Approaching a Restructure

Restructuring – a word that no one, employer or employee likes to hear. And yet recently, in the midst of the Covid-19 pandemic, it’s a word we’ve been hearing on a regular basis. Unfortunately, as the Government employer subsidies come to an end it’s a word, we’re likely to hear even more over the next few months.

Some organisations, particularly large and complex ones are old hands at the management of restructures and their outcomes, but for many SMEs the current situation will be the first time they’ve had to face a situation where decisions have to be made that will mean some jobs will go. And of course, as the jobs are reduced so, inevitably, are employee numbers.

If you’re an employer facing the need to restructure your organisation for the first time, it’s important to remember that there are rules and processes in place that will help you through the challenge with as little stress as possible. There’s no denying that there will be stress but knowing what you’re doing definitely helps reduce it.

The first thing you need to remember is that any restructure in your organisation requires you to go through a consultation process with the employees whose positions are affected. What does this look like?

  • You need to be able to provide employees with an outline of what the current structure consists of, together with an outline of how you see it looking after the restructure process.  This usually involves providing before and after organisation charts of the affected area(s) of the business, along with verbal descriptions of both the proposed changes, and the rationale for them.
  • Your employees then need to be given enough time to go away, think about the changes and what they would mean to them, and get outside advice regarding the proposal and how they might respond to it. Under normal circumstances this time to think is likely to be anything up to a week, or even a little more. However, we do not live in normal times, so with the element of urgency it is possible to reduce this time to as little as 24 – 48 hours and still meet the legislative requirements.
  • Employees should be encouraged to provide feedback and suggestions for changes to the proposal, which should all be considered. While you’re under no obligation to act on the suggestions, there are times when at least some element of the proposed restructure can change as a result of this consultation period. I’ve been personally involved in the management of some restructures where this has happened.

The next part of the process is to assess whether you still have some jobs to fill and decide how you’ll go about filling them. It’s at this point that it’s very tempting to use this process to rid yourself of those employees. You know the ones, those who are the thorn in your side, who go through disciplinary process after disciplinary process but never quite get to the point of termination. The restructuring process is not designed to help you do this. If you have a few jobs to fill and a lot of people hoping to fill them, you must go through a fair and equitable process to decide who will be the lucky ones. So, you’ll have to put some work into this as well, such as:

  • Have well thought out and comprehensive position descriptions ready
  • Identify the requirements of the position, what qualifications, experience and competencies are needed
  • Carry out interviews, using the same success criteria for each interviewee
  • Make your decision based on a fair assessment of how well each applicant meets all the role requirements

Of course, even at this point there are other things to consider, and they tend to be about money – redundancy payments, if any, for those leaving the organisation, and remuneration levels for those filling the newly created jobs. If you want to be able to look back on your restructure and say it went well, it’s essential to get these two things right.

Most employment agreements have a redundancy clause included. Some of these clauses are generous, with payments calculated based on years of employment. Many though simply refer to the employee’s notice period which they may or may not be required to work out. If your employment agreements fall into the latter category, it’s well worth having conversations with the employees who will be leaving in order to agree on a process that can work for both parties – often this will mean that you won’t require the employee to work out their notice period, giving them the opportunity to use that time to undertake a job search while still being paid.

Then we come back to remuneration levels for those fortunate people filling your newly created roles. How do you make decisions that are acceptable to both you and the employees? We would suggest that it’s a good idea to think about this way back at the beginning of your process.

Once you’ve decided what you want your new structure to look like, this is the time to develop some new draft position descriptions. Doing this helps you clarify exactly what it is that you want each role to do, identify accountabilities, and give you an idea of the competencies, qualifications and experience you’re going to be looking for in your appointees.

The next, very important, step is to establish the remuneration levels for each of your new roles, so you can be sure that you can afford the structure you’ve designed. To do this, it’s important to decide what ‘size’ a role is – whether you do this through a formal job evaluation process, or through comparing it with other, similar roles in the wider market. Once you know what size the role is, the next step is to see what similar roles are being paid in the market your organisation works in. While there is plenty of information out there on remuneration levels, we would suggest that it’s important to rely only on information that’s reliable, trustworthy and drawn from the largest possible relevant database.

Only when you have this information can you confidently say that your proposed new structure is a financially viable structure. You can also be confident that your recruitment process allows you to offer what you know is an appropriate level of remuneration for each of your new roles.

If you follow through on all the steps we’ve mentioned your restructure should go smoothly, with the outcomes you need and with as little controversy as possible. The process is never pleasant, but it can be relatively painless.

Strategic Pay has many years of experience guiding organisations through the restructure process, from writing position descriptions and discussing potential structures, to providing solid, accurate remuneration information for your new roles as well as advice on redundancies. Our experienced consultants are always available to help you through your organisation’s change. Contact us today here!

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