On 6 April, the Information and Consultation of Employees (ICE) Regulations were extended to apply to all employers with 50 or more staff. But should employees really be told about plans to reorganise the company, or is ignorance bliss? Sarah Fletcher reports.

The ICE Regulations, which were introduced in April 2005 and originally only applied to companies with 150 or more employees, set out guidelines for telling staff about the business’s economic status and possible changes to the working environment.

As the Regulations establish minimum requirements for consulting workers about prospective job losses, mergers or plans to reorganise the business, companies are obviously dealing with highly sensitive issues.

These could cause huge disruption to the company from a disgruntled workforce, so is absolute transparency really the key to a happy organisation?

Silence is golden?

“Management often have an irrational fear of talking to the workforce about how the company is doing,” argues HR manager Fiona Fritz. “Obviously there are times when commercially or legally sensitive information cannot be divulged; but what’s wrong with talking about company performance?”

Employers may fear that staff will spin into a wild panic if told that restructuring or job cuts are likely, but keeping quiet isn’t the solution. A disgruntled workforce often complains that they’re kept in the dark about company plans, and this only damages loyalty to the organisation.

Work out your plan first

“For employees, the requirement should be that they know what is proposed, they know why, they know the repercussions for them, and they have an opportunity to respond,” argues HR consultant Don Rhodes.

“This requires the employer to firstly work out exactly what they wish to achieve, and why,” he adds. Only then should managers advise employees of their plans. This will ensure that staff don’t panic over nothing, but that they’re kept informed as soon as anything solid is decided – and don’t make it too vague.

The risk of rumours

“The idea behind having as detailed proposal as possible is to enable employees to respond more accurately, rather than some far-flung notion which may have little relevance,” says Rhodes.

“Telecom New Zealand announced several years back that within three years there would be hundreds of redundancies. The only explanation given was that technology and restructuring would take place,” he adds.

This is a lesson to all UK organisations – employers must be clear. “How in the world can an employee respond to such a ‘nothing’ proposal?” asks Rhodes.

“The net result was that many of the top performers left, rather than hung about waiting to see what was really going to happen,” he comments. Keeping staff properly informed is, therefore, crucial.

Telling the workforce about potential mergers or job losses may affect motivation, but the alternative could be even worse. If you keep quiet, staff have to rely on rumours, which can be even more unsettling than just telling them the truth.

Employees may think that something much worse than the reality is about to occur within the company. You may end up with resignations as staff seek new and more secure employment, or an unmotivated and unhappy workforce.

Improved performance

However, if you keep staff informed about changes to the organisation, you’re more likely to get the loyalty and commitment you need at difficult times. Employees are grateful to feel trusted and valued by the business, and relations between managers and staff are likely to improve.

You may even get better performance and commitment from the workforce, says the employment advisory body ACAS. “Employees will perform better if they are given regular, accurate information about their jobs,” says the advisory organisation in its guidelines on adapting to ICE Regulations.

Show staff their value

Employers may benefit from the wisdom of the workforce when making business decisions and, by involving staff, managers are more likely to gain employees’ support and commitment to the decisions they make.

It’s also important to make it clear that this input has been considered and not just dismissed as soon as the boardroom door has closed.

Managers must show that they have acknowledged and recognised the value of employees’ suggestions. “If the employer does not accept the response, staff deserve to know why, because even if the employer response is not accepted, the staff member will at least feel they have been listened to,” says Rhodes.

There’s a moral dimension too. As job losses are potentially life-changing for the workforce, the employer has an obligation to warn staff before the P45s come out. “It seems only fair that they should know about the future of the company and how it might affect them,” says Fritz.

“These regulations only formalise what companies should be doing anyway,” she argues. Certainly, taking the Regulations on board is a sound business decision: employees will appreciate this consideration, and are more likely to act loyally to the company if managers show they embrace the ICE Regulations.