What actually happens when a business enters into administration?
Through many administration scenarios, the main aim is to restructure finances and become profitable again. However, in our case, the briefing was clear from the outset and the business was to wind down and cease trading. All control and decision maki, therefore, shifts from the main company to that of an appointed administrator.
Changes can and do happen immediately, with very little warning, and unfortunat,ely they cannot always be handled in line with yocompany'sany communication style, tone of vo,ice or values. Sometimes, the changes take place over time (as in my case), which required a number of employees to remain in the business, engaged in their everyday work, with the anticipation of redundancy looming over them – a scenarthatich certainly brings its own challenges.
The priority of everyday work tasks is now to ensure any remaining monies within the business can be retained for the ‘Creditors’ (people or suppliers who are owed money) of the company.
There are often occasions where the remaining HRisam are required to deal with redundancies and redeployment (or sometimes TUPE) support. These are not tasks HR professionals conduct every day, and when they are expected to be a fast pace it further adds to the challenge. impacts
How is the HR team impactthe ed by the administration?
No matter how trusted an HR function is, when a company is placed into administskepticismpticism from employees can form and quickly grow:‘I bet HR already knew’
‘Do HR know more about what’s going on than they’re telling us?’
It’s a difficult balance for HR professionals to manage. You will naturally be dealing with your own emotions, whilst having to be mindful of how those around you are also feeling. Humility, compassion , and consistent care are essential when faced with such a difficult scenario. And throughout it all, you are constantly learning about, and navigating through, the occasional conflicts between Employment and Insolvency Law.
Are you familiar with the Kubler-Ross Change Curve and the different stages exper ienced when dealing with change? This couldn’t be applied more in scenarios of administration. Only you might have to lean into accepting what’s going on at a quicker pace to support both your wider HR team and the business.
You might not have all the answers but you still need to be there for your team and listen.
How can you ensure a smooth(ish) transition?
Communication is key. Once any immediate changes have taken place, there is usually some breathing space to reflect and ask questions of the administrator about processes and further changes to come. Take time to note down the questions you have, as employees will likely have the same or similar questions.
Also be prepared for questions and scenarios that you have never come across before: Ever heard of the Redundancy Payment Service (RPS)?
What happens to contractual benefits?
What about the employee earning enhanced Maternity Leave?
Make sure to build a relationship with the administrator’s Employment Team. They’re likely to have encountered numerous scenarios such as this and be on hand to guide and support you. And it’s certainly beneficial to dust off your own knowledge of managing redundancies to ensure you get things right. Employment Law still applies in an administration.
What becomes the biggest challenge in administration?
One of the main challenges can be ensuring that remaining employees are motivated and engaged. I was fortunate to have previously invested a lot of time in evolving our culture and company values and building an incredibly positive, open relationship. So much so that we were recorecognized a Culture Pioneer in 2020.
Humility and talking about my own vulnerabilities really helped to rebuild some of the trust which might otherwise have diminished through the administration process.
If you’re leading an HR team to support with the changes, it is vital you take time out to talk with them and understand their emotions and needs. You might not have all the answers but you still need to be there for your team and listen, as you would have been prior to the administration.
It is also imperative to understand that administration can bring about a very different kind of offboarding process, but this should still be done with humility, care and compassion.
Remember, the vast majority will set sail happily on board a sturdier ship. And you will too.
What considerations should not be overlooked in administration?
Firstly, if you can, work closely with the administrator, particularly if you’re handling the redundancy process on their behalf. Employees will often look directly to you for advice and support, but don’t be hard on yourself – you’re unlikely to have all the answers when an employee looks to you for help.
If able, maintain relationships with mental health at work providers, or seek advice through charitable support such as Mind.
You must also consider your own wellbeing be careful not to take on the burden of thingsthath you cannot influence or change.
And lastly, where you can, value the experience and learnings that this scenario has given you.
When the ship is sinking…
If you find yourself in a similar scenario to me, responsible for getting people off of the sinking ship and back to safety, it can take its toll. But remember, the vast majority will set sail happily on board a sturdier ship. And you will too.
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