At a time when most organizations are focused on how to attract new talent, many are probably not thinking about having to let go of valued employees. Yet, business cycle fluctuations, mergers and acquisitions and unexpected events, such as a pandemic, can catch companies off guard. The best time to develop a plan for workforce restructuring is well before you need to implement it.
Forward-thinking companies understand that taking care of employees at the point of departure should be a continuation of an employee-centric experience that begins at onboarding and continues throughout the entire employee life cycle. Properly caring for employees affected by a restructuring is simply an extension of an employee-centered company culture.
what is company restructuring?
Company restructuring is a strategy through which business leaders change the direction of their organization to remain competitive. Many cases of restructuring involve downsizing. The company may dismiss employees, eliminate departments or close some of its offices or 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.
Most business restructuring plans include layoffs and are the result of companies becoming less focused on agility than growth. Regardless of the reason, it’s imperative that your company consider your workforce and the potential impact on your employment brand during the restructuring process.
This process usually comes with a displacement of employees through layoffs and early retirements, which means that you will need to pay more attention than ever to your brand during this phase.
related content: why your organization needs to be prepared for a layoff.
benefits of organizational change
Company 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.
- Business restructuring can be an opportunity to introduce new technologies so that a company can increase its operational efficiency.
- When deploying a restructuring communication plan, it’s better to focus on the fiscal health of your company and not the outsourcing. Transparency, yes, but with a focus on what leads to a company’s need to restructure, rather than celebrating the benefits of doing so.
related content: the emotional side of a layoff – the role HR can play.
change management: why communication matters
If your company isn’t already having quarterly all-hands meetings about its fiscal health, now is the time to start, whether you see layoffs coming down the road or not. Your employees are the core of your company. Keeping secrets leads to rumors, which may well cause people to jump 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 respond. Being as transparent as possible is key.
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 people appreciate honesty and how quickly it can starve the rumors. While some employees may actively start looking elsewhere, they’re likely to be employees who have already been in passive job-search mode or who realize their roles are redundant within the new company structure.
identify those who will lead change management
There’s a reason why changes like company restructuring can put additional stress on a company’s workforce, and it’s tied to 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, specifically in the areas of leadership, learning, change and culture.
When it comes to organizational change, Andreatta says that it’s important for organizations and leaders to understand where each employee is on the change journey. Leaders who are involved in creating and building new organizational strategies have had time to adjust to the new change but 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.
According to Andreatta, there are three categories of people who take part in the workplace change journey depending on the change processes taking place and where they work: expedition designers, guides (who are most often managers) and travelers.
During layoffs and business 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, explain that the decisions are not personal and convey that your company recognizes and values 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.
related content: reduction in force process guide and checklist for HR managers.
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.
Prepare to be proactive rather than reactive. Though company 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 may 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.
related content: 5 ways to keep employees productive before, during and after a layoff.
sample company restructure communication to employees
A reduction-in-force (RIF) or layoff letter should include the following:
- The reason for the RIF or layoff. Be as transparent as possible. Let the employee know what steps you took to prevent this outcome, and that it’s not their fault their position is being eliminated.
- How the employee will be affected. If this is a RIF, be clear that their position is being permanently eliminated.
- The employee’s last day. Let them know the exact date if you can. If there is any equipment they will need to return, let them know when and how to do that.
- When and how the employee’s last paycheck will be paid.
- Relevant information about employee benefits, including any severance pay, paid-leave or vacation payouts, how to submit for reimbursements and when their medical benefits will end.
- How employees can access outplacement services. Outplacement services are a great way to let affected employees know you support them as they prepare for the next phase of their career.
- Employee rights, including their right to appeal the company’s decision and to seek legal counsel.
- A positive acknowledgment of their service. Say ‘thank you’ and let them know you appreciate their time and dedication.
Among the items to avoid in business restructuring communications to employees include:
- Unclear or wishy-washy language.
- Language that suggests blame. Avoid insinuating that employees could have done something different to prevent this outcome.
- Language that is dismissive of employee rights or attempts to dissuade employees from asserting them.
related content: download a sample RIF notification letter.
how to restructure a company or department
Delivering news of a business restructure is among the most difficult activities HR professionals will face in their careers. With the proper planning and preparation, you can manage this process with calm and grace, helping to minimize stress to your HR team and all employees – whether they’re being let go or are remaining with the company.
The steps to follow break down into these key activities:
- Assemble a team – Establish a team to plan the event.
- Hold a planning meeting – Discuss legal, ethical and organizational issues with department heads and managers.
- Build a business case – Explain the purpose of the downsizing and leverage this information in your communications.
- Choose an outplacement provider – Meet with your services provider to allocate resources, coordinate activities and ensure that your provider can deliver the results you desire.
- Provide contact information – Share the list of impacted employees, along with details related to their severance, with your outplacement partner. A finalized list should be provided at least one week prior to notification.
- Consolidate plan – Assemble severance packages and finalize plans.
- Monitor social media – Keep track of conversations about your organization and workforce action.
- Prepare security – For on-site notifications, keep security low profile but have them at the ready in the event an employee has to be escorted off the premises.
- Hold notification training – Help managers involved in the notification process to learn or review the do’s and don’ts of delivering the news to employees.
- Consider timing – All notifications should be delivered within a short period of time. Virtual notifications require additional preparation.
- Provide moral support – Ensure your EAP provider is available the day of the notification to help impacted employees with emotional issues.
- Offer career transition help – Make sure your outplacement partner is available the day of the notification or very soon after to debrief employees and register them for outplacement services.
- Meet one-on-one – Whenever possible, managers should meet individually with each impacted employee.
- Offer resiliency training – Employees who remain will be affected by the layoff event. Providing resiliency training is important for helping them remain secure, focused and productive.
related content: how to protect your employer brand: guide to planning and conducting an organizational workforce reduction.
For an organization to remain competitive in a quickly evolving economy and uncertain global climate, leaders have to make decisions that can involve organizational changes, layoffs and restructuring.
The complexities of these activities and their potential long-term impact on employer brand often require outside help from a partner with the right tools, plans and expertise to ease transitions. As a leading in career mobility and outplacement provider, Randstad RiseSmart helps organizations deliver employee-first experiences at all stages of the employee life cycle, including at the point of departure to help employees find their new beginnings.