Thinking about restructuring? Read this first…

Employment is getting more expensive and the first ERA changes are already putting pressure on some businesses’ bottom lines.

The Statutory Sick Pay reforms introduced in April have already impacted businesses where people make up a significant proportion of their overheads. With further employment reforms still to come, and costs continuing to rise, it’s understandable that some businesses are looking for somewhere to make savings.

So naturally, we’re already hearing conversations about redundancies, altering terms and conditions or even full-scale restructures.

If similar discussions are cropping up for you, consider this your cue to take a step back and ask whether restructuring is genuinely the right response.

Start with why

It can be easy to make the leap from identifying a problem to making a change. Costs have gone up, so headcount must come down. But before reaching that conclusion, you need to understand exactly what’s driving the problem and what you’re trying to achieve.

Before moving forward, you should be able to explain:

• What the problem is
• What’s driving it
• What the business needs to achieve
• Why restructuring could be an appropriate response

In terms of the SSP changes, reducing headcount might bring your overall people costs down, but if you still need those employees to deliver the same level of service, have you really solved anything?

If the problem hasn’t been accurately defined, everything you build from it risks being flawed from the get-go.

Consider the alternatives

Even with a clear problem, restructuring shouldn’t automatically be the next step.

Changes to roles, headcount or terms and conditions can have a permanent effect, so consider what other options are available. Could you achieve the same outcome without making such significant changes?

Take particular care where changes to terms and conditions are being considered. New protections around fire and rehire will make this a much riskier area, with even relatively minor contractual changes potentially caught.

This doesn’t mean restructuring should always be a last resort, though. If it’s the most appropriate response to the challenge you’re facing, there may be a strong case for it. But rising employment costs alone shouldn’t determine the outcome.

Before you make the final call be confident you understand what you’re trying to change, why you’re changing it and whether restructuring will actually get the business where it needs to be.

If, having considered the alternatives, restructuring remains the right option, the focus should then move towards how the change is managed.

Make consultation meaningful

If you decide restructuring is still the appropriate way forward, you might have a preferred outcome in mind. That’s fine, but there’s an important difference between proposing a solution and presenting employees with a decision that’s already been made.

People don’t necessarily expect to have the final say on a business decision. But they do need to understand the problem and feel their views will be genuinely considered before an outcome is reached.

Before consultation begins, make sure they:

• Understand the rationale behind the proposed changes
• Know what has and hasn’t been decided
• Are clear on the boundaries when answering questions
• Know when to take a question away rather than offer their own interpretation

Keep checking in

Give as much thought to what happens after the change as you did to the consultation itself.

When someone is thinking about their livelihood and what the change means for them personally, there’s only so much information they’re going to absorb at once.

Throughout the process:

• Keep employees updated between formal consultation meetings
• Give people regular opportunities to ask questions
• Address rumours or misunderstandings before they gather momentum
• Keep checking in once the changes actually take effect

Regularly checking in is particularly important because this is when employees actually start living with the change. And although employees may not agree with the outcome, feeling heard and kept informed throughout the process can make a big difference to the trust they retain in the organisation.

Before you restructure

Ultimately, a restructure needs to make sense for the problem you’re trying to solve. If you can’t clearly explain why it’s the right way forward, it’s worth questioning whether you should restructure at all.

If you do move forward, make sure the process is as carefully considered as the decision behind it.