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July IR Insights: Restructure and Redundancies

Aug 26

4 min read

One of the sad realities of owning a business and trying to thrive during an economic downturn is the need to consider restructuring the workforce.


Whether you are a New Zealand or Australian employer, there are many factors to consider when deciding to let an employee or group of employees go. While there are some subtle and not so subtle differences across the Tasman around the legislatively correct process to follow (or even if a redundancy payment is required) - the intent and purpose is the same. So, let’s set that aside to consider how best to engage, notify and close out a restructuring process in your business.


1. Planning Phase – What do I need to consider?


As Benjamin Franklin said, “If you fail to plan, you are planning to fail”.


Before commencing any communication with your employees, consider your current and future workforce requirements. A role may not be required right now, but is there a need for a role like this in the future?


If you do need to move ahead with a restructure, ensure you have considered everything before commencing notification with the affected employees. This includes:


  • What will the messaging be to the team?

  • How many roles will be affected?

  • What is the timeline from notification to consultation, to the final decision being made?

  • What is the cost to the business of making positions redundant?

  • What is the impact on the employees that remain in the business (including impacts to their workloads or responsibility)?

  • What selection criteria will be used if amalgamating positions (e.g. 5 down to 3)?

  • If role descriptions need to be changed, will there need to be changes to salary too?

  • Are there any employees with special circumstances that may need additional consideration to reduce risk (e.g. an employee on a performance management plan, parental leave, or who is a union member)?


2. Reflection – Is the need genuine?


Redundancy should always be considered as a last resort. As a business owner, you will need to explain your reason for making this decision, and it needs to be both a genuine and plausible reason to your employees.


You need to consider that a redundancy process is about removing roles (not people) from the business. However, some employees may take the decision personally so you should ensure you are communicating that this decision is not a reflection on their performance.


3. Crunch Time – Notifying the employee their role is at risk


It is very easy to make a decision on paper, and when you review the impact on the bottom line of your financials, this possibly affirms your decision as a good one.


However, it is very different when it comes to the time to translate your business decision to an employee who wasn’t expecting to hear this type of message. As most employees will be in a state of disbelief once they have heard the words “your role is likely to be made redundant” you can almost guarantee they will not hear too much more after that.


Make sure you have a good script to speak to and stick to that script if you are not able to remember it verbatim. Speak calmly and factually, be genuinely empathetic. Expect the conversation may go around in circles until you can close it out.


Notification of potential change is not a day for you or the employee to negotiate any outcomes or to make any decisions. It’s a time to deliver the message, provide the employee with paperwork and give them space to consider the impact on them (and their family).

  

We recommend that if operationally viable, any employee advised their role is at risk not attend work again until the consultation meeting. This isn’t due to any concern with breaches of confidentiality, more so that the employee is likely to be distracted – if they tell you they are fine to work, just monitor them and provide the opportunity to leave if they need to. We suggest you do not insist that an employee needs to keep working, as this is contradictory to the need to remove the role in the first place!


4. Consultation – Active listening at its best!


Consultation is a very important step in any redundancy process, this is the employee’s opportunity to consider the impact of the change on them and their opportunity to put forward other ideas for the business to consider.


In this stage, listen and respond to the employee’s thoughts and ideas, even if they are not viable or possible. When an employee knows you have considered their feedback, this will go a long way to making them feel that this wasn’t a decision about them personally. So let them download, let them vent, let them tell you the business decision is wrong – just listen! Plus, they may have some great suggestions to offer that you had not considered before.


5. Closing Out – Communicating the outcome

As every HR person has always said: “There should be no surprises.” The consultation process should have been thorough enough that any concerns, ideas or questions have been considered and responded to by now. Hence, it’s likely that every party at the table will understand the outcome about to be delivered.


While this is a time of goodbye’s, this isn’t a time of ‘good riddance’. Let the employee know that you valued their support and dedication to the business, let them know you are available to be a reference for them and will speak positively about their performance to prospective new employers. Check in with the employee in a few weeks’ time to see how they are doing.


It doesn’t cost anything to show you care!


6. What Now?


A restructuring process affects more than the employee being made redundant. It also has an impact on the employees that remain in the business, and you as a business owner.


When the process has been finalised, it is important to let your remaining employees know that you have been through a process, that the process has been finalised, and you are not considering a further restructure (in short, they’ll want to know their jobs are safe).


Ensure you communicate any changes to workflows to the remaining team and maintain close and open communication with everyone over the coming weeks as you settle into your new normal.


Keep your head up – you have got this!

 

Streamline HR are here to help with your strategic workforce planning needs. Should you need any support with the planning or implementation of a redundancy process please contact us.

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