The human side of organisational restructuring.

Organisational restructure. It sounds exciting!

Out with the old, in with the new,
Shake up the staff, with some HR kung-fu!

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Organisational restructure is a chance to engage with company strategies, redeploy staff, and add a ton of value to an organisation. Restructuring a workforce is one of the biggest and most complex areas of HR, depending upon company size and structure, and it’s difficult to not relish the chance to use it to demonstrate how valuable HR is and what it can do. The process, varying legal requirements, and methodology is interesting and fun for the HR tribe to debate about. Unfortunately, as exciting as restructuring can be for us HR nerds to get into, the mere suggestion that there is going to be a restructure can cause the workforce morale to plunge dramatically, perhaps even causing employee disengagement, and it is this more personal aspect I want to focus on here. A good HR team will be ready for this and will try to make restructuring as pain-free as possible. A bad HR team will sit there, looking at names and numbers on a spreadsheet, as gossip, doom-mongering, power-struggles, and rumours cause panic to spread throughout the workforce.

So why the big panic?

Let’s look at it from the point of view of the employee. The main worry that goes through everyone’s mind is job security, and most other worries come back to that. People who face a big company shake-up often fear that their job is under threat. Decisions are being made, about their position in the company, were they have only a minimal ability to truly effect the outcome. A whole bunch of questions will go through their mind as soon as they hear about restructuring. Questions like “Have I performed well enough recently?”, or “Have I had too many sick days this year?” or even “Does the fact I had a bitter argument with my manager mean he’ll use this as an excuse to get rid of me?”. And, depending upon the relationship between the workforce, HR, and senior management, some of these questions may be warranted.

People are smart. They know that the streamlining of a workforce to increase productivity relative to operating costs is likely to result in the loss of a few positions. Even where restructuring isn’t primarily a matter of attempting to improve workforce efficiency, the opportunity to improve efficiency won’t be missed by most management teams. If they have any staff or departments they consider to be ‘dead weight’ such assets will likely be trimmed. This is even more prevalent in continental states of the EU. In continental Western Europe, where employment regulations are generally far more robust than in most of the rest of the world, it is much harder to dismiss people. In cases where the firing issue is related to performance, it can be so prohibitively difficult that many companies simply don’t bother even attempting it. They instead get around it by restructuring the workforce on a regular basis, which gives them a handy and legally secure way to fire people who might otherwise have continued their employment.

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Some employees might wonder “Why restructure at all? Is the company doing okay at the moment?” Frequent or secretive restructuring projects might make confident employees feel insecure about the company, if not their own role, and prompt them to seek other opportunities elsewhere. Even if – especially if – someone feels they’re a competent and effective worker, they may feel that they could do better somewhere else. Remember the important requirements to keep a satisfied worker – an employee needs a satisfactory compensation package, a good relationship with their co-workers and manager, satisfaction in their work, and confidence in the organisation. Start kicking these pillars away and they become a flight risk. A company which is constantly undergoing major and unexpected alterations in the workforce structure, or which has a high turnover of people, is a company which will feel like it has lost its way, and a rudderless organisation will see people jump ship out of fear of where it may end up.

Another consideration is that people naturally form friendships with their co-workers, and they will naturally be worried should those friends feel their position becoming precarious through a restructure. In these instances, loyalty to the organisation may wane going forward.

So what can we do about it?

First of all, the people who want to do the restructure should be made aware that it has the potential to degrade the quality of employee engagement. Find out if it is really a necessary move or simply someone playing soldiers with the workforce, and if it is the latter try to dissuade the relevant people from going through with it. At times businesses need to cut costs and look for increases in efficiency. But if it results in a less dedicated workforce, then that can be a cost all by itself. Each organisation will have a set of metrics which they consider to be key to their success. Some focus on OPACC, another might favour profit per head, another might focus on business growth and turnover. In reality a whole host of separate factors should influence such a decision beyond the narrowness of a handful of statistics. Assuming a restructure is necessary, a full appraisal of the current workforce and how it will achieve the aims required should be done. Such an appraisal might result in a rethink, and an additional benefit is that a thorough review covering benefits, risks, mitigation, will all form part of a consultation process that could prove valuable later on.

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Announcing the restructure to the staff is the next move. How this is handled will play a large part in determining how the workforce responds. If it has the atmosphere of doom and gloom about it, that will be reflected in the increasing moroseness of your minions. If you don’t announce anything but start doing audits of various departments or redundancy consultations they’ll reach their own conclusions. A personal announcement to those effected or potentially effected, along with a news bulletin or emailing to the rest of the employees, with a point of contact should they have questions, is the usual way to proceed for larger organisations. A staff announcement is normal for smaller ones. The culture of the organisation will have a major impact on how the workforce responds to news of restructuring. If the organisation is obsessively secretive, with most information about the company circulating as rumour, gossip, and Chinese whispers, then any news of a restructure is going to be bad for staff morale. If it is more open, and the relationship between the management and workforce a strong and trusting relationship, there may be reservations but an open dialogue should help quell concerns. Potential questions and likely complaints should be prepared for in advance. Good preparation is vital, but all the preparation and academic work done to get ready for this can’t really fully prepare you for what will happen when you stand alongside a manager, in front of your co-workers, to announce that some may be losing their jobs.

The next thing will be the process of restructuring itself. This is where all those charts, graphs, and spreadsheets will meet the reality of the people they represent. This is where you will discover that, as easy as it might have looked on paper, the involvement of actual people can make things difficult. Human resources is about “humans” after all. Expect written complaints, union involvement (where recognised), and employees protesting, such as working to rule or refusing overtime. But what’s often not factored in are the tears, anger, feelings of betrayal or worthlessness. These things don’t really get to make it into the typical plan, but are very real and have a huge impact on everything, from the individual, to the teams, to the entire workforce and overall productivity and bottom line. Depending on how you handle this part of a restructure, it can even badly effect the company reputation. Transparency and openness helps to mitigate this. If people know why it’s happening and feel properly engaged and involved they’re less likely to be angry. People will inevitably still find things upsetting, but treating them as mercenaries will make things much worse.

Another great way to mitigate the human cost of restructure is to have proper support packages for those who are being made redundant. Outplacement services are useful here. Services that provide help in updating a CV, interviews, or job-searches can be a vital service for someone who has worked the same job for 13 years and is scared or nervous about re-entering the job market. If the costs of outplacement services can’t be found, I would strongly recommend freeing up some of the HR team to support with these kinds of services. Not only does it show those leaving the company that their service was valued and that you supporting them through the process, but it also shows those remaining in the business that you truly care about the human side of the workforce.

One overlooked aspect of restructuring is the effect it has on those who remain after the restructure. Sometimes people can feel guilty that they’ve kept their job when friends and colleagues have lost theirs. Impostor syndrome can also come into play, as employees can begin to second guess themselves, perhaps start wondering whether they were as good as others who were made redundant. Even worse, people can start to wonder about the stability of the company structure and wonder about their own job security going forward.

All of these potential pitfalls of a restructure can at least be alleviated by addressing the human element, though it is difficult to eliminate them entirely. As HR professionals we have a duty to see to it that the workforce meets the needs of the organisation it works for. But we also have a duty of care to the individuals of that workforce, no matter how big or small their role might be. The numbers on the spreadsheets will eventually translate in to real world consequences for some, and it is vital that we keep this in mind during periods of change.


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