How to plan a company restructure

How to plan a company restructure

Planning a company restructure can have a significant impact on your employees, and if not done correctly, could put you at risk of an employment tribunal. It’s important to follow the correct procedure if you need to reorganise the business. What should you consider?

Make sure you have a genuine commercial reason to restructure

If your company restructure plans will affect jobs then you must ensure you have a commercial reason which is justifiable. These can include the business losing money and needing to cut costs, or that you need to refocus your efforts on a different market or sector. Whatever the reason, if taken to an employment tribunal, you would need to justify the legitimate reasons and would need evidence to support this.

Never base a restructure around performance issues

This includes a team member who is underperforming or isn’t working well within the business. This is classed as performance management and would not be deemed as a justifiable reason to restructure. Read our guide to managing poor performance.

Communicate with employees

To most important element of a restructure is to communicate effectively with staff. This means informing them of the proposed changes and including them in feedback, factoring this into any final decisions. They should be given the opportunity to provide meaningful feedback with access to all the information required.

You can withhold some sensitive information, for example, the salaries of other employees. However, by law, if it’s relevant to the decision-making process then you are required to share it. You must also include any criteria or tools you will use to assess team members for new positions or redundancies and allow them the opportunity to comment. Transparency is key.

Reach an outcome collectively

It could be tempting to shortcut the consultation process, but it’s not worth the risk. A restructure is only a proposal until employees have the chance to give their feedback and the business has genuinely taken it into consideration. You are duty-bound to take employee feedback on board, but it also may have a positive impact on the outcome.

Allow enough time to respond

Part of providing a fair and transparent process is also allowing enough time for consultation and feedback. Any proposed restructure could have a detrimental effect on staff and they will need time to reflect and digest this information before offering an opinion.

Unless the proposed changes are in response to an emergency, it’s recommended that you start with at least two days between announcing changes and asking for responses.

If your staff ask for more time it’s advisable to give them that. Up to two weeks is considered reasonable in this situation.

Take everyone thoughout the process

The law states that you must consult with everyone whose job could be affected by the proposed restructuring. Even if you know which members of the team are likely to stay / or change, you will need to consult with all who will be impacted. Excluding people could open you up to a personal grievance.

Always refer to the employment contract

Always check contracts before proposing any structural changes. Look at job descriptions, notice periods and compensation in case of redundancy. This is also why it’s essential to keep all job descriptions up to date and adapt if you’re changing any staff duties. Read our guidance on what to include in an employment contract.

Stay fair and transparent

Use a selection matrix to be fair and transparent. Whilst there are many ways to select employees to new or remaining roles, this should always be done with transparency.

Use a selection matrix to ensure your decisions are fair. This will map out:

• Key skills
• Key competencies
• Experience for the role
• Assess against the criteria
• Selecting the highest-scoring employees

The employee should also then be given a copy of the matrix and criteria. They should be allowed an opportunity to comment and their feedback considered before making any final decision.

We can offer advice on restructuring so get in touch with our team if you would like to chat further.