What HR Should Do When the Company is Facing Closure

​Unfortunately, as our economy has been hit devastatingly hard by this pandemic, some businesses are not going to rebound and are being faced with difficult decisions that have long term impacts to their employees.  Some have been able to temporarily furlough employees and call them back as business rebounds.  However, others may find themselves in a situation where they need to close the business altogether.  In those situations, if the company is large enough to have an HR person on staff, you will likely play a key role in winding things down and may be one of the last ones employed by the business.  A lot of people will be looking to you for guidance during this critical time.

I found myself in such a position back in 1999 when I was the HR Director for a large medical group that closed.  It was not something that I was expecting.  Unfortunately, there was a nasty and pretty public dispute between the physician owners and their management company that ultimately led to the dissolution of the company.  Less than a year after starting there, much to my surprise I found myself in a key leadership role helping to wind down a medical group that had employed 150 physicians and over 600 staff.  It was quite a learning experience.  Although you’d never wish for it again, I’ve found that often the most stressful times are the ones where you can grow the most.  And now I’m able to share what I learned with you from that experience.

Ten Key Considerations in Preparing for a Dissolution:

• 1. Employee Communication – The most critical thing during periods of organizational instability is communication with employees.  Rumors are going to fly like crazy and employees will be fearful.  During our dissolution, we established a special newsletter early on for the sole purpose of addressing rumors.  It was published weekly via email and employees could count on knowing it would come out and when.  We told them what we knew and were as transparent as we could be.  We also held Town Hall meetings where they could ask questions of senior leadership directly.  We addressed rumors head on and over time, this built trust, which is critically important for employee retention during difficult times.  I’ve used other similar methods during times of great change or uncertainty in other organizations and these have worked well.  Consistency in messaging, frequent communication and transparency from leadership are the keys to getting ahead of the rumors.

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