What is HR’s role when a company goes into administration?

 

Woolies

In 2012 I gave a short interview to People Management to provide a perspective of HR when a company sadly goes into administration after the collapse of HMV.

Following the news that BHS has gone into administration; putting 11,000 jobs at risk, I thought it would be appropriate to share my experiences from when I worked at Entertainment UK, part of the Woolworths group which collapsed in 2008.

When the announcement was made on 26th November 2008, it’ll be a moment in my early career that I will never forget and I quickly learned that business can be unbelievably harsh therefore I must toughen up to support the needs of the employees and secondly, I have never seen such a variation of reactions in one room before, it’ll be an image that will stay with me. Poor business decisions alongside difficult trading and an ever increasing pension deficit all contributed to Woolworths demise and now it seems history is repeating itself with the employees suffering the most.

So what can HR do when a company has hit the buffers? Unexpectedly, employee reactions are amazingly mixed; some are not surprised, others are shocked, some are relieved, others want to do everything they can to save the company, but the majority are distressed and concerned for the future.

When you work in a business where it has a substantial heritage, you often have an incredibly loyal workforce which has a community feel to it so it is vital that HR provide support as much as possible and handles the situation with great sensitivity. Support each employee as an individual case and listen to their concerns.

HR is almost completely helpless once the administrators arrive on site, yet it is a very busy time for them. Simple requests such as holiday entitlements and resignations have to be run past the administrators first which can take a long time to obtain a response. Most company contracts and assets are frozen which can include employee assistance programmes (unless the full fees are paid for upfront) so HR has to take on the role of handling the situation to the best of their ability and trust me, it is incredibly difficult.

Speaking to the employees is vital, as a HR administrator I went to pick and pack in the warehouse to get orders out just in time for Christmas. Surprisingly it was a jovial time as it looked like Woolworths might actually survive. It was great to see the stock moving again but it had been an incredibly slow two weeks to get to that point and I just couldn’t sit in the office anymore!

We were advised on 12th December 2008 that the iconic doors were closing with final trading taking place on 6th January 2009. From 12th December the HR team had 5000 employees queuing up for advice on their redundancy pay, shares and pensions. I remember going home that evening and feeling completely numb and being able to memorise RP1 forms in my head!

The amount of tearful thank you’s we received as a team in such difficult conditions made us really appreciate that we had the opportunity to work with some wonderful people and that by actively listening and being supportive has impact on employees.

I decided to contact as many recruitment agencies as possible in the hope that we could find suitable employment for as many employees as possible. We held CV workshops, interview skills training (some had been with the company for 40 plus years so this was their primary area of concern) and invited the recruitment agencies in to register candidates. Obviously this shouldn’t be done until further information from the administrators are announced and confirmation of the future of the business is received.

For now BHS continues to trade as normal until a suitable buyer is found or a decision to cease trading is made. As my former colleagues and I often say – there’s life after Woolworths, it’s just hard to imagine life without it.

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