Downsizing, and making incumbent employees apply for their own job: A matter of professional negligence?A recent case in the employment court, Christchurch, New Zealand  NZEmpC 7, CRC 46/10), in the matter of a challenge to a determination of the Employment Relations Authority between Derek Wayne Gilbert (Plaintiff) and Transfield Services NZ (Defendent), is of interest. The case involved the usual restructuring (downsizing) where incumbent employee positions are dis-established, with the same employees now required to re-apply for the fewer jobs available as a result of the restructure. The usual HR/management wheeze is that the new jobs require different 'soft-skill-competencies', hence the use of psychometric tests to assess these. Of especial interest are these judge's comments in finding against the defendent Transfield Ltd:
" Transfield’s refusal to disclose the actual Previsor test scores, combined with its inability to have access to the proprietorial intellectual property of the testing organisation, including questions asked and the actual answers given, is not consistent with the requirements of the Act for information sharing, disclosure, and objective rationality. Not only was this information not available to Mr Gilbert but it was apparently not available to Transfield. That is one illustration of the dubious value of using a psychometric testing tool, designed for recruitment and managerial promotion, to determine which of a number of existing employees should be made redundant. Although the owners of the testing system may have had good reason to keep its ingredients and even results secret, that illustrates the inappropriateness of its use in a process that requires openness and information exchange. Employers proposing to use testing procedures that they do not fully understand, and are not permitted to know about, will have difficulties when challenged by employees such as the plaintiff to justify the consequence of dismissal effected in reliance on the products of such systems"
" That is further illustrated by the defendant’s inability to explain how another employee (whom I will call K) who had a 94 per cent psychometric test score and scored equally on the interviews with Mr Gilbert (9), was not retained in his employment while another employee (E) with a lower psychometric test score and an equal interview score of 9, was retained. The inability of the company to explain such apparent discrepancies rationally also illustrates the flawed methodology employed by it in this exercise."
" Transfield’s decision to employ an assessment tool that was incapable of meaningful explanation made it impossible to comply with the requirements in s 4(1A) of the Act to provide access to employees (including Mr Gilbert) to information about the psychometric test. It thereby deprived them of an opportunity to comment on the results of the test upon which the employer relied in the course of determining that Mr Gilbert was redundant and dismissing him. As well as the psychometric test for recruitment purposes being of dubious value to the very different exercise of selection for redundancy, Transfield created an additional problem for itself by purchasing and using an assessment tool which it could not and did not understand or explain to affected employees or indeed to the Court at the hearing."
" Transfield was required to assess Mr Gilbert’s “skills” by cl 46.6 of the collective agreement. To justify its extraordinary decision to ignore completely what it knew about Mr Gilbert’s performance of his job, the defendant was driven to say that its long established and indeed still current employee performance assessment mechanisms are of limited, if any, value. That beggars belief. If it were really so, one might well wonder why they continue to be used for ongoing performance assessments of employees including for remuneration reviews. It will be clear that I do not accept the defendant’s excuse now about why it did not use those obvious and relevant tools that it had at hand and as it bound itself to do in the collective agreement."
" This is an example of an employer not only ignoring relevant criteria (skills and experience) but also of taking into account irrelevant criteria (psychometric and personality type testing designed for potential new employees where none was in that position). For these reasons also, the steps taken by Transfield leading to its decision to dismiss Mr Gilbert by reason of redundancy, were not what a fair and reasonable employer would have done in all the circumstances and were not how a fair and reasonable employer would have gone about that."
I don’t think asking incumbent employees to re-apply for their job is acceptable, except under one condition:
The job (and its duties, responsibilities, and operational functions) they are currently engaged in will no longer exist. That "no longer exist" translates to:
1. the current job is being completely dis-established. e.g. the company will no longer undertake its own equipment repair functions, or its office cleaning, or its specialist sales team for a no-longer-to-be-sold product.
2. the current job is being changed substantially into a new job, where existing duties etc. are being augmented with significantly new functions and responsibilities requiring specific knowledge and qualification requirements which have not been prerequisites of the existing position.
Given #1, it is entirely reasonable that those staff hoping to do another different job within the company should be asked to apply in competition with others. Given #2, it is important for the company to clearly identify the new job requirements-duties, making sure these are substantially different from those already being undertaken by the incumbents. The company may decide that specific cognitive-personality attributes might be required to fulfil these new tasks (over and above those already possessed by the incumbents) for which new psychometric or other kinds of qualifications/assessment may be required.
However, simply “bringing in” psychometrics as an excuse to produce some numbers which can be used to discriminate between incumbents is a potentially dangerous approach, because of the fundamental inaccuracy of psychometric tests per se. In some situations they make sense, sometimes not. And, weaving them coherently into a decision process is actually quite complex if you are not to leave yourself exposed to facing someone like me as the opposing expert-witness in an employment court.
So, great care needs to be shown here by the company in determining just how different and significant are the new duties, and the actual relevance of any new person characteristics over and above what might already be possessed by incumbents. Justification for both should be with an eye to convincing a court (or any disinterested 3rd party) that your reasoning is coherent, reasoned, and fair. Indeed, seeking legal and/or union opinion is one way of establishing the coherence of your reasoning behind the processes you seek to instantiate.
Otherwise, you do not ask incumbent employees to re-apply for their own job. Period.
It is both humiliating and insulting because these people have all been doing their job well-enough to the extent that the employer has not found reason to sack them before now. This does not mean that all are performing adequately, or are model employees. It just means they have "kept their noses clean" to whatever extent required to make it difficult, if not impossible, for an employer to sack them.
Under the kind of "look, we can only afford to pay 4 out of 6 of you in future" scenario, you evaluate each employee based upon their past performance (across those features which are considered definitive of job performance), using a mix of performance records, relevant objective attributes (numbers of publications, sales, widgets made, safety record etc.), and ratings by supervisors or external independent raters (who rate from written employment records/information if these contain relevant performance information). If rating, every person has to be rated by multiple raters - and only attributes rated the same (or very similarly) by a majority of raters are used in any decision process.
In short, you do not humiliate someone who has been doing the job very successfully for say 5 years by making them compete with their colleagues in what amounts to a sham interview situation. Instead, you take steps to agree with all parties (the incumbents, unions, spokespeople) about how you will assess the incumbents (precisely how; not some fudged, purposefully vague set of procedures), and proceed on that agreed basis. And yes, it takes real leadership here.
You also indicate that it is quite possible all incumbents may well end up with the same ranking or feature score, because either insufficient information of a suitable veracity is available to make the necessary distinctions, or, all incumbents really are performing at the same level. Under these "terminal" conditions, job-loss will be via a random number sequence - because there is no other rational way of making a fair and reasoned decision.
You laugh? Why? When there is no other rational way of making a decision, but that decision has to be made, what can be fairer than an unbiased random selection procedure?
It's a clean, honourable, open process which treats employees with integrity and respect. It is also implemented openly and honestly from day 1. It is entirely transparent to any 3rd party evaluation because 3rd-party evaluation has been foremost (and maybe even present as with unions) in designing the process.
You can't make these things any more upsetting that they are - but you can treat incumbent employees with dignity and respect. Such downsizing can be done but is actually a very complex task involving a mixture of computation, evidence-base construction/evaluation, records-based analyses, job-analyses, through to open and honest discussions about how to do things with all parties involved. The process must be utterly transparent to employees, unions, and any disinterested 3rd party, and agreed upon by those affected and their unions. It’s hard because of the flutuating and powerful emotionality and stress surrounding the entire process.
Just think of the many intelligent and ‘in good faith’ ways of going about this process, where those whose performance has been so poor that now is the time to say ‘goodbye’ on the basis of performance reviews, and where those whose performance has been acceptable get the chance to work in the new environment, even if a little new training/development might be in order. Just think how much that motivates them, the ‘engagement’ they would bring to their new positions, the loyalty they might offer their employer.
Instead, we invariably see some senior HR or Management person in an organization who is promoting the use of psychometrics in such a situation without any coherent, agreed-upon plan for how the assessment information might be used, with metaphorical handwaving taking the place of a formal decision-system that would stand legal scrutiny, and generally creating bad-feeling all round. Such executives are blind to the tenuous legal position they place themselves in, let alone the bad and quite unecessary publicity they always garner for their organization.
updated 12th October, 2017