The massive earthquake and tsunami that hit Japan in March 2011 were not only a national catastrophe, they also had global repercussions on markets and multinational corporations (MNCs) alike. MNCs with operations in Japan — and especially Japan-based MNCs — faced a double bind as they had to decide whether to pull their staff out of the disaster-stricken area or not.
To do so would gravely hurt employee relations with local Japanese staff, as there is an ingrained culture of pulling together in the face of adversity. On the other hand, continuing operations would run the risk of staff resignations or even possible lawsuits and legal liabilities if any staff members were injured in the course of carrying out their work duties.
In such situations, human resource (HR) departments face the strategic challenge and the need to execute their HR responsibilities swiftly and appropriately without hurting cross-cultural ties. It is a precarious balance between what is practical with what is culturally acceptable.
Learn from the past
Lessons on what path to take can be gleaned from history. In 1998, a leading US manufacturer and marketer of men’s shirts abruptly closed down its factory in Guatemala as it claimed it had to cut back on its productive capacity. The multinational laid off 500 workers overnight, leaving them in shock as they only found out they had lost their jobs when they reported for work the next day.
In the aftermath, the International Garment Workers’ Secretariat and Union of Needletrades, Industrial, and Textile Employees (Unite!) launched a consumer campaign against the company. Consequently, the Human Rights Watch published a critical report that severely hit the manufacturer’s image and pressured the company to eventually begin contract negotiations.
In contrast, when the InterContinental Phoenicia Hotel was severely hit by a car-bombing incident in Lebanon in 2005, instead of laying off workers, it re-assigned 150 employees to other hotels in the InterContinental chain. Performance indicators for Phoenicia Hotel turned out to be even higher than the regional and total averages.
Mr Marc Ronez, managing director of Asia Risk Management Institute, wrote in an article titled “HR – Human Resource Contribution to Crisis Management” that HR can play a strategic role in organisational sustainability through advance preparation. And preparation includes immediate aspects of business such as leadership development and talent management, as well as not-immediately-apparent aspects like safety and security initiatives to help prepare and reassure employees, and solid communication plans to support effective crisis management.
The cornerstone of crisis management can be summed up in three words: bond, plan and assure. In preparing for a crisis, corporations should consider three important issues:
Forge strong community and employee relations
When the global clothing company Levi Strauss decided to close down six of its US manufacturing plants in 2002, its Levi Strauss Foundation set aside as much as £1.9 million (S$3.82 million) to help the communities which depended heavily on the manufacturing plants make the transition to other revenue sources. One of the initiatives was the addition of an employee advocate in each plant location, who stayed for a couple of months to help laid-off staff tap into the network of support available to them.
Devise a thorough crisis management process
Companies that display foresight in their ability to manage themselves and their assets in crises are often those that pick themselves up rapidly post-crisis.
Given that HR departments act as the liaisons between management and employees, it is important that the HR manager is actively involved in the crisis management process, and routinely communicates to and supports employees with their health and personal issues during crises.
Put in place policies for pay and benefits continuation
In the event of disaster, one of the biggest concerns of employees is their job and financial security. After Hurricane Katrina, a survey of large US companies showed that over 70 per cent of the companies lacked formal policies on how to handle pay and benefits matters.
HR managers should ensure that employees’ pay and benefits are considered in crisis management plans, and take that additional step of assuring employees of the fair treatment that the company will give.
In the days following the earthquake and tsunami, the Japanese people impressed the world with their stoic and community-oriented behaviour.
MNCs can take a cue from them and show grace under pressure by putting into practice the delicate art of building and maintaining employee relations.