An Employer’s Guide to Workplace Restructuring

As the new financial year approaches, many businesses are reviewing their workforce plans. From 6th April, employer National Insurance contributions (NICs) will increase, as announced in the Autumn Budget. Combined with slow economic growth, this is prompting many workplaces to consider restructuring.

When people think of workplace restructuring, they often immediately think of redundancies – but restructuring doesn’t have to mean job losses. You may be able to redeploy your staff into new roles that are better aligned with your business goals.

In this guide, we’ll explain everything you need to know about restructuring, including the benefits of restructuring over making redundancies, how to communicate a workplace restructure to your employees and the benefits of using organisational design specialists to help you manage the process.

What is workplace restructuring?

Workplace restructuring is when companies adjust the structure of their organisation, whether through job roles, processes or workforce numbers to meet changing business needs. For example, some job roles may be combined or responsibilities may be changed.

Restructuring often means that job roles are made redundant, but it doesn’t mean that you have to lose the staff currently in those roles. During a restructure, it’s often possible (and is advised) to redeploy your employees into new roles that better suit your organisation.

Workplace restructuring is closely linked to organisational design. Having a strong understanding of organisational design will help you get the best results during a restructure. Organisation design is the process of taking a holistic approach to your workplace structure and boosting effectiveness through your people.

Working on optimising your workforce, and not just making redundancies, during difficult times protects your organisation, but also ensures you have the right people to help you continue to grow the business.

Why might a business need to restructure?

While workplace restructuring can take place when a company is experiencing financial difficulty, it’s certainly not the only reason why restructuring might happen. In fact, restructuring can be a proactive way to prevent the business from running into difficulties.

Some other reasons why a business might need to restructure include:

1. To adapt to changing market conditions: Changes to the economy, the way your customers interact with your business, or when two companies merge could mean you need to optimise your workforce.
2. To respond to new competition: A new competitor in the market may cause you to need to pivot and change your priorities.
3. To align with your strategic goals: As companies grow, it’s not uncommon for your organisation’s structure to fall out of line with your goals. Restructuring can set you back on the right path, and continuing to focus on your workplace culture and design can prevent you from needing to restructure again in the near future.

So, it’s clear that there are multiple reasons why you might consider restructuring your organisation, and it doesn’t always have to end in redundancies.

The benefits of restructuring over making redundancies

When it comes to restructuring and redundancy – the two terms should not be used interchangeably. Workplace restructuring can very much exist without the need of making people redundant. There are many benefits to restructuring your organisation instead of making redundancies – let’s take a look at a few:

Improves efficiency

Changing and combining job roles to group similar job responsibilities together helps streamline processes, eliminating unnecessary roles and tasks. Redeploying your existing workforce into these new roles also saves time and resources, improving efficiency. 

When executed well, workplace restructuring can help your teams become more organised and collaborate more effectively. During the restructuring process, giving employees clear goals and objectives allows them to work better alone, reducing the need for micromanagement.

Improves profitability or cash flow

While you may make cost savings if you make redundancies, you can still improve profitability or cash flow when you restructure without making redundancies. When you eliminate redundant roles and unneeded processes, you can become more profitable without having to reduce your headcount.

Restructuring forces you to review your strategic goals and how your job roles fit with those goals. When you identify new job roles and responsibilities, you will often find that you already have the skillsets required for these new roles in your existing employees. And since hiring a new employee on an average salary can cost an average of £62,890 in their first year of employment, it’s much better to utilise the staff you already have.

Improves communication

When done correctly, restructuring the workforce can improve communication and collaboration within your business. Reviewing your current organisational structure and how information is passed from one person or department to another will help you identify bottlenecks.

Reorganising your leadership team and improving processes can improve information flow, and allow team members to work together more effectively without experiencing blockers that prevent them from completing their work. Research by McKinsey shows that well-connected teams can increase their productivity by 20-25%, so it makes sense to invest in improving communication during a restructure.

The four steps of workplace restructuring

Once your shareholders and other stakeholders have decided that a workplace restructure is best for your organisation, you should take an immediate but considered approach. A workplace restructure could take weeks up to several months, so once you know it’s the correct business decision, it’s best to get started.

There are four general steps to restructuring a workplace:

1.   Review the existing structure

Sit down with all relevant parties and review your existing organisational structure. What is working? What isn’t? Look at each job role in detail and consider which functions and tasks are required and which are not.

However, don’t review roles in silo. Look at how job roles relate to each other and how they work within, and across, departments. You may discover that one department could be more efficient, or roles are currently sitting in the wrong team.

2.   Consider your ideal structure

When you’re designing your ideal workplace structure, it’s crucial that you base it around your business goals. Your goals should be the foundation for all the restructuring decisions you make.

Conduct a thorough workforce analysis to understand your organisation’s current and future needs. Identify the skills and job roles required for business success. Once you’ve done this, you should be able to spot gaps in your workforce and where you have redundant roles or responsibilities.

Once you’ve done this, you should develop a redeployment strategy for your current employees to fill the new or changed job roles you’ve identified. You may also need to work on a learning and development strategy to upskill your workforce.

3.   Consultation

Even if you don’t plan to make any actual redundancies, when you alter job roles so much that positions become redundant and you require your staff to take on new ones, you must have a consultation period.

There is no limit on how long a consultation period should be, but there are minimums depending on how many roles you are making redundant:

• 20 to 99 redundancies: the consultation must start at least 30 days before any dismissals take effect
• 100 or more: the consultation period must begin at least 45 days before any dismissals take effect

During the consultation period, you must invite each employee to a meeting to discuss how the restructure affects them and what this means for their job role.

You are legally required to consider alternatives to redundancy where employees have worked for you for more than two years. This is where the work you’ve done on your new structure comes in. You can offer what’s known as suitable alternative employment to employees whose jobs have been eliminated to retain them in your new organisational structure.

When offering suitable alternative employment, you should make the offer to employees in writing and give them enough time to think about it. The new role should start within four weeks of their previous position ending, and they are entitled to a four-week trial period in the new job.

In employment law, whether an alternative role is suitable is subjective, not objective. That means that employees may decide that a role you have offered them isn’t suitable due to their personal circumstances and they may choose to be made redundant.

4.   Redeployment

Once your consultation period is over, you can begin to redeploy employees that have accepted a role within your new structure. You should start to execute the redeployment strategy you worked on so you can equip your team with the skills they need for their new roles.

Bear in mind that employees can reject your offer of the new role at any time before, during or at the end of their trial period. They can reject the offer if they have a good reason for doing so, which includes personal circumstances such as health reasons or a more expensive commute to a new location. If the employee has worked for you for more than two years, they would then be entitled to a redundancy payment.

The redeployment process can be complex. You must follow a fair and lawful procedure to prevent employment tribunal claims. We would always recommend speaking to HR professionals who have experience in workplace restructuring if you don’t have an in-house HR team to ensure you are legally compliant.

Workplace restructuring and pay

When you restructure your organisation and redeploy your employees into new roles, they are generally entitled to receive notice pay if their role is being made redundant – remember, even if you don’t plan to let any staff go, this still counts as going through a redundancy process.

Employees will be entitled to their statutory or contractual notice period, so they should receive their normal pay during the time between being given notice that their role has been made redundant and being redeployed.

The HR admin behind workplace restructuring

There is a significant amount of HR admin required during a business restructure. Your HR team should lead in managing the operational side of restructuring and support in organisational design based on your strategic vision.

Key HR responsibilities during a restructure include:

• Building a strong business case: Conducting a workforce analysis to understand the skills and job roles required, along with evaluating the procedural requirements and implementation costs
• Consultation invites and summaries: Writing letters to employees inviting them to a consultation meeting about the restructure, then providing summaries of what was discussed in consultation meetings and whether you have come to an agreement about suitable alternative employment
• Contractual changes: Working with legal experts on changes in contract terms or more complex issues like TUPE
• Updating organisational charts: Updating organisational charts and job descriptions in your HR information system (HRIS)

How to communicate to employees during restructures

Telling your team that there will be workplace restructuring can be tricky. When employees are told that some job roles are going to be made redundant, it’s bound to make them feel uneasy. But it’s up to you to help your employees understand the reason for the restructure and what that means for them.

Here are our top tips for communicating to employees during restructures:

Be clear

Be clear about the restructure so your employees understand what’s going to change. It’s useful to hold at least one meeting to discuss:

• The vision your company is working towards
• The differences in how your organisation will operate
• What the timeline for the restructure is
• How employees will contribute and be involved in the changes

Be transparent

Sometimes, leaders try to shield employees from a restructure until it’s just about to happen. While this often comes from a good place, it’s more likely to damage morale when your employees find out that plans have been in the works for a long time.

It’s a good idea to communicate the restructure as soon as possible, as employees can often find out through other members of staff who might not give accurate information. This could cause further damage to morale and employee wellbeing.

Show empathy

Appreciate that hearing about a restructure could leave employees feeling uncertain. Let them know that you will answer any questions they have, and direct them to your employee assistance programme (EAP) if they feel that they could benefit from talking to someone or receiving some mental health support.

Maintaining morale

It’s not uncommon for morale to dip during a restructure. During and soon after the restructure, you may notice a visible reduction in your team’s energy and productivity, and some employees may be resistant to the change.

A study found that restructuring in organisations has a mainly negative effect on the welfare of employees regardless of whether there are job losses. Some businesses saw a recovery of wellbeing in their team over time, showing the importance of handling a restructure sensitively.

To maintain morale during and after a restructure, you should:

• Involve employees in the change process: Like we’ve said, it’s important to be clear with your team and let them know about the restructure as soon as possible. You should also be open to hearing their ideas for reducing redundancies – you don’t have to action them, but you must take them seriously.
• Have regular check-ins: Regular one-to-ones with your team are important in general, but even more so during restructuring. Give employees the opportunity to voice concerns and tell you how they’re feeling.
• Develop your team: Investing in your employees’ development in their new roles helps improve morale. In fact, it’s been shown to have a positive impact on employee engagement, satisfaction, productivity and retention, so L&D is crucial to business success.

Change management: embedding the new structure

Once your new structure is in place, you’ll want to do everything you can to preserve your culture and core values. Organisational development and design specialists can help you ensure that your new structure aligns with your strategic goals and company values.

To embed your new structure and improve or maintain your company culture, you should consider the following elements:

• Values and mission: What principles define your organisation? What shared beliefs drive your work, and how do they shape the way you operate?
• Policies and processes: How do you engage with all stakeholders? How do you approach hiring, performance evaluation and career progression?
• Leadership: Does your leadership team actively demonstrate your organisation’s values through their actions, setting the standard for the rest of the team?
• Employees’ attitudes and behaviour: How do your people interact with one another? Does this reflect the culture you aim to foster?

Organisational design specialists can work with you to help you restructure your organisation with your values and workplace culture in mind. Other benefits of working with organisational design specialists are:

• Objectivity: As they are separate from your business, they can look at your organisation without any biases. They’ll identify and advise on any pain points they find and help you work on fixing them.
• Experience: While every company and restructure is different, organisational design specialists will have worked with similar organisations before. They’ll have insight into what has worked well for other businesses like yours, and can help you come up with an organisational development plan that includes proven strategies.

When restructuring leads to redundancies

It’s common for workplace restructuring to lead to redundancies. We’ve spoken about some of the processes involved in redundancy in this guide, such as consultation, but it’s a complex part of restructuring that has different rules depending on the number of redundancies you need to make. Find out more about how redundancies work in our redundancy guide.

How we can help

At Fitzgerald, we’ve helped many clients through business restructuring and preserved their company culture and values. We cover all aspects of organisational development, including HR and people strategy, HR administration and employee relations.   

If you’d like to discuss how to conduct a successful workplace restructure we’d love to hear from you. Book a free consultation or give us a call on 0330 223 5253 to see how we can help.