Page 152 - Socially-responsible-restructuring-Effective-strategies-for-supporting-redundant-workers

Socially responsible restructuring
Effective strategies for supporting redundant workers

identify key activities, deliverables and staff functions to be suppressed, to
reduce duplication. All units underwent significant changes to adapt to the new
economic targets. The new organisation merged various departments to achieve
synergies and more efficient internal communication channels. The new set-up
resulted in a flatter organisation and more strategic competences in-house.
Throughout the reorganisation, a clear focus was also on keeping research and
development as one of the core activities in Volvo.
The new organisation demanded new roles and job descriptions, new
competence schemes and a new selection of people who could match the
competence requirements. Throughout the restructuring process, instructions
were given to keep essential competences in the firm, such that competences
were a decisive factor in the selection of people to keep in the company.
According to the Swedish Employment Protection Act, length of service and
competence determine the priority of the employees in redundancy processes.
The company can, in cooperation with the trade unions, agree on other criteria,
but this is usually more costly for the company.
During the summer, however, it became clear that the first notice would not
solve the challenging situation, as the financial crisis hit harder than expected. A
second notice was given in October 2008, which concerned an additional 2 700
employees.
The result of the restructuring process had significant differences between
planned and actual redundancies. The company was able to limit the redundancy
numbers through a significant reduction of costs in other areas, such as supplier
contracts, purchased services, IT and co-location of offices. Some 4 616 people
were made redundant during the restructuring process, including 1 215
consultants whose contracts were terminated: this is about 1 400 fewer than the
number of notices issued in June and October 2008. Overall, about 6 000 people
left Volvo Cars. In addition to those who were dismissed, a number of employees
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had agreed early retirement schemes or educational packages ( ) before the
‘right-sizing’ process, but these departures did not come into force until 2009.
Part of the staff reduction was also due to natural staff changes, with employees
leaving the company because they found other jobs or moved geographically.
The supply chain was also affected by the restructuring process. Volvo is a
large purchaser of goods and services and for many suppliers, the company may
be their main raison d’être. It is likely that several VCC suppliers were hard hit by
the restructuring, but no precise estimate exists at this stage.

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( ) Volvo offers two kinds of educational packages: one where the company finances the whole
training for an employee and one where the company gives some financial support to facilitate
training as part of the severance pay package.

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