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Major change (or restructuring and reorganising) can be one of the most uncomfortable HR processes, but it’s also one of the most straightforward, if you do it well.
At its core, restructuring/reorganisation is a consultation process centred around the work being done in the business and which roles are performing which tasks. It is about change to get the right structural fit for the company’s objectives. It’s not about the people in the roles, or a way to get rid of employees you don’t like or want.
Getting the process right will enable you to make the necessary changes smoothly, without opening yourself up to too much legal risk.
Major change can involve a single role or many roles – the process is largely the same, only the scale varies.
It starts with a proposal of changes to the organisation’s structure, individual roles, or responsibilities that is based on a genuine commercial justification. Once you have made a definite decision to make changes, you must consult with every individual who will be or who may be affected by the proposed changes.
Be aware that restructures can be highly stressful for everyone involved. If you make the process as painless as possible, people will be able to move on with their lives, and the team that remains (including the employer) can get on with things.
The process
There are 8 main steps in a restructure.
1. Preparation
Preparing the information that you’ll present to your team is key.
You are telling your employees a story that has to make business sense. Make sure you have a solid commercial reason for the changes, e.g. you are resizing because of a decrease in revenue or a shift in the company’s focus.
Also ensure you are giving people all the information they need to understand the proposal and give feedback, especially if you are relying on financial arguments for the change(s).
This includes information on why you’ve chosen specific roles for change and how the changes will roll out.
If you're considering redundancy of 15 or more employees, you also have to give Services Australia written notification of the proposed redundancies.
2. First meeting: The proposal
The initial meeting with employees is all about communicating the proposed changes.
You can choose to meet with affected members as a team or as individuals. It makes no difference legally but we strongly advise meeting with affected individuals first, before a team meeting. If jobs are on the line, it’s much more considerate to let people know privately.
Once individual meetings are held, then hold a team meeting and include employees not affected by the proposed changes, so that they can be aware that their colleagues are going through a tough time and to be sensitive.
Present the case for changes (and the supporting information), the details of the changes, and explain the overall restructure and reorganisation.
Make sure each employee has this information so they can take it away to digest and prepare their response. This is usually in the form of a letter, but it can be an email.
Be as kind as possible and allow plenty of time for questions. Your team members may well be shocked and upset.
3. Employee’s consideration period
Allow employees time to go through the information and prepare a response.
Anything up to 2 weeks is considered reasonable, but it all depends on the scale of the changes and how urgently the business needs to make them.
We recommend giving 2 working days (e.g. first meeting Monday morning, second meeting Wednesday morning) as a starter, but if any employees ask for more time, you should consider giving it to them.
4. Second meeting: Employee’s feedback
Like a disciplinary process, this is the chance for employee(s) to give their side of the story.
Keep an open mind. Your people may present information you haven’t considered.
Unless your employees are part of a union, meet with them individually. They may have suggestions or ideas which negatively affect their colleagues, or they may be very upset and shaken by the process.
5. Employer’s consideration period
By law, you must fairly take the employees’ feedback into consideration.
It may be that they have identified a flaw in the proposal or an option you hadn’t considered. We have seen plenty of instances of an employee coming up with a new idea that means the original proposal changes, or the business decides not to restructure after all.
If you choose to continue with the original proposal, you need to be able to justify why.
6. Third meeting: your decision
Meet with the affected employees individually and present your decision on the restructure and how their feedback was considered. You must make a 'fair and reasonable decision' and be able to prove it.
Confirm the changes to roles and/or responsibilities, and the timeframes.
If redeployment is an option or new roles are available, this is when you present those options to your employees.
You will also have to deal with fallout from affected people, so be prepared, and be kind.
7. Implementation
Rolling out the changes can take time, depending on their scale.
If you are making people redundant, they will have a notice period to work out (or be paid out in lieu of notice).
Other employees may be moving into new roles or have new responsibilities. You may also be working through applicants for other available roles.
8. Survivor management
The last stage is all about looking after the people who remain with the business. The restructuring process is unsettling and team members may have lost colleagues who are their friends.
It is important to be sympathetic to the impacts on people. You need to ensure you provide time and resources to support those 'survivors' and work on rebuilding team culture. You may also be dealing with bringing new employees onboard at the same time.
This step is easy to miss but it is crucial to getting your team up to speed again quickly!
Be prepared for issues
As we all know, things don’t always run as smoothly as we’d like. People can ask for more information or more time to consider the proposal. People can dig their heels in and try to slow the process down.
Good advice will mean you are prepared with alternative plans and responses, if anything arises.
Common restructuring mistakes
There is always the potential to make mistakes when changing the structure of your business. Some of the common errors we see are:
- Not having a genuine financial justification for the restructure.
- Not following the consultation process set out in modern awards or registered agreements.
- Not genuinely considering employee feedback.
- Not providing employees with the reason(s) for the restructure.
Getting the restructuring process wrong could open you up to an unfair dismissal claim.
If the dispute ends up being heard by the Fair Work Commission and they find against you, you’ll be looking at a costly award to your employee and a contribution to their costs, plus the potential for any lost wages, as well as paying all your own expenses.
In the end, if you prepare well enough and get the basics right, chances are you will make the necessary changes to your business smoothly. You’ll also be able to adapt and respond, if you need to.
We always recommend getting specialist advice about your planned changes before you start, even if it is just to confirm you have all your ducks in a row. If you need any assistance with planning or implementing a reorganisation of your business, get in touch with our team of HR experts.
