Sometimes, despite the best efforts of management and staff, a company can go under and have to resort to bankruptcy to manage its financial affairs.
This is a difficult time for all involved, especially employees who probably won’t know whether their careers are safe, or when they’ll receive wages or bonuses – if indeed they even will.
Regardless of how talented an employee is, they are only as safe as their company's financial position allows them to be, meaning bankruptcy is something that could theoretically affect anybody.
How Bankruptcy Affects Employees
When news of an organisation’s financial collapse break among the workforce, there will be many questions staff wish to ask. Managers and those higher up within the organisational structure will usually be too busy to liaise with their workforce at first, so the responsibility will often fall at the feet of the Human Resources department.
It will be up to the department to inform workers about any new changes made, and try to provide as much information on the situation as possible. The department will act as the bridge between management and the workforce, helping to keep operations running as smoothly as possible.
Saving Jobs
One of the first things a business or organisation will usually look to trim is staff wages. This can mean many loyal workers may find themselves out of a job, usually through no fault of their own. If it is in any way possible, the Human Resources department will try to fight for the survival of the company’s employees for as long as it can.
Surviving Bankruptcy
Bankruptcy does not signal the end for a company or organisation, but it does create a very ominous-looking future. With any luck, the firm will be able to evolve and ride out the difficult financial situation; however, this will take an almighty effort, and will even involve a little bit of luck.
For an organisation to survive bankruptcy, the people operations department needs to be in fine form.
It will need to help the business devise a successful survival strategy, and maintain control of the workforce to ensure employees remain productive.
The department will need to keep teams motivated, and will also be tasked with the job of keeping the company’s best employees (its assets) working for it. Without the help of a good HR department, the business will find it almost impossible to survive the crisis.
Since the global market crash in 2009, more and more businesses and organisations have turned to bankruptcy. Some have made poor investment choices and have been made to pay because of those, while others have suffered from funding cuts or even organisational decisions that have gone wrong.
There is enough evidence around to suggest a business can survive bankruptcy, but the period of being low on funds does create a feeling of anxiety felt within all departments.
Human Resources will be called upon more during this tumultuous period, and will be relied upon to enact strategy and encourage workers to believe in recovery.
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