Navigating redundancy and restructuring: A practical guide for employers
Contents
- Introduction
- Planning and preparation
- Conducting the consultation and decision process
- Additional information and potential issues
Introduction
Right now, many New Zealand businesses are feeling the pinch of what’s been termed a “technical recession”, pushing companies to reassess their structures and operational costs.
We know that change is inevitable in business. When the change involves restructuring roles within a company or even making positions redundant, however, there are certain processes that need to be followed to ensure the safety of your business and the well-being of your people.
For employers, understanding these processes is crucial for navigating them smoothly while supporting affected employees.
Facing the prospect of making staff redundant is never easy, and it’s natural to feel a mix of concern and uncertainty. But it’s important to remember that these decisions, though difficult, are sometimes necessary to ensure the long-term viability of your business.
With that, what follows is a practical guide for employers to manage restructuring and redundancies effectively.
Defining restructuring and redundancy
Restructuring involves reorganising the business or specific roles to align with changing company requirements.
Redundancy is when a position is disestablished, and the employee is not deployed into another role.
It’s important, as an employer, to consider other options prior to redundancy to show your commitment to valuing your employees.
Other options could include redeployment opportunities, reduced hours by agreement, or cost-cutting measures in other areas of the business.
Navigating redundancy and restructuring:
A practical guide for employers
Planning and preparation
Before initiating any changes, you’ll need to establish the business reasons behind them.
These reasons should be justifiable and clearly documented, and you’ll need to communicate the reasons to employees during the consultation process. A solid rationale not only guides your decision-making process but also provides transparency to your employees during consultations. This clarity ensures that everyone understands the necessity and inevitability of the changes.
Identify which roles need to be changed or disestablished, then draft a proposed organisational chart to visualise the new structure.
Creating new positions during this process is common. If a new role is identified, assess its similarity to existing roles so that you can determine whether you need to offer it to affected employees or conduct a recruitment process.
Conducting the consultation and decision process
Next, it’s time to talk. Present the proposal for change, and actively listen to feedback offered by your employees. Not only does this demonstrate the respect you have for your team, but it also fosters trust that the organisation is considering the options thoroughly.
Employee input and feedback may also uncover insights and enhance acceptance of the proposed changes, so it’s important to consider the points raised during this process.
Any decision you make, even if it’s as a result of the feedback you’ve already received, will need to be proposed to your employees first. This will protect you legally should any disgruntled individual raise a grievance.
When presenting change, it’s also important to provide the employee with time to reflect on the proposal, and you need to ensure that decisions are not made prior to employee feedback.
Finally, any questions, comments, or alternative suggestions must be considered, and as the employer, you’ll need to provide feedback to those responses.
Additional information and potential issues
During this period of transition, emotional responses from employees are expected.
Provide support and show empathy if employees are distressed. This can alleviate tensions and facilitate smoother interactions. Handle the process transparently, avoiding the misuse of redundancy to sidestep performance management issues.
Mistakes to avoid
Avoid these common pitfalls:
- Making a pre-determined decision around the outcome of the proposal (even private emails may be used as evidence if the issue goes as far as employment court).
- Being unclear about the justification for the change or what the proposal means for affected employees.
- Using redundancy to remove staff for poor performance or other reasons.
- Not providing all the documentation for the proposed restructure.
- Failing to consider all possible alternatives to redundancy.
Managing redundancy and restructuring requires careful planning, transparent communication, and empathy towards affected employees. By following established guidelines and seeking professional support when needed, employers can navigate these challenges effectively while upholding their legal obligations and fostering a positive workplace culture.
Restructures and redundancies can be complex to navigate – as well as exposing employers to legal action if mishandled, they can also take an emotional or psychological toll on both employers and employees.
