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Risky business – HR’s role in reputation management

Story by
Anna Elliott, Employment Partner at Osborne Clarke

Reputation

The disruption to normal working life over the last few years has reinforced the critical role HR plays in managing a business’ reputation – and, as recent media stories aptly demonstrate, it is the “people” news which can often attract widespread public attention.

The impact on existing staff and workplace culture, recruitment and wider business relationships with customers, suppliers and other third-party contractors should not be underestimated.

There is also an increasing focus on ESG meaning investors are paying more attention to the social (“S”) aspects of a business and how employees are treated (akin to a ‘cultural’ due diligence) that may uncover people related reputational issues.

The starting point will be for HR (and in-house legal teams) to recognise where the risks to reputation lie – whether it be decisions by the employer or conduct from an employee.

Decisions by employers

Employers have had to make some tough decisions during the pandemic – many have weathered the storm well in handling difficult staffing issues – managing furlough, cutting pay and, in some instances, unfortunately making redundancies.

However, as the Chancellor’s recent spring statement made clear, we remain in challenging times with increasing business costs and the rise in the cost of living.

Given this backdrop, HR should remain alert to the fact that sympathy for businesses looking to cut their costs, for example, through changing terms and conditions of employment or reducing numbers of permanent staff, may well be low and we are in an environment where unions and staff may be more minded to challenge unpopular proposals.

Replacing permanent staff with agency workers to cut costs in specialised roles not only has the potential to damage wider employee relations but risks breaching statutory obligations, such as those relating to health and safety or any performance terms under third party contracts.

The use of “fire and re-hire” (commonly referred to as termination and re-engagement) to change staff terms and conditions has also faced scrutiny.

While the government previously indicated that it would simply look to Acas to provide guidance on this practice, rather than any legislative reform, it has recently announced a new statutory code of practice, in an attempt to ensure businesses consult fairly with staff and are not solely driven by their balance sheet.

Concerns raised by employees

The pandemic has also seen a plethora of new everyday issues for HR to manage.

From concerns over the adequacy of health and safety measures put in place to manage Covid-19 transmission, to those who are reluctant to return to their place or work or who now wish to permanently change their working patterns.

Movements such as #metoo and Black Lives Matter have also shone a spotlight on unacceptable behaviour in the workplace over recent years, with many employees now feeling more able to call these out publically.

The potential for an employee or former employee who is upset or feels that their concerns are not being treated seriously to damage employer reputation is an increasing risk with employees of all ages now using powerful social media tools to share stories in an instant across networks and the wider media.

Ultimately, any disputes may end up in the Employment Tribunal, with journalists attending and decisions available publicly on the government website, as well as potentially attracting media attention.

Recent years have also given rise to the phenomenon termed the “Great Resignation” with employees feeling more empowered to move between organisations, driven by factors including a shortage of top talent and new hybrid working practices.

Managing any departures will be critical in retaining the status quo internally, as well as reputation in the market to attract staff and protect a business’ goodwill (such as confidential information and intellectual property).

Actions for HR

The actions HR should take to proactively manage reputational risk (instead of reactively dealing with a crisis) will obviously depend on the nature of the issue in play.

While inevitably some risks will be easier to pre-empt than others, practical steps to consider upfront include:

  • Give careful consideration as to what any business decision really means for individual staff and the wider brand in the current market. Manage any consequences proactively and sensitively – it can be all too easy to lose sight of the bigger picture when seeking to manage a specific set of circumstances.
  • Put in place a “crisis management” process where any potential issues are identified or come to light. Who in the organisation needs to know? What immediate steps need to be taken? Take legal advice on the immediate risks and implications and any repercussions for ongoing negotiations/litigation. Should an external PR agent be appointed to manage the company’s response?
  • Understand and remain alert to the changing influences driving your employees; while financial motivations will inevitably play a role, many employees now also want to understand the business’ commitments and values in respect of broader issues such as climate change, diversity, health and wellbeing etc. Take on board individual opinions and deal with them sensitively and with consideration. Does your organisation provide forums where individuals (particularly from unrepresented groups with protected characteristics) can make their voice heard on these matters?
  • Ensure managers and employees are aware of and know how to use the employer’s grievance and/or whistleblowing policy to manage any complaints and/or grievances appropriately. Remind managers of the need to take care in all communications given obligations regarding disclosure should a matter end up in the Employment Tribunal or where a data subject access request is made.
  • Keep social media and other information technology policies up to date. These should reflect how technology is used in everyday work and personal life and set out clear guidelines for employees on appropriate use, particularly where lines may have become blurred with hybrid working. Consider reinforcing the messages in policies through training so they are well understood.
  • Review contracts of employment to ensure they provide adequate protection on confidentiality and an employee’s conduct during and after employment. Use regular catch-ups as appropriate during employment and exit interviews on termination to highlight expectations and manage any potential risks. The government has previously indicated that it will legislate on “gagging” provisions in employment documentation, including settlement agreements which are often entered into where an issue is to be resolved on termination. While such provisions are not prohibited, careful drafting will be needed to protect business interests while not preventing an individual from raising legitimate concerns and keeping in line with the position of regulators (which includes lawyers advising on the inclusion of such clauses) in this respect.

As the last few years have demonstrated, HR has a pivotal role to play in navigating employers through unexpected and difficult times.

Keeping abreast of the wider picture is key in understanding how business decisions will be received and knowing the issues which really matter to employees.

It remains critical that policies and procedures and other employment terms are kept up to date to reflect how today’s employees work, as well as any legislative and related changes, to ensure the company is adequately protected.

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