Tech-tonic shifts: managing workforce changes in uncertain times

Are the increasingly loud rumblings from the tech world a sign of things to come?

The tech giants have been the bedrock of the US economy in recent years. However, announcements of large-scale layoffs and sharp declines in market capitalisation show that they are having to adjust to the new reality. It is not just the giants that are having the heebie-jeebies. The squeeze is on right across the sector with those operating across fintech, cyber security, digital media, bitcoin, retailtech and cloud-based services all being affected.

With interest rates rising, inflation soaring and private equity backers feeling the heat, cash is becoming king in an uncertain market. Many companies are trying to assess the length of the downturn, its depth and what impact it will have on their role within the tech microsystem. The picture varies; the challenges and opportunities for those in the digital media space differs, for example, from those in the medtech sphere. However, in anticipation of difficult times ahead, increasing numbers of tech companies are seeking to preserve cash by cutting back on expenses, effecting hiring freezes, accelerating the use of AI and, as we’ve now seen, by implementing swingeing job cuts.

However, the picture is nuanced. Alongside the need to implement job cuts and slash costs, the war for talent in some areas goes on unabated. Opportunistic acquisitions persist and strategic hires continue; good people it seems are always in demand. Against a background of uncertainty taking the long-term view, protecting your reputation and nurturing your talent are all factors which weigh heavily on employers’ minds.

Agility is key in the battle for survival and success. Flexible labour models continue to be popular with some tech companies as they cautiously test new markets, geographies and product lines in an effort to stay competitive. At a time when customer demand is changing rapidly, the result of pandemic uncertainty giving way to downturn reality, the use of employers of record and the engagement of contingent workers is an increasingly attractive fix. This fix brings its own compliance complexities; the price of striving for a lean and efficient workforce.

As employers strive for maximum flexibility, they must respond quickly to changing market conditions, saving costs where necessary but also taking advantage of potential acquisition opportunities and securing key talent when competitors falter or customer demand drives changes to their business. Restructuring is the name of the game, and it brings particular challenges for those tech companies with global businesses that are operating in an era of geopolitical uncertainty.

Restructuring is commonly associated with downsizing, which of course is one facet, however it has much wider and positive application encompassing all forms of change management including retraining the workforce, moving from high cost to low-cost jurisdictions, introducing AI, merging business units, digitalising products and service lines, acquiring and divesting businesses, outsourcing non-core functions, changing terms and conditions and refining hybrid and remote working arrangements.

In circumstances where wide scale restructuring is envisaged there are key preparatory steps to take in anticipation, not only to increase a company’s resilience but to ensure that such steps do not worsen its current or future ability to compete. Some key areas of focus include:

Due diligence and compliance

Time is often of the essence, and it is very important to understand in advance the contractual and legislative time constraints associated with any cross border restructuring. The risk profile is not always restricted to financial exposure. There are a number of typical questions to ask. Are there employee representative bodies to consider, for example European Works Councils, National Works Councils, unions, or other employee representative bodies. Are there relevant collective bargaining agreements which cover the affected employees and what do they say? How will they impact on planning and timing? What statutory provisions need to be considered and what are the sanctions for non-compliance, whether civil or criminal? Can non-compliance with contractual or legislative requirements derail the timetable or will it simply increase the financial liability? Are there atypical working arrangements which need to be factored into planning?

Involve all stakeholders

It is essential to ensure all parts of the business are talking to one another, a typical team should include, HR, finance, legal, PR and comms, relevant business and project management leads. Each representative needs to understand the priorities and constraints of the others and the risk profile of any course of action agreed in advance. Too often aggressive and unrealistic timetable are agreed, often from a different jurisdiction unfamiliar with local laws, because all interested parties have not been consulted in advance. The result is unworkable timelines, unachievable financial projections and heightened risk for the business both legally and reputationally. The end product is often the opposite of what was envisaged; a demoralised and demotivated workforce.

Establish clear lines of communication and project management

Coordination is key when managing fast moving cross border projects. Does everyone know their role? How will communication protocols (both internal and external) be managed? Has due thought been given to confidentiality, legal privilege and data privacy considerations? Will you consider using a dedicated IT platform to assign tasks and assume central control and maintain confidentiality? Who will access to the platform and at what level? Will you have regular progress meetings and who should be invited? Are there materials from previous projects available to speed up progress and reduce cost? If you are making a public announcement, are your legal, HR and PR teams all joined up?

Contingency planning

If the restructuring programme carries risk, it is important to have the necessary backup plan to ensure risk to the business is minimised. Is strike action a possibility and what are the options if this happens? What is the position if employees refuse to accept proposed changes to terms of employment? Is there a possibility of adverse publicity and have reputational risks been covered and anticipated?

The media spotlight is firmly on restructurings within the tech world. When time is of the essence, strategic planning and deployment of the right resources is key to minimising litigation and protecting image. The tech sector looks set for a period of upheaval as companies seek to reinvent themselves and ensure longer-term resilience in their operating models. There will be winners and losers, risks and rewards however doing nothing seems the most risky option of all.

Further Resources

Overcoming organisational challenges and reshaping the workforce

Our cross border restructuring guide aims to assist businesses in their strategic planning and operational execution of workforce restructurings and change management programmes. It provides an overview of the key legal requirements in 19 jurisdictions across EMEA and APAC.

Read here

Employers of record contingent workers Heatmap

We have developed a Heatmap providing an overview of the key risks and issues associated with using alternative employment structures in 19 countries across the world. The Heatmap forms an important step in selecting the most suitable employment model for a particular situation in a specific jurisdiction, and is an essential tool for employers who are considering adopting a new structure or evaluating an existing one.

Read here

Twobirds Access & Global Restructuring Projects

In this video, Emily Clark demonstrates how our twoBirds Access tool can be used to help streamline and project manage complex international restructuring projects. For more information on how twoBirds Access and the International HR Services team can help you with these kinds of projects, please get in touch.

Watch the video here

Strategic Employment Consulting

This guide focuses on companies engaging in organisational changes with direct workforce impact, including those already operating in and/or considering acquiring businesses located in the EMEA and APAC regions. It outlines an approach to providing a coherent strategy for managing the workforce, which should be at the centre of any such proposals.

Read here

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