concluded that firms did have responsibilities to workers who were being laid off, to provide retraining and counseling, and that these responsibilities could be effectively coordinated through voluntary employer-led CSR codes (Uchitelle, 2006). This encompassed the ‘triple bottom line’ concept whereby companies voluntarily take on board social and environmental concerns besides economic ones, as a means of achieving sustainable growth. The potential connections between CSR and restructuring have also been tentatively explored within the business ethics literature over the last decade, in terms of the extent to which employers implementing mass layoffs violate codified or abstract notions of fairness and justice (see Bonvin, 2007; Hopkins and Hopkins 1999; Orlando, 1999; Van Buren, 2000).


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The dominant focus of company level CSR activities has been on environmental and financial issues rather than employment or the conditions of labor (AgirE, 2008; ESTER, 2007). Within widely used indices of social responsibility and sustainable development there are few indicators and measures that relate to restructuring activities. In the Global Reporting Initiative, for example, there are 79 measures of social responsibility. Fourteen of these relate to labor issues, and only one covers restructuring activities (Global Reporting Initiative, 2009). Two arguments have been put forward to explain the lack of coverage of restructuring issues in CSR. The first is that firms perceive that the central concern of CSR is towards ‘external’ issues of accountability such as the environment, rather than ‘internal’ issues such as restructuring (Deakin and Hobbs, 2007). The second argument is that the ‘non-binding’ regulatory frameworks for CSR in Europe and the US place limits on its ability to contribute to objectives around labor and employment. Within such a framework, companies remain free to adopt a ‘self-service’ approach to CSR (ESTER, 2007). The motive for much CSR activity is to improve corporate image, either as a means of gaining a competitive edge, or to offset any potential damage to image that might occur through other activities. The argument that is made is that it is this self-service approach that has resulted in the dominance of financial and environmental issues over labor issues, given that these are perceived to provide the greatest competitive edge or the most secure insurance against damage to corporate image (Imbusch, 2008). The rising interest in the connections between CSR and restructuring offers the opportunity for a re-appraisal of the pre-layoff process of restructuring. What specific corporate actions would we expect to see within a company seeking to restructure in a socially responsible way? To examine this, we synthesize contributions from the human resources, industrial relations and business ethics literatures to develop a framework for understanding and evaluating socially responsible restructuring. We identify three critical phases of the pre-layoff period where socially responsible restructuring interventions should be developed: the period before layoff announcements; the period covering the announcement of job losses and the consultation process; and the period following the announcement of layoffs through to their implementation. Within each of these phases, we draw on previous studies to highlight a number of potentially ‘good practice’ activities. These are summarized in Appendix 1. In the period prior to the announcement of layoffs, we identify three potential components of socially responsible restructuring: the effective anticipation of change and restructuring; advance notification of layoffs, going beyond the requirements of legislation; and the responsible management of information prior to mass layoff announcements. Firstly, the effective anticipation of change places responsibilities on employers to promote long-term investment in human capital through lifelong learning, and to develop the profiles and skills that are necessary to develop workers’ employability and allow them to adapt to changing technological requirements (AgirE, 2008; European Commission, 2008). Anticipatory approaches to downsizing and ‘early warning systems’ that trigger consultation about potential layoffs can also be beneficial for both employees and organizations (Cameron, 1994; Feldman and Leana, 1994).


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Secondly, Leana and Feldman (1992) report that many employers fail to provide adequate advance notification of downsizing plans, due to fears of productivity slowdown, loss of morale or increased employee turnover. Hopkins and Hopkins (1999) argue that there are minimal costs to the employer of a longer period of notification beyond that required by the WARN Act. The length of the advance notification period is one of the critical factors shaping post-layoff outcomes for ‘victims’, as it determines the amount of time workers have to seek counseling, undertake retraining and find alternative employment before they experience a substantial loss of income (Feldman and Leana, 1994). Thirdly, rumors, speculation, conflicting information and uncertainty about whether ‘the axe is going to fall’ (International Labour Organization, 2002) can have negative psychological effects on employees, particularly if employees feel that management are deliberately manipulating, ‘drip-feeding’ or distorting information (Hopkins and Hopkins, 1999). Turning to the period during which layoffs are announced, we identify four key elements to socially responsible restructuring. First, there is the actual communication of job losses. Hopkins and Hopkins (1999) report numerous examples of workers learning about layoffs from sources outside the firm, often via television or radio, which contributes negatively to employee perceptions of the equity of downsizing decisions. Second, there is the need to consult and/or negotiate with all stakeholders, internal and external to the firm (Feldman and Leana, 1994). Cascio and Wynn (2004) found that only forty-four percent of companies that downsized in the last five years shared details of their plans with employees, with predictable negative effects on morale. In Leana and Feldman’s (1992) study, particular importance was placed on the benefits of negotiation with trade unions. The authors reported examples of joint union-management lobbying of government to protect firms against the effects of global competition, and the critical role of unions in developing alternative plans for threatened plants. Third, alternatives to job losses should be genuinely considered. Cascio and Wynn (2004) report that redeployment, cuts in working hours and deferment of bonuses are rarely considered in practice (see also Leana and Feldman, 1992). The final phase of the pre-layoff period covers the implementation of layoffs, and here, we argue that there are four potentially important aspects of socially responsible restructuring. The importance of establishing equitable criteria for selecting workers for layoffs has been highlighted in a range of studies (Brockner et al., 1994; Feldman and Leana, 1994; Lamsa and Tamaka, 2000: 394). Whilst most organizations do establish criteria, the perception of many employees is that layoff decisions are biased or arbitrary (Leana and Feldman, 1992). Secondly, opportunities for internal redeployment are often offered to some employees threatened with layoffs, but these are also often perceived to be inequitable. Thirdly, pre-layoff support in the form of outplacement, counseling and retraining programs have also been identified as critical to the post-layoff experiences of ‘victims’ (Feldman and Leana, 1994; Trevor and Nyberg, 2008). Esser and Ozoux (2003) point to a range of support activities that can assist workers in the pre-layoff phase, including on-site job fairs, job and psychological counseling, paid time off work to assist with job search, and entrepreneurship advice. Studies have also pointed to the critical importance of liaison with unions, government agencies, community action groups and private employment agencies in the lead up to layoffs to coordinate these support activities (Feldman and Leana, 1994). Finally, studies highlight the


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importance of providing severance pay and extended benefits to minimize the negative consequences of layoffs (AgirE, 2008; Leana and Feldman, 1992). In sum, whilst the current economic crisis has stimulated a renewed interest in the anticipation and management of restructuring and in the potential role of CSR, there are gaps in our understanding about what a socially responsible approach to restructuring would entail. We have provided a framework for understanding and evaluating socially responsible restructuring in terms of actions that should be developed by employers prior to layoffs being implemented. In the remainder of the paper we use this framework to address the following research questions through our empirical work:

• How do the practices of companies implementing mass layoffs measure up to our indicators of socially responsible restructuring?

• To what extent does the CSR agenda offer a means for promoting socially responsible restructuring at the company level?

3. Research methodology The current study fills an important gap in the literature by examining actions that occur prior to and during the implementation of mass layoffs and the extent to which they measure up to notions of socially responsible restructuring. Due to the relative neglect of these issues within the human resources management literature, an exploratory, inductive study is appropriate for addressing the key research questions identified above (Strauss and Corbin, 2008) To understand whether mass layoff programs measure up to our indicators of socially responsible restructuring, an in-depth understanding of the actions, perceptions and reactions of stakeholders involved in these programs is critical. The case study method is well-suited to developing such an in-depth understanding (Strauss and Corbin, 2008), and has provided valuable insights into layoffs in the past (see Leana and Feldman, 1992). The case studies in this paper are drawn from a research project into restructuring and mass layoffs in the steel industry in Wales, United Kingdom. We gathered primary data between 2002 and 2004. The sector provides an interesting case through which to explore the anticipation and management of mass layoffs and notions of socially responsible restructuring. For some, the steel industry is an innovator in socially responsible activities, through the activities of companies such as US Steel and Tata Steel over the twentieth century (Surie and Ashley, 2007). Yet, the large global contraction in employment and regular bouts of layoffs in the steel industry over the last 30 years have posed challenges to the ability of firms to simultaneously meet restructuring and sustainability goals. Wales has historically accounted for a significant proportion of steel production and employment in the UK. In the late 1960s, of 270,000 UK steel jobs, 80,000 were based in Wales. By the mid-1980s, total employment in the UK steel industry had fallen to 80,000, with 30,000 of these jobs based in Wales. By the time of the research, UK steel employment stood at around 35,000, with over one-third of these


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jobs based in Wales. Three large Welsh steel plants are considered in this paper. Two, in Llanwern and Ebbw Vale, were owned by the Anglo-Dutch steel corporation Corus, a company formed by the merger of British Steel with Koninklijke Hoogovens in 1999. At the time of the research Corus produced around 90 per cent of the UK steel manufacture and was the fourth largest steel company in the world. The company had a number of other large steel plants in Wales, at sites including Port Talbot and Shotton. The third case study plant, based in Cardiff, was owned by a company called Allied Steel and Wire (ASW). At their peaks, the three case study plants employed a combined total of over 30,000 workers. Periodic bouts of layoffs had significantly reduced employment to one-fifth of this number by the year 2000. In 2001, restructuring plans announced by Corus resulted in the loss of 6000 jobs, including over 3000 in Wales. The Ebbw Vale works, which had employed some 1,100 workers in 2000, was closed in July 2002, with layoffs taking place in two stages in 2001 and 2002. Restructuring also saw heavy steel production cease at Llanwern in July 2001. The plant had employed some 3200 workers in 1999; 1,300 workers were made redundant in the 2001 restructuring. Since the research there have been further announcements of collective layoffs in Corus in Wales. In 2007, when the company was taken over by Tata Steel, it employed 7,900 workers in Wales, less than half of the total employed in 2000. In July 2002, the third case study plant, ASW in Cardiff, was put into receivership, following a sharp downturn in demand and an inability to secure continued support from its financial backers. 800 ASW employees were made redundant at the end of July 2002. Together then, over 3,000 workers at the three plants experienced layoffs in the restructuring that took place in the plants in 2001 and 2002. The research examined the economic and social impact of mass layoffs on steel workers and their families. The research involved in-depth interviews with redundant steelworkers, their partners, economic agencies, plus union, management experts. In total, we conducted 142 interviews. Each interview lasted between one and three hours, with one and a half hours the average. Ninety percent of these interviews were conducted face to face, whilst the remainder were conducted by telephone. At ASW, 40 interviews were conducted with steelworkers and 11 interviews were conducted with their partners. At Llanwern and Ebbw Vale, 25 and 34 interviews respectively were conducted with steelworkers. Of the interviews with steelworkers, 95 per cent of interviewees were male, a figure which was representative of the gender profile of production workers across the three steel plants. In terms of the age profile of respondents, 21 per cent were under 40, 32 per cent were aged between 40 and 59 and 33 per cent were over 50 years old. This age distribution is older than that of the working population in Wales, but is representative of the profile of UK the steel plants. The average tenure levels of the steelworkers interviewed across the three plants was very long, at 24.5 years. Indeed, the majority of those interviewed had spent their entire working life within the case study steel plants. Once again, these tenure figures are representative of the population of steelworkers at Welsh steel plants. Of the 32 interviews with other stakeholders, 10 were with union representatives, 4 were with management (including human resource managers), 6 were with regional development agencies, 4 were with government agents (including representatives from national and local government) and 8 were with other job support agents (including representatives from the state employment service).


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Strauss and Corbin (2008) indicate that in-depth interviews are well-suited to exploratory questions such as the ones being considered in this paper. The interviews were of a semi-structured nature. The interviews were specifically designed to build up detailed biographies of the working lives of the steelworkers experiencing layoffs. The interview schedule was ‘emergent’, evolving over the course of the research. The structure of each interview was flexible, and allowed key themes that emerged during dialogue with individual respondents to be explored in detail. The interviews explored experiences prior to layoff announcements, perceptions about the layoff process, and experiences in the period leading up to layoffs. In other words, the interviews provided extensive data on the three key phases of the pre-layoff period which we have identified as being critical to the development of socially responsible restructuring. Lincoln and Guba (1985) propose four tests for evaluating interpretative research work: credibility (does the data provide an adequate representation of the social world under study?); transferability (the applicability of findings in one context to another); dependability (how reliable or ‘authentic’ are the data?) and conformability (how well are results from the study supported by participants and those outside the research site?). Persistent observation in the case study sites, over a period of 24 months, helped to ensure the credibility and dependability of the research. Key respondents, particularly stakeholder and steelworker gatekeepers were interviewed on multiple occasions, to increase dependability. Formal interviewing (which itself took over 200 hours), was supplemented with extensive observation by the research team in the case study sites and the localities. Analysis of the interviews proceeded in a number of overlapping stages to increase dependability and conformability. First, interviews and field notes were transcribed and validated. Cross-researcher validation of the transcripts formed an important part of this initial process. Secondly, the research team engaged in an iterative process of analysis of the interviews. Major themes and categories from the interviews relating to each of the three stages of the pre-layoff process were identified individually and jointly through manual coding. These themes were finessed through joint meetings and further iterative analyses of interviews. Respondent and non-respondent validation was ensured through the presentation of preliminary findings to a sample of those interviewed, along with other stakeholders. Feedback from this meeting informed the production of subsequent drafts of work. To increase transferability, we sought to adopt a ‘thick description’ approach to reporting the results from the studies which has been the hallmark of a number of key studies of the process of layoffs in the past (see for example, Leana and Feldman, 1992). The regular bouts of layoffs in the Welsh steel industry had led stakeholders to develop a coordinated ‘Team Wales’ response to restructuring announcements, involving ‘rapid response teams’ who aimed to assist with the anticipation and management of change, and to provide support and advice prior to layoffs being implemented. Trade unions were also able to play a role in the anticipation and management of restructuring. Unionization in the steel industry was relatively strong, with density in the Welsh steel industry standing at 60 per cent, compared to 20 per cent across all industries. Legislation in the UK required that employee representatives are consulted in advance regarding plans for mass layoffs. The extent to which unions, local labor market agencies and other stakeholders were able to provide on-site support in the lead up to layoffs, varied from plant to plant. Most


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obviously, in ASW, the placing of the company into receivership meant that there was no notice period served by employees following the announcement of layoffs, and no opportunity for interventions on-site before this occurred.

4. Results We structure our findings from these case studies into four parts. First we examine corporate social responsibility at Corus and ASW. Following this, we explore aspects of socially responsible restructuring in each of the three phases of the pre-layoff period identified earlier in the paper.

4.1 Corporate social responsibility At the time of the job losses considered in this paper, CSR was often invoked in debates over restructuring in the UK steel industry and in calls for the more socially responsible approaches to mass layoffs. In the UK context, CSR was (and still is) driven by individual voluntary employer codes or ‘best-practice’ initiatives from government. Both Corus and ASW were members of UK Steel, the main employers’ federation for the industry. The focus of UK Steel’s sustainability and CSR agendas at the time of the research were on environmental issues, in particular meeting the goals of the Climate Change Levy Agreement. The first reporting year for reduction targets in CO2 emissions in the steel sector was 2002. Beyond this, Corus did have a well-developed policy of corporate social responsibility, which is often cited as an example of best practice (see European Foundation for the Improvement of Living and Working Conditions, 2003). Whilst the main emphasis of the company’s CSR program did reflect the dominance of environmental concerns, restructuring and layoffs did feature in CSR statements, in contrast to most UK companies. Corus’ CSR report at the time of the research noted: ‘steel supply has predominantly outstripped demand over the past 20 years…this has resulted in the rationalization and closure of some facilities. In the regrettable event of layoffs or plant closures, we make every effort to minimize the impact upon our employees and the communities in which we operate. This includes retaining, helping to find alternative employment, or providing outplacement services’ (Corus, 2004: 45). Stakeholder engagement, with employees, trade unions and local communities was identified as one of the key ‘overriding principles’ through which the company could benchmark its achievements on its CSR goals (2004: 3). In principle, in the event of restructuring, this included high-level involvement of trade unions and employee representatives in consultation and negotiation with management over the nature and number of layoffs (2004: 12). A tangible connection between Corus’ CSR agenda and restructuring activities can be seen through the activities of UK Steel Enterprise. This company was a wholly owned subsidiary of Corus. UK Steel Enterprise sought to provide support, advice and financial assistance for those workers experiencing layoffs, to help them find alternative employment. Using government, company and private sector funding, the activities of the company were narrowly focused on creating new jobs in the small


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and medium enterprise sector, which had been identified by the company as critical to future economic regeneration (Corus, 2004). To facilitate this, the company supported entrepreneurship and business start ups, and UKSE was involved, with other labor market agencies in the on-site support available in Corus in the lead up to the layoffs in 2001 and 2002.

4.2 Prior to the announcement of layoffs Whilst the layoffs being considered in this paper were announced in 2001 and 2002, periodic bouts of restructuring and declining levels of employment in the steel industry across the UK meant that employees in Corus and ASW had worked in a climate of insecurity for a long period of time. Rumors about possible layoffs were a constant feature of the working environment. Workers described working in the steel industry as ‘living under the sword of Damocles’ (ASW worker). One respondent at Llanwern noted ‘there had been rumors kicking around that place for ages…..we were all living underneath a cloud’, sentiments that were echoed by others at the three case study plants. In terms of the key elements of socially responsible restructuring that we identified in this phase of the pre-layoff period, the majority of activity in Corus and ASW was focused around the management of change, rather than its anticipation. Whilst both employers had historically provided high levels of training and investment in human capital, this training was focused around continued employment within Corus and ASW. Interviews with workers following their layoffs from the companies pointed to recent cutbacks in training provision, linked to cost-cutting exercises, which impacted on their marketability once they had to re-enter the job market. A key problem was that training and the accumulation of skills was often site-specific and not formally accredited. Training provided therefore was often not transferable to future employers outside the steel industry. Respondents became acutely aware of the importance of skills and the accreditation of training when they sought to find work, and they reported that employers were increasingly demanding of paper qualifications and accreditation, both for technical skills and for transferable skills such as the ability to work in teams. Turning to the advance notification of layoffs, there were few formal ‘early warnings’ provided to workers. Immediately prior to the announcement of layoffs at the Corus plants on February 1st 2001, steel unions and members of Parliament had met with the chief executive of Corus. They emerged from the meeting saying they were ‘none the wiser’ about the likely plans for their plant. Corus senior management privately justified the lack of information provided to government on the grounds that the information would be leaked, and that the workforce deserved to hear news about layoffs first. There was little information provided to employee representatives or the workforce until the day of the announcements. At ASW, a formal meeting had been held with the workforce as early as a year before its closure, in which management outlined the precarious financial position of the company. Workers were informed that the banks had warned ASW to reduce its overdraft by £10m from £60m by March 2002, or the ‘plug would be pulled’ (ASW worker). The main messages from the meeting were that workers needed to cut back on consumables and that the company was looking to sell off elements of the business, such as scrap and some


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subsidiaries. The next formal meeting with union representatives about layoffs at ASW did not take place until early summer 2002, following continued speculation about the deteriorating position of the company. A crisis meeting between the company and government representatives also took place immediately prior to closure, as a means of attempting to ‘cushion the blow’ of the impending layoffs. Workers were largely reliant on rumor and speculation to form an assessment of their future prospects. In terms of socially responsible restructuring, the interviews with workers raise key concerns about the responsible management of information in the case studies. Following previous bouts of restructuring, Corus workers anticipated further announcements of job cuts. The consensus at both Ebbw Vale and Llanwern was that one Welsh steel plant was going to be targeted for closure. Many workers at both sites remained optimistic about their own prospects for survival, basing their assessment on information gleaned from line managers and union officials and the actions of management in the run-up to the announcements. A previous capacity and cost-reducing exercise conducted by management at Ebbw Vale in October 2000 had resulted in the loss of 261 jobs, and thus whilst most workers expected further job losses, total closure of the plant was not anticipated. Press reports in January 2001 that Llanwern was being targeted for closure heightened feelings of insecurity amongst workers at that plant, and provided Ebbw Vale workers with a false sense of security. A number of Llanwern workers expressed the view that this was ‘the beginning of the end’ and that the ‘writing was on the wall’. Counter to this, some workers reported rumors (from line managers and senior management) that there was to be substantial new investment in the blast furnace, and this was interpreted as a sign that steel production at Llanwern would continue. At ASW, the company’s position worsened during late 2001 and early 2002, and workers were left to draw their own conclusions from management practices and visible signs of an impending crisis. Refusal by management to replace old machinery and cutbacks on maintenance and training expenditure, were interpreted by many ASW workers as signs that the company was facing serious financial difficulties. More starkly, in mid-2002, labels were placed on equipment within the plant saying ‘Property of XXX Bank’, a clear indication to some that financial administrators were about to be called in. Interviews with partners of steel workers revealed how external activities and rumors provided an indication of the crisis at ASW. The wife of one Llanwern steelworker worked in a bank and claimed that they were no longer accepting mortgage applications from steelworkers. Workers at all three plants expressed resentment and widespread dissatisfaction at the lack of formal communication in the lead up to layoff announcements and the conflicting views that were generated from informal discussions with management, union and works council representatives, and team leaders. Whilst this may have been the result of a genuine ignorance on management or the unions part about the future prospects of the company, the perception amongst many workers were that management had presented a misleading picture. Workers at Llanwern were particularly resentful about the messages that had come from management: ‘They lied to us for 18 months. Some days the word from management was that they were going to upgrade the furnace and others they said they were not. They were just keeping us hanging on. They were never going to invest in the furnace and knew almost two years ago that it would be put out of commission’ (steelworker, Llanwern).


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Others felt that management had withheld information about restructuring plans, and were disseminating information strategically, to their own advantage. A number of workers felt that management had started rumors about likely layoffs rather than ‘just springing the announcements on us….by starting the rumors it gave the workforce time to get used to things and took the pressure off management’ (Llanwern steelworker). At ASW, the perception amongst some workers was that middle management’s own actions betrayed the fact that they must have known more about imminent restructuring plans:

‘They were making alternative employment arrangements well before the layoffs were heard of, so (I) was suspicious that they may have known about this earlier’ (ASW worker).

This perception was confirmed by at least one manager who noted that he knew more than the ‘average Joe on the shop floor’ (ASW manager) and had made cutbacks in his spending for the last two years, in anticipation of layoffs. In Corus, only senior management was aware of the extent of the job losses. Those few managers at works level who knew about impending job losses described this as an almost intolerable burden to bear. It is important not to overlook the fact that managers, as the ‘executioners’ of layoffs, faced considerable pressures in the lead up to layoffs.

4.3 The announcement of layoffs and the consultation process Despite the fact that many workers at all three sites were expecting announcements of layoffs, the immediate reactions were shock and anger. Having worked in a climate of insecurity for many years, facing almost constant rumors and speculation about future prospects, many workers felt that recent rumors and speculation were ‘no different to normal’. In terms of the communication of the layoff announcements, there was widespread dissatisfaction amongst ASW and Corus workers. There were numerous examples of workers hearing of their fate through work colleagues, through family and on television or radio. At an individual level, workers were also faced with the immediate prospect of the loss of wages and the end to long-standing employment in steel:

‘Initially your stomach sinks….. My first reaction was feelings of insecurity, financial insecurity’. (ASW steelworker)

Turning to consultation and negotiation with all stakeholders, which we have identified as a key element of socially responsible restructuring, practice varied from plant to plant. At the Corus plants, the planned layoffs were not implemented immediately. The company followed the statutory 90-day consultation period required prior to implementing layoffs. During this period a range of alternative plans to restructuring were devised by trade unions and presented to management. Unions coordinated at a national level to decide which union would lead the development of alternative plans at each site. A proposal at Ebbw Vale coordinated by the Transport and General Workers Union, focused on saving the threatened tin-plate works, and included plans for retraining workers. A similar plan was put together by unions at Llanwern. In both cases there was recognition of the fact that there would be some


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layoffs. The ISTC union put together an alternative nationwide proposal, which the union argued would save all of the 6,000 jobs under threat at Corus across the UK. This proposal involved securing funding from the European Commission to retrain those workers whose jobs were under threat, with a union-led partnership co-ordinating the training. Those involved in designing the proposals felt that the timescale for putting alternative plans together was far too short. The job of preparing the plan was very much left to the lay officials in site. The task was rendered more difficult by management’s refusal to provide key financial data, deemed ‘commercially sensitive’ by company accountants. All of the alternative plans were dismissed on the same day as they were presented to management. The rapidity of the decision, the shortness of the period granted to come up with viable alternatives and the resistance by management to providing key data all left workers with the impression that alternative plans were never going to receive due consideration. Another problem was that following the national meeting, there was little co-ordination between unions over the generation of alternative plans. The alternative ISTC union plan, for example, was viewed in some union quarters as opportunistic. At ASW, there was no statutory consultation period since the company went into administration. Much of the discussions following the announcement of closure focused on pensions. At the time of insolvency, the pension fund had shown a £21 million deficit. When workers were laid off, they were informed they would only be entitled to statutory layoff payments and that their pension entitlements had been lost, as non ring-fenced assets from the pension fund had been ploughed back into the business to maintain production. The loss of pensions was the most devastating aspect of the experience for ASW workers, with many of them having tenure levels in excess of 30 years, or being close to retirement. In the UK, legislation had been put in place in the 1980s which, in the event of company collapse, gave pension rights priority to workers who were already retired and receiving their pension, over those who were close to retirement. The subsequent legal action by ASW workers against the government to recoup their pensions has been well-documented. In 2007, this resulted in the UK government offering ASW workers 90 per cent of their lost pension. A government backed financial assistance scheme to protect other UK workers in the event of the company collapse has also been put in place since this research. In terms of socially responsible restructuring, three points are worth emphasizing. First, a key issue was that at the time of the research, the contribution that employees made to pensions did not, under UK law, enjoy any preferential status in terms of which claims on debts have priority in the event of insolvency. Creditors were first in line to be paid in the event of collapse, followed by pensioners, with existing workers coming after both these parties. Secondly, there was anger amongst ASW workers that in the lead up and aftermath of insolvency, trustees of the pension and company directors were able to receive fees and pensions worth £2 million which were charged against the pension account. These actions were seen by many workers to be unethical and socially irresponsible. Finally, the parliamentary Ombudsman’s report into the ASW collapse, published in March 2006, did find that the advice given by the government to ASW workers in the period following the collapse of the firm caused ‘suffering, distress and uncertainty’, by indicating –wrongly – to workers that their company pensions were safe and protected by law.


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4.4 The implementation of layoffs Following the announcement of layoffs , key decisions still had to be made at the two Corus sites over the process of layoffs (at the ASW site, all workers were laid off). We have noted that the establishment of equitable criteria for the selection of workers for layoffs and for redeployment is critical to socially responsible restructuring. Whilst criteria were established, as required by law, a number of elements of the implementation of these criteria left many workers with the perception that the process was subjective and inequitable. First, in both Corus sites volunteers were sought before compulsory layoffs were implemented. Workers who had reached the age of fifty were able to take early retirement with full pension under existing Corus arrangements, and evidence suggests that the majority of workers who were able to take retirement with pension did so. Unions also managed to negotiate that anyone who was forty-nine would be kept on to reach fifty, in many cases undertaking decommissioning work to allow them to reach the date of entitlement to a pension. Management took the view that these layoffs were voluntary (‘soft’) in nature. However, unions and many workers took the view that if such individuals did not wish to be laid off they were compulsory (‘hard’) in nature. Many workers close to 50 perceived that they were forced into retirement, since the alternative was to accept compulsory layoffs. Indeed, many layoffs, both amongst those aged over 50, and those under 50 could be characterized as ‘voluntary compulsory’, in that workers reluctantly volunteered for layoffs, having heard that their department was likely to close or that they were prime targets for compulsory layoffs given their shorter lengths of service with Corus. Secondly, opportunities to be redeployed to other departments at the same site, or to different Corus sites, were perceived by workers to be highly subjective. There were some opportunities to be cross-matched to Trostre and Port Talbot in Wales and to Ijmuiden in the Netherlands. For many, the opportunities at Trostre were unattractive, as relocation was a pre-condition of securing a job there, unlike the cross matches offered at Port Talbot. The phased implementation of layoffs at both sites was also a particular issue. At Ebbw Vale, for example, layoffs were implemented in two stages. Approximately 200 workers were made redundant in mid-2001, and the remainder finished when the site closed in July 2002. For those workers laid off in the first phase, there were only very limited opportunities for cross-matching, and only to Trostre and to the Netherlands. Only later in 2001 and 2002 did matches become available at Llanwern and Port Talbot, and these were deemed to be more attractive. According to one union official, this was not through any particular negotiating effort on the union’s part, but due instead to chance vacancies and increased management effort in the lead up to the final closure. For workers, the ‘sudden appearance’ of 200 extra cross-matches at Llanwern and Port Talbot, close to the date of the Ebbw Vale closure, was the source of much anger, as many workers had already taken decisions about transfers to other plants, or had already taken voluntary layoffs by then. Since Trostre and the Netherlands were the least attractive options, many took the view that management had withheld information about alternatives until these positions had been filled. Finally, financial support from Corus to facilitate relocation, in terms of removal costs, mortgage transfer fees, and costs towards curtains and carpets was also unavailable until July 2002, which was too late for many who had already made decisions.


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Beyond these issues related to the way redeployment opportunities were implemented, there were also concerns raised by workers about the criteria used for identifying those eligible for cross-matches. In the lead up to layoffs in 2001 and 2002, many perceived that decisions were being made on the basis of personality and relationships with team leaders and management as much as any objective criteria. In one department at the Ebbw Vale site, employing 70 workers, workers were told that only 30 people would be able to keep their jobs through cross-matching. In addition to skills and experience, workers perceived that assessments were also based upon timekeeping, absenteeism, and according to some, the likelihood of committing sabotage in the period following layoffs. For many workers, it appeared that the decision depended upon ‘not what you know but who you know’ (Steelworker, Llanwern). The period from the announcement of layoffs to the moment of severance was a crucial time in which individuals could prepare for future employment or retirement. Co-ordination between management, agencies and trade union representatives varied across plants. At the Corus sites, agencies sought to intervene as early as possible following the announcement of layoffs, to provide workers with counseling and support. At Ebbw Vale, the state-run employment service had established an on-site ‘Job Shop’ in the Ebbw Vale works as early as January 2001, in anticipation of layoffs, offering information on job vacancies and career guidance. By April 2001, other local agencies, education and training providers began to move on site, with Education and Learning Wales, for example, providing information on funding opportunities for training courses. The state employment service also established a ‘rapid response team’ which could be used across Wales to coordinate responses to large scale layoffs, and this team set up a job shop at Llanwern in May 2001. In addition, the rapid response team ran open days at Llanwern, attended by local employers, the tax office and UK Steel Enterprise, the latter providing advice on self-employment and entrepreneurship opportunities. There was also a trade union led training company, Steel Partnership Training which was on site during the later part of the layoff process. At ASW, there was, of course, no time between the announcement and implementation of layoffs, and so much the support for workers that was available, was limited to the post-layoff period. Overall, labor market agencies felt that their provision of on-site support was a success. This was a sentiment echoed by many workers at Ebbw Vale and Llanwern, who found guidance on CV writing, applying for jobs and careers advice generally helpful. Some were skeptical about management’s willingness to allow agencies on site, suggesting that it was a ‘good PR exercise’ or a ‘damage limitation exercise’ employed by the company. In general, workers perceived that the support in this period did assist with preparing for entering the job market. The cases did reveal nonetheless the crucial role of the employer in the process and the detrimental consequences of blockages during this period. In the Corus plants, office space was made available for workers to visit ‘rapid response’ teams and labor market agencies on site. But many respondents found it difficult to visit on-site advice offices. At Ebbw Vale, this was due to the location of the office, which, whilst on-site, was a long distance from the main production areas. At both Corus sites, whilst senior management was generally accepting of the need for on-site support, this was not always immediate. At the level of the line, workers did not always find it easy to


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persuade management to allow them counseling opportunities during working time. These issues were the source of tension between management and unions.

5. Implications and conclusion What are the implications of these case studies for the promotion, anticipation and management of socially responsible restructuring? We have illuminated three key phases of the pre-layoff period, and have identified a range of actions that might be regarded as ‘socially responsible’ at each phase. Under what circumstances would firms choose to adopt or not adopt these socially responsible actions? Does CSR offer a genuine means for promoting socially responsible restructuring? What role, if any, does the human resource manager have to play in the development of socially responsible restructuring activities? Here, we draw out a number of key points for practice which emerge from our case studies. It is clear from the cases that the needs of all stakeholders were not being fully met during the pre-layoff period, even in the two cases where the company had explicitly sought to develop a ‘socially responsible’ approach to restructuring. In particular, those employees experiencing layoffs at first hand were dissatisfied with a number of key aspects of the restructuring process. Much of the emphasis of activity in our cases centered on the management of restructuring (focused on establishing criteria for layoffs, the announcement of layoffs etc.) rather than on the anticipation of change. In contrast, it is the anticipation of restructuring, in which companies prepare stakeholders for the changes ahead, that is increasingly seen as the route to competitiveness in a globalised economy, and which helps to minimize any negative social and economic consequences associated with change (European Commission, 2008). In terms of specific actions, we have already pointed to the importance of early warning systems, skills audits, and long-term investment in human capital. Research has also indicated that anticipatory actions will involve the widest range of stakeholders, within the context of particular regional, sectoral and labor market contexts, to ensure the high-quality transfer of information, strong co-ordination between representatives, options to form regional partnerships, and engagement of institutional networks (AgirE, 2008; MacKenzie et al., 2006). We have also pointed to the critical role played by the employer in the management of restructuring. In the case studies, blockages in support in the lead up to layoffs were due, in part at least, to the actions of employers. The period following the announcement of layoffs has been identified in previous research as critical to the subsequent labor market experiences of the ‘victims’ of layoffs (Leana and Feldman, 1992). Thus, to ensure that employees’ needs are met, employers have responsibilities should grant timely access to external support agencies, trainers and job counselors and provide appropriate facilities and time off work for those who are to be laid off (see Gardiner et al., 2007). The cases also pointed to the challenges associated with implementing criteria for layoffs and redeployment on an equitable basis, even where such criteria were established in principle. Interviews pointed to the markedly different interpretations that individuals give to ‘voluntary’ and ‘compulsory’ layoffs, for example, and showed how the phased implementation of layoffs can create perceptions of inequities and subjectivity in the allocation of redeployment opportunities.


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This is not to suggest that the employers in our cases were not complying with legislative requirements. However, legislation in the UK (as in the US) places few requirements on employers in relation to socially responsible restructuring. There are some requirements on employers to consult with employee representatives, and others which seek to ensure that equitable criteria for layoffs are established. There are a number of routes available to encourage employers to adopt more socially responsible practices in this area. One approach would rely on ‘business case’ arguments, on the basis that socially responsible restructuring will be adopted if employers see some competitive value in such actions. Yet, as the current economic crisis deepens, and the incidence of mass layoffs increases, there are concerns that fewer rather than more companies are adopting socially responsible restructuring practices (Heller, 2009). Tighter regulation and the development of active labor market policies offer alternative routes to promote socially responsible restructuring. In many European economies, for example, employers, working alongside other stakeholders, are required to draw up social plans setting out individual plans of action for workers threatened with layoffs, setting out retraining and counseling programs (Stuart et al., 2007). There are signs that as the recession deepens, active labor market policies are being identified as a tool to promote socially responsible restructuring. In the US, for example, as part of the economic recovery program announced by President Obama, the Trade Adjustment Assistance Act has recently been extended as a means of advancing ‘social accountability’ in the face of rising trade-related layoffs (Office of the US Trade Representative, 2009). The criteria for receiving benefits have been altered and for the first time, services workers are able to apply for support for retraining in the event of layoffs. CSR offers a further route to promoting socially responsible restructuring, albeit one that remains underutilized by companies and governments. We have already noted that few CSR codes and frameworks contain reference to issues of labor and restructuring, and that financial and environmental issues continue to dominate CSR agendas. Our cases have shown that even where restructuring is connected to CSR agendas, there are gaps between the rhetoric of CSR-led restructuring and the reality. Some, such as Campbell (2007), argue that identifying a minimum behavioral standard for CSR offers one route for embedding CSR, and this ‘minimum standard’ approach could then be applied to a range of specific areas, including restructuring and layoffs. By defining a minimum basis of CSR, analysis is directed towards the institutional conditions that foster and shape responsibility. Such conditions can include the nature of competition, the degree of enforced regulation, traditions of self-regulation, the role of pressure groups and trade organizations, and the degree of institutionalized dialogue and participation around decision-making (Campbell, 2007). Care must be taken in assuming that this will lead to deliberate and well articulated company level strategies for CSR, as can be seen by comparing the development of CSR in the UK and the US. When it comes to restructuring and employee welfare more widely, CSR is not as well developed within the UK as the US. Matten and Moon (2008: 407) note how ‘national differences in CSR can be explained by historically grown institutional frameworks that shape ‘national business systems’. Within a European context, there is greater institutional regulation (through national laws or European directives) of employment rights. Yet, this means that firms may have less ‘incentives and opportunity’ to introduce explicitly articulated voluntary


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codes of CSR. In the case of the UK, firms have operated within a ‘market based’ system, yet have also been able to ignore aspects of European regulation due to the piecemeal adoption of European directives and employment rights by the UK government. In contrast, in the US, explicit voluntary CSR codes have become the norm, in the absence of greater institutional regulation. Matten and Moon make a helpful distinction between implicit and explicit CSR. Explicit CSR rests on corporate discretion, and comprises voluntary programs and strategies by corporations that combine social and business value. In contrast, implicit CSR consists of ‘values, norms, and rules that result in (mandatory and customary) requirements for corporations to address stakeholder issues and that define proper obligations of corporate actors in collective rather than individual terms’ (Matten and Moon, 2008: 409). In essence whilst the former approach tends to be more intentional, voluntary and strategic, the latter is more reactive. This distinction between implicit and explicit CSR is useful for forming an assessment of whether CSR-led approaches to restructuring are likely to take hold over the coming years. There are strong drivers for more explicit CSR as a result of economic policies of liberalization, deregulation and welfare state retreat, declining trade union power, new production methods and the strategies of multi-national corporations (see Matten and Moon, 2008). There are also pressures for the development of implicit CSR, particularly in many European states, where traditions of codetermination remain important. Emerging policies of CSR are likely to reflect a changing balance between implicit and explicit actions. The recent experience of key economic sectors, looking to the state for increased adjustment support in the event of major restructuring to reduce the incidence of layoffs, suggests that the balance is shifting towards implicit forms of CSR. The big questions are how this is redefined over the coming years, and the role of labor and restructuring issues within any reshaping. The current economic crisis, and the restructuring that accompanies it, offer an opportunity for a refocusing of CSR agendas around the issues of employment and labor, as a means of rectifying some of the potentially harmful economic and social effects of restructuring and layoffs. Indeed, some have argued that socially responsible restructuring offers a route for shortening the length and minimizing the effects of the current global recession (International Labour Organization, 2009). We have identified a wide range of actions that characterize socially responsible restructuring. Whilst at present we do not have a viable CSR tool for the successful anticipation and management of corporate change, there are a range of possibilities for connecting restructuring to CSR. These include binding regional or national regulation, international regulation and transnational regulation, such as the development of international framework agreements (Bethoux et al., 2007; ESTER, 2007; Vogel, 2006). There are also more or less codified approaches to CSR and ‘implicit’ and ‘explicit’ versions of CSR, as already noted (Matten and Moon, 2008). Companies may have mission values and polices that reflect dimensions of CSR but which are not articulated as CSR, whilst others may have formal policies but do not act responsibly.

The human resource manager has a critical role to play in the restructuring activities that are occurring within firms at the present time. These managers are likely to be at the centre of any CSR-led restructuring agenda that emerges over the coming years. As the ‘executioner’ of layoffs, the human resource manager has a critical role in the


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management of layoffs (see Cameron, 1994; Kets de Vries and Balazs, 1996). The HR manager is also likely to have responsibility for overseeing and implementing many of the socially responsible restructuring activities identified in this paper. Beyond this, many have also pointed to the important ‘ethical stewardship’ role played historically by the human resource manager in organizations. This can be seen not just in terms of ensuring that human resource activities comply with the law, but also in terms of addressing issues of equity, social justice and fairness (Weaver and Trevino, 2001). The tensions between human resource and CSR activities and the shifting boundaries between these functions in organizations are increasingly recognized (Moon, 2007). As layoffs increase in the current recession and debates over the potential and actual role of restructuring within CSR intensify, the boundaries between human resource and ethical stewardship responsibilities of HR managers are likely to be redrawn again.


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Appendix 1: Three phases of socially responsible restructuring

The announcement of layoffs and consultation process

Clear and direct communication from within the firm

Consult and/or negotiate with all stakeholders

-both internal and external stakeholders

-possibility of joint initiatives with stakeholders to

minimise job losses

Genuine consideration of alternatives to job losses

The implementation of layoffs

Equitable criteria for layoffs, clearly communicated

Equitable criteria for internal redeployment

Offering of pre-layoff support services

-outplacement,

-job and psychological counselling, entrepreneurial advice

-on-site job fairs

-liaison with external labour market institutions

Provision of severance pay, extended benefits and timely payment

of pension rights

Prior to the announcement of layoffs

Effective anticipation of change

-long term investment in human capital

- development of employability of workers

Advance notification of layoffs

-beyond the provisions set out in legislation

- ‘early warning systems’ of change and subsequent

consultation with stakeholders

Responsible management of information

-honest and open communication to minimise rumour and

speculation

-no deliberate manipulation or distortion of information

Documents

May 2009 Working Paper no - University of Leedslubs...pre-layoff period, to develop our understanding of how layoffs are strategized, implemented and experienced (Cameron, 1994; Feldman