Step by step restructuring
The need to implement change is almost inevitable in today's business environment if organisations are to continue to survive and grow. Change can be in response to a number of factors but will almost certainly lead to a need to restructure the business to some extent. The restructure may be small and only involve a single department or a few employees; on the other hand it may involve the entire workforce who could be spread over different sites and locations or even different countries.
As the old saying goes: "if it's not broken why fix it?" However there are numerous reasons why an organisation may need to change. The most common of these are:
- acquisitions and mergers:
Most takeovers usually result in a restructure and redundancies often occur. Those who are fortunate enough to retain their employment will inevitably see their roles and the organisation change.
- changing market place and products (and a need to adapt the skills of
the current workforce to meet these changing demands):
Organisations need to constantly review their products and services to ensure that they meet public demand and are competitive with the rest of the market place. This could mean that employees may need to acquire different skills or that job roles change in order to meet this demand and remain competitive.
- economic/financial considerations:
This may not necessarily be a downturn in business; equally it could be an upturn which could result in a major review of business operations and staffing considerations. However, if the restructuring results in potential redundancies , it is important to consider the process that needs to be followed.
- changing technology:
Technological advances have resulted in the greater use of robotics and the electronic operation of assembly lines, resulting in the loss of jobs for low-skilled workers and a skill shortage in the more highly technical positions. In order for organisations to manage these changes they need to be constantly reviewing their operations and staffing to ensure that they are not left behind.
Our guide takes you through the main stages of a restructuring exercise and will help you to ensure that:
- the process is carried out fairly and to optimum advantage to the organisation
- you are able to retain key employees.
Where a restructure may involve redundancies, employees in Great Britain are protected by the following legislation:
- The Trade Union and Labour Relations (Consolidation) Act 1992
- The Collective Redundancies and Transfer of Undertakings (Protection of Employment) Regulations 1995
- The Employment Rights Act 1996
- The Collective Redundancies and the Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999
- The Collective Redundancies (Amendment) Regulations 2006
- Trade Union and Labour Relations Consolidation) Act 1992 (Amendment) Order 2013
A successful restructuring exercise depends on a number of factors including:
- commitment at senior management/board level
- a shared vision of what is to be achieved and the final goal - aligned to your long-term strategy
- the resources available (such as time and finance) to implement the changes
- taking employees with you - keeping the communication channels open and consult with all concerned
- ensuring that key employees are retained and that you can continue to grow talent
- openness and honesty during the process.
If any of these are an issue, do consider carefully before embarking on your restructuring exercise.
It is absolutely essential that you have a plan and timescales for each stage of the process.
The first step is to agree at senior management level or Board level, if appropriate, the end goal and the vision. This should be aligned with your long-term strategy in terms of operational, financial, marketing and sales needs.
Draw up a project plan indicating the timescales for action and the date by which the restructure needs to be completed.
Write a brief for employees setting out the proposals, the reasons for the restructure and the overall implications for the workforce. At this stage it is best to avoid specifics such as the number of people who might be made redundant as this will often cause unnecessary panic. A statement of what you want to achieve and where you want to be in terms of positioning in the market place, in a "let's all pull together" philosophy, is the best starting point.
Ensure that there is no time delay whereby some employees have not been briefed and others have. This will lead to rumours. Individuals who are absent for whatever reason should be briefed either by telephone or by a home visit if that is possible.
Include in the brief the proposed timescales and your intention to consult with employees at the earliest opportunity.
If your organisation is unionised, arrange to meet the union representatives as soon as possible, but not before you have completed a draft project plan.
If the restructure will mean changes in your organisational and/or departmental structures, changing job roles or scenarios such as more employees in one area and less in another, you will need to plan the proposed new structure before holding any meetings.
Draw up an organisation chart and departmental charts (include job titles rather than names). Be sure about why this is necessary in line with the strategic objectives. Also draw up draft job descriptions and person specifications for any new jobs. Identify which, if any, job roles may be 'at risk' of redundancy.
Begin the consultation process.
You must consult with all affected employees and this must start in good time and be meaningful. How you carry out this consultation will depend on the numbers of employees affected and also whether or not you recognise a trade union for this purpose. If twenty or more employees at one establishment are likely to be 'at risk' of redundancy within a 90 day period you will need to consult with either a recognised trade union (if you have one) or elected representatives.
All affected employees should be included in the consultation process even if you are confident that you will be able to retain them, albeit in a different role or on different terms and conditions.
Ensure that you are properly prepared before you start:
- detail the reasoning behind the restructure
- draw up a new proposed organisation structure and new draft job descriptions
- check all tasks are covered
- consult with managers as to whether this would work
- consult with anyone whose job may be affected by these changes (eg by additional workload, or requirement to do the job slightly differently, which then impacts on support departments).
Don't rush the consultation process - this will generally always backfire. And remember that notice must not be given until the full formal consultation period is exhausted.
If you anticipate twenty or more potential dismissals in the space of 90 days you will also need to notify BIS, either by letter or on a specific form HR1, which can also be obtained from any Redundancy Payments Office. Until you send this off, your formal consultation period is not triggered. See our step by step guide to redundancy for more help with this. This applies even if you have already begun consultation with employees and/or representatives and even if you think that you may be able to retain all of the employees, albeit in different roles or on different terms.
If your organisation is not unionised and 20 or more employees are likely to be 'at risk' of dismissal, you will need to consult with employee representatives. Therefore you will need to arrange for employees to nominate their representatives within departmental/location areas. If more than one person is nominated, an election must take place before consultation can commence.
Advise employees of the details of the proposed structure, any new job roles that are available and which job roles may disappear. Ensure that everyone receives the same message indicating how the new job roles will be advertised and how to apply.
Note that any employees whose job roles are disappearing and therefore will be 'at risk' of redundancy should be given first consideration for a new post, but this does not mean that they have to be appointed if they are not suitable for the position.
Carry out a thorough recruitment selection procedure for the new roles. Even if there is only one candidate for a particular vacancy, you should still rigorously test out his/her ability.
Remember that those employees who are not successful will still be potentially 'at risk' of redundancy and you must be able to defend your selection decision and show that those chosen for the new roles were the best people for the jobs and were selected in a fair and consistent manner. You may wish to consider running an assessment day or using competency-based selection .
Once you have made appointments to the new roles, confirm with those who are successful in gaining new jobs when they should take up their appointments and identify what training (if any) is needed.
Identify any vacancies that are not filled and also those employees that are still 'at risk' of dismissal.
Consider whether any individual who is still 'at risk' could possibly be retrained to fill any vacancy. You should consider all 'at risk' employees at this stage through a consultation process. Do not advertise these vacancies externally until all other options have been explored for the 'at risk' employees. Inform the affected employees that you intend to advertise the vacancies externally, having ensured that either they do not wish to apply or they are clearly unsuitable (ensure that you have evidence of this).
Continue consultation both with employee representatives and with individuals until the end of the consultation period. Ensure that you explore all options before issuing redundancy notices.
Once you have completed your consultation, issue redundancy notices to those whose roles are going and who have not been successful in gaining an alternative role. Consider whether you wish them to work out their notice, or to give pay in lieu (sometimes the existence of employees who are losing their jobs can jeopardise the introduction of the new structure; at other times they can be invaluable in assisting with the transition as they keep the "old" process going for as long as necessary).
If you still have unfilled vacancies, recruit additional people externally if appropriate until your new organisational structure is complete.
Ensure that you evaluate and monitor the success of the restructure in terms of operational efficiency, financial stability, increased market share, competitiveness and sales. Get your managers to evaluate employee engagement post-restructure, addressing any concerns that employees may have. Read our guide to managing redundancy survivor syndrome for a few tips!
Hold a final briefing with elected representatives/union to confirm their commitment to the organisation and to the new structure and to thank them for their input and co-operation throughout the process.
Restructures can be very complex and time consuming processes that cause both managers and employees a lot of stress. However, managed properly and fairly, a restructure can lead to greater opportunities for employees, greater profitability for the organisation and, in the long term, a happier workforce.
The key is always to plan properly, listen to your employees and remember to communicate, communicate, communicate!
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Frequently asked questions (FAQs)
If the changes are non-contractual you can implement them but if they are changes to contract, you will need to gain consent or give full notice of the changes.
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