Honesty the best policy as firms face hard choices

BELFAST BRIEFING:In a time of increasing uncertainty, business leaders must earn trust of their workforce, writes FRANCESS McDONNELL

THERE ARE few businesses in the North that can say they have not, in one way or another, contributed to Northern Ireland’s rapidly rising unemployment rate.

The impact of the dramatic slowdown in the local economy has created a domino-like reaction among businesses and firms that have been forced to take difficult decisions in order to survive the recession. In the worst-case scenario, this has resulted in job losses and company closures.

The recent surge in the number of people unemployed in the North underlines just how poorly the local economy is performing at this time. In the three months to June, the unemployment rate rose to 6.7 per cent. Latest government statistics estimate the total number of people out of work to be in the region of 54,000.

The number of people joining dole queues in the North has increased steadily for 17 months in a row. There is no sector, no industry and not a single business that appears immune to this malaise, and there seems little that anyone in Northern Ireland can do to stop it.

According to Ulster Bank economist Richard Ramsey, there are some encouraging signs that the worst of the recession is behind us, but he still predicts Northern Ireland’s unemployment rate will average 9 per cent in 2010.

The expectation is that the anguish caused by unemployment will seep further into the fabric of Northern Ireland as more people through no fault of their own find themselves without a job.

There is a sense of desolation about being unemployed that official government statistics can never convey.

In the economic downturn it is inevitable there are companies in Northern Ireland that will have no choice but to make valued staff redundant if they want to survive. But, according to one of the North’s business leaders, it is the manner in how firms do this that will set companies apart.

Paul Rooney, a partner with PricewaterhouseCoopers, says even in these difficult times businesses have a responsibility to show leadership to their staff.

Rooney believes companies that adhere to good principles of corporate responsibility will not only help their business but also earn the trust of their workforce.

His role as leader of PwC’s corporate finance and recovery practice in Northern Ireland gives him a particular insight into the business environment in the North and the challenges it is currently facing.

Rooney says nobody has seen this type of recession before in Northern Ireland and there is a fundamental issue of social responsibility at stake now.

“Businesses have a responsibility to be honest. There are hard decisions to be made. In some cases there is uncertainty about the future, but what business leaders need to do is try their best to communicate with their stakeholders and their workforce.

“I believe there is a need to restore public confidence in business and companies. Some sectors, such as the financial services industry, have been damaged and it is important to rebuild trust right across the board,” he added.

Rooney, who has just been appointed the new chairman of Business in the Community in the North, says when tough calls must be made, the best policy is “honesty and clarity”.

“Business leaders should adopt what I call the ‘day after tomorrow’ approach. In a recession everyone battens down the hatches, but the recession will end and when it does businesses need to be ready for the upturn.

“How they will do this is by being responsible, by keeping their staff informed and by consulting with them, particularly when difficult decisions have to be made.

“This is the time for businesses to show corporate responsibility. It is not about a feel-good factor for companies, it is about doing the right thing, which in the long run will not only help them but also the Northern Ireland economy.”