Managing the impact on your people of a business restructure

Restructuring is a process many businesses will have to conduct at some stage, the reasons for which can be wide ranging.

It is the process of making operational changes to improve efficiency, competitive edge, profitability or ensuring ongoing viability, for example.

Reasons a restructure may be necessary include a downturn in profits, business growth, change in the market or in preparation for or due to acquisition or merger.

Restructure means change, which is often unsettling to people. A carefully managed restructure is one that seeks to minimise the pain of change – and the perceived pain of it – and maximise the gain and buy-in from your employees, managers and stakeholders.

It’s a subject covered in depth in our free webinar managing the impact of a business restructure, which can be viewed now on demand.

Restructure doesn’t have to mean redundancies

There’s often a perception that restructure automatically means redundancies and job losses.

In reality, even when the reason for restructure is related to a downturn in profits, there are options that allow the retention of skilled staff.

Flexible working, reduced hours, compressed hours, secondment and even reduced salaries can enable this, with appropriate consultation and agreement.

Restructure may come where growth now calls for a different approach to enable agility. It may mean departments need to be merged, some roles have become obsolete and others created. Restructure may come in response to the introduction of new technology or automation.

It’s important to remember that even if the restructure proposals will lead to an increase in headcount and no redundancies, formal consultation may still be advisable and even necessary, such as where there are proposed substantive changes to terms and conditions.

How to carry out a restructure to minimise risk

A full risk assessment and consideration of the wider business agenda is vital during a restructure.

Communication is a key part of the process and must be carefully planned to ensure it is done effectively.

Plans should be communicated whilst they are still at a formative stage to ensure input and involvement from the wider team, but only once due preparation and investigation has been done to minimise unrest and allow a compelling business case for changes to be presented.

Remember the personal impact and appropriate manager training

For a restructure to roll out positively it is imperative that you remain aware and conscious of the personal implications for staff and teams.

Certain consultations are obligatory and must be carried out in the right way in order to mitigate the risk of tribunals or damage awards. However, this process is far more than just a requirement.

Complete buy-in from teams and individuals affected by changes is key for ongoing relations and business viability.

Having competent people leading the restructure is extremely important and it is worth considering whether managers need any additional training in advance of it and have the appropriate soft skills. You may wish to consider impartial or independent support.

Further information on consultations and legal implications is available free within our webinar.

Mergers and acquisitions

Specific rules and requirements apply where mergers and acquisitions are relevant to the restructure process.

You’ll need to formally consult with your employees and their representative and TUPE (transfer of undertakings) will apply, to preserve the terms and conditions of employees.

There is also specific information that must be provided to the business taking on employees, including in relation to any ongoing or pending grievances or legal proceedings.

Risks related to restructures

One of the biggest and most obvious risks in relation to restructure, in terms of employee implications, are potential proceedings for unfair or unjust dismissals or breach of contract.

It’s good practice to review the contracts of all affected employees in advance of the process. There should always be sound and good business reasons behind any changes.

Maximising transparency and two-way communication is not only more likely to avoid employment tribunals, but equally more likely to lead to mutual agreement over new arrangements – the best outcome for all.

To find out more about managing the impact of a business restructure on your people, watch our webinar in full.