Restructuring is a strategy through which business leaders change the direction of their organization in order to remain competitive. Many cases of restructuring involve downsizing. The company may dismiss employees, eliminate departments, or close some of its retail locations. Businesses attempting to downsize may also outsource some operations to save money. In other cases, restructuring may involve the reassignment or alteration of duties within the organization to improve performance or incorporate new technologies.
In today’s uncertain and fluctuating economy, company restructures happening across many industries put additional challenges in front of human resource and business leaders, as well as the employees who are impacted. In 2018, large companies like Pfizer, HP (which included 5,000 jobs cut), Lowes, Kellogg, and Starbucks, among many others, underwent corporate restructuring.
Most of these restructuring plans included layoffs and, in cases like Starbucks, are the result of companies becoming less focused on agility than growth over the past several years. Regardless of the reason for restructuring, it’s imperative that your company consider your workforce and the potential impact on your employment brand during the restructuring process.
Restructuring usually comes with a displacement of employees through layoffs and early retirements. I’ve written about How to Manage Your Digital Employment Brand After a Layoff, and many of these principles apply to restructuring, particularly when it comes to communication with your workforce. Keep in mind the impact on your employment brand, which will need more attention than ever during a restructuring phase.
The benefits of organizational change
Restructuring has its disadvantages, many that can be addressed through communication (covered in the next section). But it also has its advantages.
- If an organization downsizes during restructuring, its operational costs may decrease. For example, payroll expenses will be lower if the business dismisses some of its employees. Likewise, outsourced operations are usually less expensive than in-house labor.
- Additionally, when a company eliminates layers of management during its restructuring, communication and decision making often improve.
- Restructuring can be an opportunity to introduce new technologies, for example, so a company can increase its operational efficiency. For example, records become more accurate and easier to access if a company implements software to manage them.
When employing a restructuring communication plan, it’s better to focus on the fiscal health of your company and not the outsourcing. Transparency, yes, but about what leads up to a company’s need to restructure, not celebrating the benefits of doing so.
Change management: Why communication matters
If your company isn’t already having quarterly all-staff meetings about its fiscal health, now is the time to start, whether you see layoffs coming down the road or not. Your staff members are the core of your company. Keeping secrets leads to rumors, which lead to people jumping ship. A simple overview of departmental revenue, profit and loss, is sufficient. Be sure to allow time for your employees to ask questions. And if your CEO is presenting, make sure he or she is briefed on how to answer them.
If an employee asks “are we restructuring or going to lay off staff?” (and you know that you might have to in the future), be honest. Gentle, but honest. You’d be surprised how many staff members appreciate honesty and how quickly it can starve the rumors. Sure, you might have a few employees start looking elsewhere, but they’re likely to be employees who would be looking, anyway or who realize their roles are redundant within the new company structure.
If an employee asks “are we restructuring or going to lay off staff?” (and you know that you might have to in the future), be honest. Gentle, but honest. @jmillermerrell #SmartTalkHR @RiseSmart https://bit.ly/2H1orKM
There’s a reason why changes like corporate restructuring can put additional stress on a company’s workforce, and it’s tied into behavioral psychology and neuroscience. Dr. Britt Andreatta is the CEO of 7th Mind Inc, a TEDx Speaker and a best-selling author who focuses her research, training and consulting on the subject of neuroscience in the workplace. Dr. Andreatta’s work focuses on workplace neuroscience, specifically in the areas of leadership, learning, change and culture.
When it comes to organizational change, Dr. Andreatta says that it is important for organizations and leaders to understand where each employee is on the change journey. She says that leaders who are involved in creating and building new organizational strategies have had time to adjust to the new change while employees often have not been given the time to consider, learn about and adjust to those same changes. This is one of the many situations where workplace neuroscience and leadership can help.
Dr. Andreatta explains that there are three categories of people who take part in the workplace change journey. They are 1) expedition designers, 2) guides who are most often managers, and 3) travelers. She says that people throughout the organization will fall into these different categories depending on the change processes taking place and where they work within the organization.
In cases like layoffs and restructuring, you’ll want to identify your expedition designers and guides, and make sure your HR leadership team includes a mix of both. The goal isn’t necessarily to soften the blow for your employees, but to help them understand what lies behind your company’s business decisions, and emphasizing that the decisions are not made personally, but emphasizing that your company recognizes the personal impact these individuals have made. These leaders are your company’s support structure. Create collaborative networks and support systems for the leaders placed into new roles and make sure they are not isolated to figure things out on their own.
Your HR leaders must be change agents, and your company should ensure that your leadership team is communicating often, sharing what it can about stabilization and how these business decisions are strategically supporting the future health of the company. Candor and transparency are important in these communications.
Your HR leaders must be change agents, and your company should ensure that your leadership team is communicating often, sharing what it can about stabilization @jmillermerrell #SmartTalkHR @RiseSmart https://bit.ly/2H1orKM
HR teams as company change agents
Prepare to be proactive rather than reactive. Though restructuring is potentially tumultuous, the moves you make beyond staff cuts will determine how quickly your organization recovers and is able to move forward. Be aware of some of the--often inconspicuous--challenges that arise. If all leadership team members are prepared, transparent, and comfortable speaking about the process, you’ll avoid some of the consequences of poor employee communication and ultimately retain a positive employer brand. Building transparency and trust that will allow you to keep your candidate funnel full and continue to grow other areas of your business and meet talent demand.
In order for an organization to remain competitive in this fast-moving economy and global climate, leaders have to make decisions that can involve organizational changes, layoffs, and restructures. However, thorough research, communication, and preparation through the use technologies and resources like RiseSmart can help employees navigate the change and provide the company with the tools, plans, and information to help ease the transition.