What is a restructure?

Restructuring a business is a process that involves making changes to the structure or operations of the organisation. It should first and foremost be focussed on the roles in the organisation, rather than the people. The goal is optimising the design and flow of work, finding efficiencies and opportunities to do things better.

Why restructure?

There are many reasons why a business may consider restructuring, including:  

  1. Improving financial performance. This is one of the primary reasons many businesses choose to restructure. In order to be as effective as possible, organisations may undertake restructure activities such as reducing the number of roles that perform certain tasks, gaining efficiencies by optimising resources through reviewing similar tasks across an organisation and centralising the roles, changing strategic direction or operational processes to completely remove certain tasks—and therefore roles from the organisation, and more.
  2. Responding to changes in the market or industry. This is a big one right now. With the ever-increasing cost of living, and rising cost of goods and services, many businesses are looking at ways to both cut costs, and remain competitive. The COVID-19 period saw a huge shift in the way we work and how we do business. The fast-paced changes in the word of AI are also causing huge disruption, with businesses having to constantly adapt their operations to keep pace with new trends and technologies, or risk becoming obsolete.
  3. Managing growth or a reduction in the size of the business. Growing businesses may need to restructure to ensure they have the right roles in place to successfully support plans for expansion. Meanwhile, businesses experiencing challenges and a reduction in revenue may need to restructure to find efficiencies and reduce costs.
  4. Responding to internal business changes such as a change in the strategic direction of the organisation. Restructuring may also be relevant when reviewing the strategic direction of an organisation. Future-proofing and strategic business planning means leaders will be asking challenging questions, for example: is this organisation set up and designed to deliver on our strategy? And are operational processes we have, optimised by the right design? Do people in our business have role clarity? Do they understand where the handoffs occur? Are our employees held accountable for performing to the expectations that are set out for their respective roles? If the answer is no to this last question, it may be that you need to consider better managing your poor performers, as opposed to restructuring any roles!

How do I implement a restructure process?

Although the primary direction of your organisational redesign should be focused on the roles in your business, the restructuring process itself, must have people at the centre of the changes. Some key steps for achieving this include:

  • Provide the ‘why’ – ensure everyone involved understands the proposal you’re making; clearly outline the impacts and the ‘why’ for these changes. Include the broader context, the industry changes, and the rationale.  Clear communication of what you’re proposing and why, is key.
  • Follow the correct process steps – this is so important! Many organisations trip up because although they may have sound reasoning for their changes, they’ve failed to follow the correct process steps. You must consult with the impacted employees, providing them with all the information about the proposed changes, and consider any alternative options, before making any final decisions.
  • It is a proposal – remember that prior to the final decision being made, these changes are a proposal only. You must talk about the changes as such, and not assume or talk about the changes as if they are a done deal.
  • Genuinely seek feedback – a key aspect of the restructure process is to seek feedback from those impacted. I have run many restructures where the decision-makers have been surprised by the feedback received, and subsequently, made major changes as a result. Often those on the ground, doing the work, provide a different perspective that you may not have considered, so always keep an open mind to the feedback you receive.
  • Communicate well – communicate openly and honestly and provide as much transparency as you can. Make sure employees are kept up to date with any changes, and are given the opportunity to provide feedback. During unsettling times, clear and frequent communication is hugely beneficial to everyone involved.  
  • Be human – remember that although you may be making these changes for the right business reasons, there are real people impacted by these changes. It’s important that you treat all employees with care and respect, and consider what support you can provide for those exiting the organisation. This ethos of support and care through this process is important not only for those departing your business, but also for those who are remaining. A line that stuck with me from a podcast from the ladies at Powrsuit was: "If you do not treat people with empathy when they're leaving, the people who stay behind will not be productive".
  • Provide support to managers – restructuring can be a stressful process for managers. It’s important that they are equipped with the skills and knowledge to manage this process effectively. This includes an in-depth understanding of the rationale, awareness of their legal obligations and what they can and cannot say, and the tools to communicate effectively with employees.

I hope this overview on why you might restructure and how you might do this effectively is helpful. The nuance of each business and any proposed changes requires careful consideration and needs to be managed on the facts of each individual case.

As always, we’re here to help. Our team have expertise in this area, along with a compassionate and practical approach, and would be happy to talk to you confidentially, if you need advice or guidance on restructuring. Call us on +64 9 300 7224 or email is hello@thepeopleplace.co.nz.

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