The majority (82%) of New Zealanders don’t think it is fair of employers to make redundancies during a recession, which may result in retained colleagues working harder and customer service worsening due to a leaner and discouraged workforce.
A study1of more than 1000 New Zealanders has revealed attitudes are firmly against organisations letting go of employees during a recession and are particularly concerned about migrant workers being exploited to cut costs.
The study, commissioned by communications agency Anthem and undertaken by Talbot Mills Research, asked the public’s views on what it deems to be fair or not when organisations need to reduce costs during a recession or financially difficult times.
The research found just 18% of New Zealanders think it is fair for organisations to make redundancies during a recession, with men being twice as likely to consider it fair compared to woman. Within the 18% of respondents that thought it was fair for organisation to act this way, National (25%) and ACT voters (25%) were more likely to consider it fair compared to Labour (17%) and Green voters (6%).
Nearly half (47%) of the respondents stated their trust in an employer would diminish if it had a history of cutting employees’ jobs during tough times. In addition, over a third (35%) of respondents said they would stop spending money with a business that laid off a significant number of employees, with the number higher for respondents aged under 30 (46%). However, 36% of respondents stated they were unsure about what they would do and 29% said they would continue to spend money with that business.
Regarding consultations held with employees prior to redundancy decisions, just over a third of respondents (34%) perceived them as formalities and a ‘window dressing exercise’ for the business or organisation, a quarter (24%) felt these discussions were biased towards the employer, 21% thought these conversations were acceptable and fair and 21% were unsure.
When asked about the exploitation of migrant labour, the majority (55%) said they were very concerned or concerned about organisations in New Zealand doing this. Among those who expressed concern, a majority (81%) called for stricter penalties for exploitative employers. Additionally, 56% supported the idea of increased protections for migrant workers, with 41% advocating for both measures.
When respondents were asked what solution would be best when costs need to be cut, 47% said organisations should try to retain all their employees but reduce salaries by 10%, 22% said they should reduce 10% of their workforce and 31% were unsure of the best solution.
Talbot Mills Research Managing Director, David Talbot, says, “The research should serve as a reminder to businesses that there are significant reputational risks in the way they conduct themselves through financially difficult times. This is true for smaller businesses that are closely connected to their communities, and larger businesses that are posting high profits. Businesses should ensure their decisions are seen as fair and necessary with honest and transparent communication to build understanding and trust with consumers.”
John Miles, CEO of New Zealand Marketing Association, says to protect reputation during a recession, organisations need to consider alternative solutions before resorting to layoffs.
“The research shows that people’s trust in an organisation can decrease significantly when staff are laid off. All organisations go through a life cycle where they need to reinvent themselves to stay relevant and remain in business. This is no different during difficult financial times. Employees and the public want to see organisations focus on adding value to their offering and consider alternative revenue streams before resorting to layoffs.”
AJ Lodge, Partner and Employment Lawyer at Anderson Lloyd, says that businesses need to treat consultation with employees as an opportunity to solve critical business issues.
“I was surprised to see one third of respondents consider consultation with employers as a ‘window dressing’ exercise. Some organisations make cost-cutting decisions when in financial difficulty without giving due importance to consultation, which can appear as a lack of concern for employees and ultimately damage an organisation’s reputation. Businesses should approach consultation with an open mind, because employees will often have ideas for how the business can solve the issues that put them into consultation in the first place.”
Anthem Co-Founder and Chief Executive Officer, Carolyn Kerr says businesses need to strike the right balance during financially difficult times between achieving sustainable financial returns while remaining in touch with consumers and their employees, to protect or enhance their reputation.
“In the year ahead, we expect to see continued pressure on businesses to demonstrate their genuine understanding of their consumers, while making prudent decisions to manage costs and retain their staff. Those with a strong brand identity based on purpose and providing value will likely experience reputational gains. On the other hand, businesses reporting profits deemed excessive for the times or making sizeable investments need to consider the optics through the eyes of their most important stakeholders – their employees, customers and smaller suppliers.”
Anthem’s research is part of a regular research series, Fair Enough?, examining topical issues and reputation through a fairness lens. The series aims to examine key reputational risks at play and how stakeholders are responding
[1] The survey was conducted by Talbot Mills Research using a nationwide online nationally representative sample of n=1042 between the 8th and 18th of June 2023. The maximum margin of error for a 50 per cent figure at the 95 per cent confidence level is +/- 3 per cent.
