How to retain staff and zipline over uncertain periods during COVID-19
As COVID-19 escalated around the world and was ultimately declared a pandemic, it became clear that it was going to have an effect on all businesses.
For Australian property marketplace and portal, Domain, this was also ringing true as property listings, inspections and auctions started to be impacted. Domain’s group general counsel and company secretary and the winner of the Lawyers Weekly Women in Law Awards, General Counsel of the Year 2019, Catriona McGregor, shares the unique approach Domain took to retain staff and business productivity while navigating market uncertainties.
As COVID-19 escalated and it became clear that we were facing a vast period of uncertainty ahead, our executive leadership team came together (virtually!) to consider how Domain would deal with the impact of the crisis.
Like most companies, we recognised the importance of reducing the immediate cash flow costs in our business but at the same time, we were very focused on retaining our talented people and being able to deliver our existing products and services as well as drive new products such as online auctions and inspections – with the same continued momentum and pace.
Rather than going down the path of staff redundancies, stand-downs or paycuts, which would have had an impact on our business productivity, we asked our staff to elect to participate in an alternative approach enabling staff to be paid part of their salary in share rights which will ultimately convert into ASX-listed Domain shares. This became Project Zipline.
At the heart of Project Zipline was a fundamental desire to do the right thing for the Domain business but also find a better solution for our staff. This people-first approach was driven by our CEO and executive leadership team and was supported by our board – and it was overwhelmingly backed by our staff, with more than 90 per cent voting for Zipline.
Whilst the offer of share rights was what makes Project Zipline a novel response to COVID-19, we recognised that share rights were not necessarily the preferred option for all employees, for example some staff on visas, fixed-term contractors and others managing family responsibilities with homeschooling. For that reason, we also gave staff an alternative choice which was to take reduced hours.
The response from staff was exceptionally positive. Daphne Koffel, senior legal counsel in the Domain legal team, said “The executive leadership team at Domain has worked tirelessly to pull together an innovative plan to look after its staff during these uncertain times. I feel grateful and privileged to work for a company and a group of leaders who not only say its people are first, but genuinely understands what that means and shows it through its actions.”
Legally, there were a few hurdles to overcome to deliver the project. Contractually, we couldn’t have, and wouldn't have wanted to, force our staff to take share rights or reduced hours. We asked our staff to support the project, to proactively and voluntarily agree to the change in their employment terms – to see the positive outcome for the business and Domain employee community as a whole.
As an ASX-listed entity, we needed to ensure that we complied with our ASX Listing Rule obligations including considering whether shareholder approval would be required (which it wasn’t) and considering the requirements around the relevant ASX announcements. We also needed to ensure that we fell within the parameters of, and complied with, the relevant ASIC class order.
At a practical level, we set up a project team with stakeholders from legal, employee experience, finance, tax, payroll and communications. There was a daily meeting with the executive leadership team and we also provided regular updates to the board. The delivery time frame was tight and this required collaborative teamwork, open communication, efficiency in ways of working and strong decision-making from the project leads.
We thought through the options from an employee perspective and created a detailed set of FAQs openly and transparently answering questions that we anticipated that staff would ask. We provided staff with regular opportunities to ask questions of the CEO and the executive leadership team – up to three times a day in the crucial period.
With the added complexity of all staff working from home, it wasn’t going to be feasible for the documentation to be delivered in a “letter in an envelope” format. The final legal documents were delivered through an online portal that enabled us to track and record the acceptance of the variations of employment contracts and acceptance of the share rights offer.
This enabled bespoke letters to be created for each employee, efficient delivery of the documentation and quick collection of responses from staff.
The project was delivered from start to finish in around seven weeks with approximately 90 per cent of Domain employees participating in either share rights or reduced hours. The feedback from our employees has been overwhelmingly positive with a heartening sense of community – a sense that we have all stood together and done something for the collective good of each other and of the company.
It has made me tremendously proud to be part of Domain and to have had a part in the delivery of Project Zipline. Not only because of the impact it has had on our staff and our company, but also the potential to inspire other businesses navigating through this crisis.
We’ve received enquiries from companies across Australia in a wide range of industries interested to understand the project and how they might apply it to their business.
Further details about Zipline
The voluntary staff program is effective for a six-month period from May 2020. Staff were granted share rights with vesting conditions that expire in November 2021 and will be exercised as Domain (ASX: DHG) shares. The share rights granted to directors will be settled with DHG shares purchased on market. On vesting of the remaining rights, the board has the discretion to deliver the DHG shares to employees through on-market purchases, or the issue of new shares.
By Catriona McGregor, group general counsel and company secretary, Domain