Two big high street stores have both entered administration in the same week, putting up to 3000 jobs at risk in the run up to Christmas. Blockbuster, the Video/DVD rental chain, was in administration just in January of this year 2013 whereas Barratt Shoes have entered administration for the third time in five years. From a staff perspective, entering administration just six weeks before Christmas must put an awful strain on employees.
Nick O´Reilly, the administrator for Blockbuster, told HRreview that no guarantees can be made that the chain will remain open throughout the Christmas period and that they were “looking at it on a week by week basis” and “trying to find a buyer” to take the business on, although Nick O´Reilly himself admitted that finding a buyer would not be easy.
Darina Kerr, partner, Dundas & Wilson said: “With the news that Barratts has now re-entered administration, the retail sector sees another of 2011’s high street casualties decline from walking wounded to fatally injured. Once again Barratts has hit the rocks of adverse trading conditions as the rise of multi-channel retail takes a heavy toll on bricks and mortar stores
“Barratts’ descent into administration also underlines the fact that debt arrangements alone are not a long-term solution. Although debt arrangements can, in some cases, be agreed to stave off total collapse, if the fundamentals of a business are not reformed to withstand rapidly-changing market trends, high street retailers will continue to risk entering insolvency after insolvency.
“Given that a substantial restructuring took place in the wake of the company’s last brush with administrators in 2011, the terms of a new financing arrangement may prove to be extremely onerous considering the already strict conditions for Barratts’ last rescue package two years ago.
Could this be the first of several more high street administrations in the run-up to Christmas? I think it’s unlikely. Christmas is normally a pick up for retailers, and many creditors may be unwilling to pull the plug just when consumers are looking to spend. However, whether Christmas goodwill will last into 2014 is another story. And if retailers are struggling now we may see more casualties in the new year.”
Dean Hunter, managing director of Hunter Adams, looks at the HR perspective: “Whenever a company goes through a transition period, whether it’s a merger, acquisition or going into administration, they tend to think about the financial situation and brand fall-out.
“All too often one of the last things they think about is the people. In terms of going into administration, like Blockbuster, it should never be the case that the shutters are drawn and the employees are just shown the door. There is so much that can be done from a people perspective before that ever happens.
“We’ve seen some great examples of companies trying to do the best they can for their people. When the Scottish paper mills started to shut down the in-house HR managers were inviting people from their networks to come in and interview their employees in a bid to find them alternative work.
“Every HR professional, company owner or manager will have their own network they can capitalise on through social media and it’s about utilising that to the staff’s advantage. Not only does this help the redundant staff, but it also cuts the recruitment costs of hiring companies.
“The HR department has a role to help employees update their CVs and give them specific interview direction and coaching. For Blockbuster specifically, there will be a lot of transferable skills which would be relevant to the retail industry and beyond. So it would be reasonable to expect the HR team in Blockbuster to help staff identify those traits and advise them on how to best communicate them to potential employers.
“Whenever there is a downturn in one industry, there is usually a need for staff in others. For example, the oil and gas industry is constantly calling out for more skilled workers. HR professionals can help staff identify the appropriate career conversion courses and programmes to help them make the transition.
“When a company goes into administration there is a lot of confusion, frustration and anxiety. The HR function can look at the bigger picture and help guide their staff into the next chapter, mitigating some of their worry and fears.”
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