Restructuring 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 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.
Restructures can involve a single role or many roles – the process for New Zealand businesses 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. 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.
There are 8 main steps in a restructure.
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 changes or disestablishment and how the changes will roll out.
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 process.
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, it’s best to give 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.
While it may seem unlikely that they will present information you haven’t considered or will cause you to alter the proposed restructure, you still have to allow them to give feedback.
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.
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).
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's 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!
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.
There is always the potential to make mistakes. Some of the common ones we see are not having a genuine financial justification for the restructure, not taking all affected employees through the process, not genuinely considering feedback, or not giving employees all the information that you’ve used in proposing the restructure.
Getting any of these wrong could open you up for a personal grievance claim for unjustified disadvantage, unjustified dismissal, or potentially (depending on the circumstances) breach of good faith or breach of contract.
Awards for personal grievances from the Employment Relations Authority and Employment Court have been increasing year-on-year and can include payments to the employee for hurt and humiliation and lost wages, plus costs.
In the end, if you prepare well enough and get the basics right, chances are the restructure should go smoothly. You’ll also be able to adapt and respond, if for some reason it doesn’t.
We always recommend getting specialist advice about your plan before you start, even if it is just to confirm you have all your ducks in a row.
MyHR Live 19: Restructure and redundancies
Frequently asked questions
Does restructuring always mean layoffs?
No, restructuring is a process of changing the way work is done or services are delivered by the business so it can best meet its objectives. It focuses on the roles doing the work but it doesn’t necessarily mean roles are made redundant. It can involve creating new, additional roles, or making changes to existing ones.
I want to get rid of a specific person, but want to keep their role in my business. Is a restructure an option?
No. Restructuring to get rid of one employee could open you up to a personal grievance claim for unfair dismissal.
The person performing a role shouldn't be the focus of a restructure, but rather the work being done in the business and by which roles.
Any changes form a proposal that must be driven by a genuine commercial reason and you must ask for and consider the feedback of all employees whose jobs will be affected by the changes.
Any selection process for redundancy must be fair and reasonable and you should explore all redeployment options before you make anyone redundant.
For all these reasons, you would have a hard time justifying the process was fair and reasonable if you have already singled out a person for redundancy.
If you are having disciplinary or performance issues with an employee, you need to address these using the proper procedures.
I have 5 technicians, but can only afford 3. I know who I want to keep. Do I have to consult with all of them?
Yes. Legally, you need to consult with every employee whose job could be affected by a proposed change in the business’ structure.
Even if you think you know which members of the team you’re likely to keep or make redundant, you still have to consult with all of them and then run a fair and transparent selection process to choose the most suitable people.
Leaving anyone out or predetermining the outcome could give the person grounds for a personal grievance claim.