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Restructuring respectfully

Philips, Meta, Twitter and Microsoft. Just a few of the many companies that announced large restructuring in the past months. Elon Musk’s take on restructuring is not much to the Dutch liking. But then, what constitutes ‘good’ restructuring? Bas van Glabbeek, who has supported countless clients in restructuring, talks about the phenomenon.  

Usually, large-scale interventions in organisations profoundly impact employees. They have destroyed many a generation’s trust in their organisations providing a ‘job for life’. Not all restructurings come with massive layoffs and may only involve redesigning the organisational structure or adapting the set-up of functions or jobs. Or integrating two organisations after a merger. Whether large or small, restructuring is a top-down change directly affecting employees’ personal working life and greatly disrupting the daily operational run in organisations.

Restructurings are associated with issues more often than not. Is restructuring indeed always bad news?

“It depends on your view. Taking a step back, restructuring is a leap forward for most organisations. And when successful, employees will often acknowledge its benefits in hindsight, too. But at the start, employees’ feelings are usually quite different. For them personally, a period of uncertainty is inevitable. Even when no jobs will be lost. And it may be that restructuring is called for in a period of growth. I have been involved in the restructuring of logistical departments due to large growth, with implications for functions, job titles and locations. These kind of consequences affect people and are usually felt painfully by them, as they stand to loose familiar elements of their work. However, that does not imply that restructuring has to be seen as bad news at all times. It rather implies the need for careful and considerate restructuring.”

Can you elaborate on that?

“My main argument is that every step in restructuring has to be considered well from the viewpoint of the people affected. It requires determining the implications of each process step for the teams and people. How will they respond? What will they need? These kind of questions have to be taken into account while preparing. Careful consideration also encompasses aspects such as a fair and transparent process for selecting and appointing people. When your people feel that the restructuring is being prepared well, they tend to be more willing to trust your management of the restructuring. And their trust at this point in time is a prerequisite for being able to move forward  afterwards”

Which is the biggest challenge confronting organisations in restructuring?

“The hardest trade-off is the one between a careful process and timing. The more time between a restructuring’s announcement and its execution, the more uncertainty is triggered. On the other hand, the less time is devoted to preparing, the less comprehensive the restructuring story will be. Both instances will be difficult for the people involved as well as disrupt their daily work. The faster a restructuring is being managed, the tougher it is to exercise due care. Hence our strong recommendation for preparing diligently prior to announcement so that there are –  hardly any – surprises during execution. You’d be surprised to learn the number of groups of people or entire departments being forgotten in the preparation phase. Simply doing a solid impact analysis can prevent this from happening, and preferably involves acquiring input from people who are fully up to date with the emotions of the various groups concerned. They can clarify each group’s outlook on the restructuring process as well as which questions, concerns and frustrations have to be taken into account.”

To what extent is involving the people concerned early on feasible? Some restructurings are extremely sensitive and should preferably only attract media attention in due course.

“Certainly. Ideally, however, we do involve a small group of insiders prior to initial announcements. Unless confidentiality is at risk. Stock-listed companies, for instance, will suffer dire consequences if share price sensitive information is leaked. In case involving relevant people may not be possible, that will limit the options for preparing well.”

So, it may be that companies can only publish a fairly generally worded announcement, while people inside will want to know straight away and in detail what is going to happen to them? How best to address that issue?

“This issue pops up in virtually all cases. It is nearly impossible to meet people’s expectations about the level of detail. When required, alignment processes with works councils or employee representation bodies, trade unions and the UWV are another reason for this. This explains why most restructuring announcements are done twice: a general initial announcement, followed by a more detailed announcement after initial alignment with these parties.

So, it may just not be an option to fill in the entire new structure in full detail. In other cases,  managers are appointed at the start, who are then tasked with further structuring the organisation. Such multistep processes often take months, however, so employees have to cope with uncertainty for a longer period of time.”

How can organisations best address these periods of uncertainty?

“Communications are vital here, in tandem with managers taking up a strong support role towards their teams. Firstly, they need to communicate a clear story that people can hold on to: why is the change necessary? What is the outlook, what objectives will we achieve, and why are they beneficial? What is in it for me as employee? Ideally, managers have been able to internalize the story fully prior to the general announcement, so they can talk with their teams straight away after that. In equipping leaders, we often include other challenges they may come up against: How do I address my team members’ emotions? How can I help them manage their uncertainty in this phase?  How do I keep people focused on the business as usual while they do not yet know what is going to happen? And additionally: what is the best behaviour to adopt and how can I best support my team while I myself am dealing with uncertainty about my own future here?”

We tend to have high expectations of managers. Are all managers able to take on their role in a restructuring easily?

“We do decide at times that some managers will not be required to take on that role – for instance, because the restructuring clearly will hit them hard. We often solve the issue, however, by looking for managers who are set to take on a role in the future organisation and who are then tasked with supporting more teams temporarily. Another option is roping in the affected manager’s manager to play their part. Usually, we can do a lot to help managers in tough restructuring times. We often arrange daily or weekly management meetings for them to exchange what is happening or their teams’ feelings and how they are dealing with difficult situations. The purpose is to make them feel supported as well as mutual learning. Meanwhile, the meetings provide a regular pulse check, so we can respond quickly to what is going on in the teams.”

Last question: what is your view on the notorious Anglo Saxon method of catching people fully off guard only to learn out that they have to pack their belongings straight away and leave?

“I think it is a bizarre way of restructuring. You may argue that it follows from cultural differences and that Americans will feel it is a normal procedure. It does not imply, however, that the people and organisations involved should not be better off with more considerate restructuring methods. Not just the people leaving the company but also the people staying will become very cynical, to the detriment of their engagement and loyalty. Organisations adopting these methods are never the better for it.”

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