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Workforce Management in Difficult Times

Numerous organizations have experienced major changes in the past few years to include mergers, acquisitions, corporate restructuring, bankruptcy and closure. In response to requests, we will feature a series of articles on Workforce Management in Difficult Times.

Philip H. Gennis,
Vice President,
Recovery &
Grant Thornton
We realize that communications alone are not enough to deal with the complex issues requiring organizations to restructure. Failure to communicate effectively with all stakeholders can ultimately lead to an organization’s collapse. All of the above scenarios have consequences.

What techniques should senior executive use to manage the change and communicate effectively with all parties involved? What happens when organizations do not communicate properly?

Industry experts advise us to pay special attention to communications with employees in times of major transition. The communiqués must be individually tailored to meet the needs of the employer as well as those of the employees. With the assistance of financial advisors, labour and employment law specialists and management consultants, develop a comprehensive communication plan.

Some key points to keep in mind when developing a communication plan include:

* Communicate early and execute the plan fully and on time.
* Use multiple communication vehicles. An initial face to face staff meeting is advised, followed up by memo, email or letter to the employee’s residence.
* Lawyers advise senior management to say as little as possible, particularly in the case of receivership or bankruptcy, to avoid potential problems with secrecy and disclosure.
* Be compassionate but clear in your message, make the case for change, recognize employees’ contributions and acknowledge their sense of loss where applicable.

With mergers, acquisitions and restructuring, manage the expectation of each key audience. Multiple audiences involved include those who will be leaving, those who remain and those being outsourced, all of whom may be unaware of their future employment status. Senior management should be advised of the message being relayed to employees. In unionized organizations, management experts recommend involving union leaders early in the process. The aim is to handle the transition in a good, positive manner to ensure productivity and effective communication. Involve union leaders in the communications process with management.

With turnaround management or receivership, reinforce the fact that efforts are being made to salvage the organization. The organization may have to trim positions to continue operating. Establish early alignment of employees staying on with the organization’s strategy. Establish clear goals and targets. Trustees in bankruptcy will explain revised terms of employment. New employment contracts are issued and must be signed by employees as a condition of employment.

Difficulties occur most frequently when planning and communication have not been properly executed. In the case of a recent plant closure in a small town, there was no partnering with union leaders or community leaders to discuss the impact on the town. The plant was the major employer in the area. This led to picketing, animosity toward senior management and the broader corporate organization, boycott of the company’s product, lost productivity, sabotage and missed order deadlines.

In cases involving restructuring and downsizing, lack of communication of decision and business case lead to rumour mills, speculation, lost productivity, increase in sick days and short term disability claims, systems sabotage, and at times, reporters showing up on the company’s doorstep.

The bottom line: pay close attention to communication with employees. This is often overlooked and can result in huge losses to the organization. No two cases are alike, thus there is no standard universal solution to fix the problem. Consider the examples of interpersonal relationships such as a couple going through divorce or two single parents dating and preparing to take their relationship to the next level, planning how and what to tell their children. There is no “one size fits all” answer. Specific strategies must be used for each step along the way. The same applies in the workplace, where you have the advantage of working with professionals who can develop your communication plan, work with the employees, assist with day to day administration, oversee the change and manage all financial and legal matters involved with the transition.

The above information has been provided by Richard Nixon, LL.B., Partner, McCarthy Tetrault LLP, Toronto, Philip Gennis, LL.B., CIRP, Vice President, Financial Advisory Services, Grant Thornton Limited, Toronto and Mary Marcus, Vice President & Practice Leader, Right Management Inc., Toronto.

Identity Theft

For the past ten years I have investigated fraud and money laundering as an investigative forensic accountant. My introduction to fraud and the world of criminal wrong doing was the chance to work for two years in-house as a forensic accountant with an RCMP investigative unit. The police officers I worked with were a specialized unit focused on organized criminal groups and particularly the profits these groups were amassing. My job was to follow the money trail, pull together the accounting evidence and provide my report to court as an expert witness.

Grant Thornton
When I received a call, out of the blue, from a mortgage collector who wanted to know why I was not making my mortgage payments I knew something was terribly wrong. Very quickly, I realized that I had become a victim of identity theft. My name and good credit rating had been used by fraudsters to purchase two properties. Each of the properties was heavily mortgaged with a financial institution. The first time I became aware of this activity and how my name and credit had been used, was when the mortgage company tracked me down looking for their money.

I now had the opportunity to investigate my own case. With the help of police and investigative journalists, I found out that the fraudsters who had used my name were involved in a lot of this kind of activity. At first, it was not clear how the perpetrators were profiting from these crimes. And then the pieces of the story started to fit together and it became clear that the mortgage proceeds were based on inflated appraisal values, that the seller of the properties was likely involved and as well the lawyer whose trust account was used to receive the mortgage financing. Other parties were involved: a mortgage broker who, while not involved in the fraud, likely did not ask enough questions when presented with the deals; financial institutions who loaned money to people using my name without doing enough due diligence to find out who they were really dealing with; credit agencies who gave scores of people and organizations access to my personal credit information without my permission. As my unasked for in-depth education of identity theft and mortgage fraud evolved, I got very angry.

It is simply amazing how easily this terrible crime can happen to any of us. I was in fact lucky in many ways as all that was stolen from me was my credit capacity and hundreds of hours of my time to right these wrongs. We are hearing more and more stories today of people’s personal homes being stolen through fraudulent documentation filed with the provincial land registry offices and money taken from personal bank accounts. At the time this happened to me, my husband and I were not making any large purchases but we did about a year later buy our first home. It is scary to realize that if the timing of my identity theft had been different we might not have been able to obtain the mortgage financing we needed.

Your Personal Data- How Safe Is It?
Our information is everywhere. All the fraudster needed in my case was my name and social insurance number. Every other piece of information on the fraudulent mortgage applications was false. Since this happened to me, I have several times reflected on how careful I try to be with my personal information, particularly after working with the police for two years. I do not throw out or recycle anything with my name or address on it unless it is first shredded. I do not respond to unsolicited email, phone calls or letters. I know from investigations only too clearly that we as individuals really do not know who is on the other end of a phone call even if it really, really sounds reputable. I do not fill out credit card applications for free gifts. I do not give anyone my social insurance number unless I know why they need it and how they are going to use it. Basically, our social insurance number is a CRA tax reporting number. Your employer needs it and so do the organizations who pay you taxable income (all the organizations who send you a tax reporting slip in February.)

So how do these criminal groups get our information… when we try to be so careful? For criminals the list of data sources is long: How many financial institutions do you deal with? How many different government agencies have your contact details and social insurance number? The number is significant when you start to list the different federal, provincial and municipal agencies. How well does your employer protect your information? Does your employer use a payroll service and how well do they protect your information? What about the auditors of these organizations who may easily have this data loaded electronically onto laptop computers that sit in the back seats of cars? Even the very credit agencies who collect and sell our credit data have had their databases compromised by criminal organizations.

I do not know how the fraudsters obtained my data. I have been informed that the Equifax credit agency database was compromised by alleged fraudsters a few months before the activity using my credit started. I have also been asked to consider how much money a criminal group would pay to bribe an employee to obtain data. With my name alone, the fraudsters may have profited by as much as $100,000.

Victim Response
It is important to understand that when this happens, and it will happen many times again, that as individuals we are likely not able to do anything to stop this from happening. There are many organizations, who at different points along the way of these financing transactions, are able to identify the red flags of these fraudulent transactions. As individual victims we need to let these parties know that we are not helpless victims, we will not be put in a position of catering to their needs- when they ask us to assist them as they work their way through their process. We will be demanding victims and we will be demanding of them- they need to make time and take responsibility in assisting us in clearing up the situation and the bad things that have happened in our good name. Not the other way around.

If it does happen to you:
* Ensure you contact the credit agencies and have fraud alerts put on your file. This will notify anyone who is considering lending money to your name that they need to contact you, the real you, first. Credit agencies: Equifax and Trans Union
* Contact the financial institutions you deal with to confirm your account balances and all activity under your name.
* Report your identity theft to the police. Our system can and does work- one of the individuals involved in my case was convicted. Report to your local authorities and to Phonebusters.
Other Useful Tips
* Review your credit card statements and follow up on all unusual items.
* Consider purchasing title insurance. This will protect you if fraudsters ever try to steal your personal home property.
* Consider whether or not your mail can easily be stolen- more people are starting to use mail slots in their front door. Follow up on expected mail not received.
* Only deal with reputable organizations that you trust. Do not respond to unsolicited requests with out first checking them out so that you know who you are dealing with.

Jennifer Fiddian-Green, CA IFA, CFI, CFE, CAMS, CMA is a Partner, Grant Thornton LLP


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