How to Restructure - Getting it Right for Business and Employees
2024 began with an added dose of uncertainty, off the back of the first few years of an already challenging decade. Although there are promising signs on the horizon, this year in the HR world has still been characterised by economic uncertainty and its consequences. Already a popular topic of discussion in 2023, restructuring and redundancy have certainly been front and centre of late.
With many businesses grappling with the need to manage and adjust their resources, we thought we’d clear the air on what exactly these processes entail. Although they can be difficult to undertake, it’s always best to be prepared and aware of best practices.
Already know the basics of restructuring? Click here for a more advanced overview of obligations and best practices!
What is as Restructure?
A restructure is a process where a business aims to align its resources with its needs. Oftentimes, this includes a re-shuffling of staffing allocations and can bring about a headcount decrease for a company through redundancy. During times like these, we see businesses are increasingly likely to look at restructuring as a way of managing their resources more effectively.
When conducting a restructure, as with any HR process, there are obligations and considerations to be made.
The Consultation Process
A consultation takes place in the form of a meeting (or a series of) conducted with each person who may be affected by the change process. When is it recommended you conduct one? In short, when dealing with any change that could be regarded as a significant change to someone’s employment. This could include changes to a role’s duties and description (beyond small adjustments), potential reduction in headcount, or even commute times (in the context of business relocation).
Other than achieving the change itself, a consultation is just as important to ensure you deliver a carefully conducted restructure that aims to reduce a business’s chances of claims of unjustified dismissal, disadvantage or breaches of good faith. These can be a real headache, therefore, when planning to introduce significant business change, a considered consultation process is a vital step.
Here is a breakdown of how we would recommend conducting your restructure, from your business case to implementing your changes.
Business Case
The purpose of a business case should be to outline the rationale behind the restructuring. This must be sufficiently supported by evidence that suggests change would be beneficial, explaining the steps taken to date before taking this significant step, and considering the implications on individuals, should the proposal proceed.
To take an incredibly simple example, it isn’t enough to say: “We need to get rid of the assistant manager position”. The WHY needs to be there, and it must be valid. Some common traps:
The reason for the business change cannot be to circumvent performance management. A restructure must be based on the role, not the person
You need to be able to demonstrate why the position(s) you have selected are the ones to be proposed for change. If duties are being absorbed into other roles, you need to demonstrate where they will go.
Restructures shouldn’t be a decision taken lightly – you need to explain what other steps you have taken, are taking or have considered outside of the restructure to achieve your requirements.
In light of this, always be prepared to offer up supporting facts and figures whilst laying out the business case. These can include:
Financial data and business performance metrics
Market analysis specific to your NZ industry
Current and proposed organisational charts
Forecast performance expectations
Proposed Changes
As part of your business case, a consultation means being transparent with your team members about what will (or may) come as a result or the restructure. In the majority of cases, proposed changes will involve some sort of organisational slim-down and consequently a redundancy process.
A clear proposal should outline:
The reasons for considering right-sizing your business
Specific areas of the business likely to be affected
The number of positions that may be impacted
Potential timeframes for implementation
Affected Staff and Feedback
A compliant consultation process should see the employer act in good faith at all stages. Whilst you are entering the conversation with a proposal, you cannot come to a firm view or decision prior to carefully considering employee feedback. When positions are likely to be impacted by a restructuring, it is important that you provide comprehensive and relevant information about the proposal. This is not just to make your staff aware of the potential changes, but also to allow impacted members to provide feedback.
When redundancy is involved, consider encouraging employees to suggest alternatives such as:
Reduced hours or part-time arrangements
Job sharing schemes
Redeployment to other areas of the business
Voluntary redundancy with enhanced packages
The ultimate golden rule of a restructuring process is that you cannot enter the consultation stage with a predetermined outcome. For this reason, it’s best to set a reasonable (and ample) timeframe for employees to consider the proposal and return with feedback.
All feedback and suggestions should be carefully considered. Be open to modifying your original proposal based on employee input. Remember, your employees might see things from a different angle and come to the conversation with helpful ideas and insights.
Communicate Decisions
After thorough consultation, a business will make decisions and chart final outcomes. During this stage, make sure to communicate these clearly to all staff, explaining how you've taken their feedback into account. For those facing redundancy, provide support as much as your situation allows.
Remember to always treat your people as your biggest asset! Although business restructuring is never easy for anyone, make staff affected by redundancy a priority and ensure they are treated with empathy and recognition for their contributions.
Restructuring your business can be one of the most complex HR projects to navigate, especially when having to balance people-related and legal considerations. Need help optimizing your resources in these difficult times? Get in touch for a no-pressure consultation, and let’s explore how we can support your business!