22 May Getting Ready to Restructure Your Business? 6 Steps You Must Follow
To be successful, your business will have to evolve continually. As it grows, you’re likely to have to reorganise at various points on your journey. Sometimes you might want to make changes to take advantage of new opportunities. At other times, you may need to adapt your business model to respond to challenges.
In our experience, a company that has grown to employ 20 – 25 employees and beyond can anticipate having to restructure every 12 to 18 months on average.
As businesses adjust to trading in the current climate, many will likely need to look at how they are structured. This might involve reviewing and redefining the roles of some employees, and without suitable alternative positions available within a new set up, it might mean having to make some redundancies.
Understandably for employees, an organisational restructure can be an unsettling time, which means it’s important to manage it well. The consequences of not doing so can include added disruption to business, a damaged reputation – and where redundancies are involved, time and expense in defending employment tribunal claims.
In planning any restructure likely to result in changes to job roles or redundancies, it’s essential for an employer to consult with their employees before they make any final decisions.
Here at Organic P&O Solutions, we help business owners and management teams make the (sometimes tough) decisions required to change the shape of their organisations – and to do so in a way that is compliant and fair for all parties.
When a restructure goes wrong, it’s often because the business involved has not fulfilled its obligation to consult with affected staff, or because somewhere in the process, it has failed to follow the correct procedures.
If you’re planning a restructure in your organisation, having the support of a professional HR advisor is highly recommended. Because every restructure is different and has its own unique dynamics, there’s much more to consider than the linear process. This said, there are some fundamental points to keep in mind when you’re preparing to implement a change like this:
1. Review all your business options
Based on the information you have available, and what you are reasonably able to anticipate, you will need to consider all the business options open to you.
If for example, your business has experienced a significant drop in revenue, you’ll need to review – and where possible, reduce overheads in the short term. Looking further ahead and using data extracted from your management accounts, you’ll need to calculate how long your business will be able to trade on the reduced income – and consider what options are open to you longer term should the situation persist.
2. Review staffing against your business options
When you have listed your business options, you will be in a position to review your staffing structure in relation to each potential scenario. It’s important to show you’ve considered your options in this order.
You’ll need to consider each option against the key criteria, making sure you’re being fair and reasonable at each juncture – being extremely mindful at this point to set aside the personal situations or personalities of individual employees.
3. Recognise your obligation to consult with staff
Don’t make the mistake of thinking that restructuring your organisation is purely a business decision, and you don’t need to consult with your employees.
If you’re planning a restructure that’s going to require staff to have to change roles or result in redundancies, you’re statutorily bound to engage in a meaningful consultation process with those staff who will be affected.
Crucially, this doesn’t mean sharing a restructuring plan that’s set in stone and just expecting staff to adopt it. All too often, we hear of business owners who work on a restructuring plan in isolation, before presenting it to their workforce as a fait acompli: an action more likely to lead to conflict and arbitration than collaboration.
Ideally, it’s best to communicate with staff openly and honestly from the outset. This way, there will be complete transparency before the consultation process begins. You’ll have to allow time for affected employees to respond with alternative solutions, and no definitive decisions can be made until the consultation process has been completed.
4. Pause recruitment activity
If you’re planning any redundancies as part of your restructure, you’ll need to consider whether those employees affected might be offered any other suitable alternative employment within your organisation. To this end, you should pause any recruitment activity during the process.
5. Advise affected staff
When you have identified your preferred restructure route, your next step must be to notify any employees who will potentially be affected, formally advising them that you intend to enter a consultation process.
6. Consult with affected staff
Having taken the appropriate steps up to this point, you’re now ready to consult with affected employees. You will be able to share your proposed restructure plan together with your reasons and rationale for putting it forward.
At the same time, you’ll need to make it clear that no decisions have yet been taken, and you are open to any alternative solutions those affected might want to propose.
You must leave space for plans to evolve and change, and time for other parties to put forward alternative solutions and have them fully considered – so that by the time a final decision is reached, all options have been explored.
I often liken the process of going into a restructure to kicking a rugby ball into the air. In the same way you can’t know which way the ball will bounce on landing, it’s virtually impossible to predict how a restructure proposal will be received when you’re dealing with people and emotions.
Employers will frequently go in one of two directions. They’ll either procrastinate and go around in circles as they attempt to get inside their employees’ heads – trying to anticipate and address questions they can’t possibly know. Or they’ll simply impose their preferred restructure option without consultation, believing they’ve explored all avenues and no other solution is available.
The first of these routes wastes time and energy and is ultimately ineffective as the clarity of any original objective is lost. The second is clearly unlawful.
Going back to my rugby ball analogy, a restructure can have a clearly defined process, but it won’t be linear, and along the way, it will bob and weave. To ensure it runs smoothly and results in a successful outcome, the support of an HR professional who can help you manage the human aspects involved with implementing change – as well as guiding you in respect of compliance, is essential.
Focusing exclusively on compliance when making decisions is not necessarily the best way forward. In some situations, taking human considerations into account might cost you a little more time and/or money – but save you a lot in terms of how your business is perceived by others. This may be a particularly important consideration for owners of small and mid-size companies who have a high profile in their local community.
Can We Help Your Business Restructure?
Do you need to change the shape of your business? Organic P&O Solutions can advise and support you through every step of the process. We’ll help you balance compliance with fairness so that your team transitions smoothly and painlessly, and we’ll make sure that when your restructure is complete, the reputation of your business – and your conscience – remain fully intact!
Call us today to arrange an initial conversation.