Managing the impact of restructuring a business

The business world is in a constant state of flux. Economic uncertainty, tech advancements and evolving employee and consumer needs are forcing companies to adapt and transform at an unprecedented pace.

This dynamic environment necessitates frequent organisational restructurings, making it a critical skill for leaders to master.

As we head into another period of change, with process efficiency and cost-cutting top of business leader agendas, effectively managing challenging transitions will help minimise disruption, and maximise employee morale and productivity.

Corporate restructure doesn’t have to mean redundancies

Corporate restructuring is often associated with job losses, but this isn’t always the case. In fact, even when a company faces financial challenges, there are alternatives to layoffs that allow businesses to retain skilled employees. Measures such as flexible working hours, reduced hours, compressed hours, secondments, or salary reductions can be implemented, as long as there is proper consultation and agreement between the business and its employees.

Restructuring may also be necessary for businesses that are experiencing growth and need to improve agility. This can involve merging departments, eliminating obsolete roles, or creating new ones to better align with the company’s goals. The introduction of new technology or automation may also drive restructuring efforts.

It’s important to understand that even when a restructure does not involve redundancies, formal consultation is still crucial. This is especially true when significant changes are proposed to employees’ terms and conditions, ensuring that the process is transparent and fair.

How to restructure a business and minimise risk

A thorough risk assessment and consideration of the broader business objectives are essential during a restructure.

Effective communication is a critical component of the process and must be carefully planned. It’s important to share plans early, while they are still in the development phase, to gather input and involve the wider team. However, this should only happen after sufficient preparation and investigation to minimise disruption and ensure a strong business case for the proposed changes.

Remember the personal impact and ensure appropriate training of managers

During a restructure, it’s crucial to remain mindful of the personal impact on staff and teams. Awareness of these implications can help ensure a smoother transition.

Certain consultations are legally required and must be conducted properly to avoid the risk of tribunals or financial penalties. However, the process goes beyond legal obligations. Gaining full buy-in from affected teams and individuals is essential for maintaining strong relationships and business success.

Effective leadership is key to a successful restructure, and managers may need additional training, particularly in soft skills. Outsourcing employee relations expertise and impartial guidance could also be beneficial.

Mergers and acquisitions

Mergers and acquisitions involve specific rules when it comes to restructuring. Formal consultation with employees and their representatives is required, and TUPE (Transfer of Undertakings Protection of Employment) applies to protect employees’ terms and conditions.

Additionally, there is crucial information that must be shared with the business acquiring employees, including details about any ongoing or pending grievances or legal proceedings.

Risks related to corporate restructures

One of the main risks of corporate restructuring is the potential for unfair dismissal or breach of contract claims.

From 20th January 2025, large-scale change that lead to redundancies will become more complex with stricter rules on consultation, communication and support. Currently, tribunals can award up to 90 days’ gross pay (uncapped) for each employee who has the right to lawful collective consultation. From January, this amount can be increased by 25% for failing to meet collective consultation obligations during redundancies.

To minimise risks, it’s essential to review the contracts of all affected employees before starting the process. Any changes should be backed by solid business reasons.

Maximising transparency and two-way communication not only reduces the likelihood of employment tribunals but also increases the chances of reaching mutual agreement on new arrangements, resulting in a better outcome for everyone involved.

*The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 is the legislation introducing the change.

Empowering People Group supports enterprise organisations with large-scale change projects

Empowering People Group supports organisations in managing large-scale change, helping transform restructuring into an opportunity for growth. By equipping your leadership team and employees with the right tools, you can drive change positively. Here’s how:

• Enhanced manager capabilities: Transformational coaching and eLearning strengthen manager capabilities, enabling them to lead through change with better decision-making, communication and team management.
• Legal risk mitigation: Partnering with legal experts ensures compliance with current legislation, minimising risks of legal issues and costly employment tribunals.
• Purpose-built tech support: Solutions that reduce the admin burden on managing consultation processes can then free up those responsible for managing consultation meetings to be able to focus on what matters most – the people impacted. Our unique Meeting Manager platform was developed to do just this, delivering meeting automation, in-built scripts and management information that frees people up to be able to concentrate on delivering more compassionate and consistent experiences.
• Improved organisational agility: With the right change management strategies, your workforce adapts quickly, staying responsive to shifts in business goals or technology.
• Resilient workforce: Training managers to handle challenges and guide teams through adversity enhances employee morale and productivity, even during restructuring.
• Support during redundancies: When redundancies are unavoidable, outplacement services help employees transition by offering career coaching, job search support, and resume-building, protecting your brand and demonstrating care for your people.

Investing in these strategies positions your organisation for long-term success, creating a more engaged, resilient and agile workforce, while safeguarding your legal standing and reputation. Ultimately, it leads to higher productivity, lower turnover and a stronger company culture.

Find out more about how our group can help here or contact us today for a no-obligation consultation.