Consulting firm EY recently had to shelve plans for a restructure after internal disputes among US colleagues. Major changes such as mergers and restructures are doomed to failure without getting employees on board and being transparent about how they will be affected, says Michael Hibbs.
It has recently been reported that top four accounting and consultancy firm EY has had to shelve restructuring plans after employees raised concerns about where they would sit within the new structure. The company had begun looking into separating its audit and advisory businesses after claims of conflict of interest, but faced questions from US colleagues as to the future of their divisions.
While the company fully intends to complete the change, it will only be able to do so once these issues have been resolved, demonstrating how a lack of employee ‘buy-in’ can affect companies dealing with a restructure.
Employees are integral to how a business functions, and their opinions, feelings and concerns should be actively listened to. In the past 18 months, figures from the CBI and Pertemps have shown that three-quarters of businesses suffered from skills shortages, with many offering salaries above the industry standard in order to attract top talent.
In this precarious situation, businesses cannot afford potential employee losses, and if a huge change like a restructure is not implemented smoothly it could risk a number of employees leaving in a short period of time.
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Major changes such as a restructure can cause the workforce to feel unhappy if they feel it will have ramifications for their career progression or job security.
Employers therefore need to keep their staff at the heart of any planned restructure and put detailed thought into how the plan will be communicated internally, as well as externally.
The risk of employees reacting badly to a planned restructure can be mitigated, but only if a business plans for this eventuality from the beginning of the process.
It can be tempting to rush through decisions without fully considering every possible scenario, but this can leave businesses vulnerable to errors.
For example, many restructures come with some or all employees being presented with changes to terms and conditions in their contracts – something that can make them feel wary.
Care over consultation
For contractual changes to be legal in a business that wants to change the contracts of more than 20 employees, a 45-day consultation period with staff must take place, potentially adding a delay to the restructuring proceedings. In some circumstances, employers may find themselves having to ‘dismiss and re-engage’ employees.
For this to be legal, employees are entitled to the consultation period and their notice period on top before moving to the new contracts.
Dismissing and re-engaging, or ‘fire and rehire’ as it is sometimes described, is a generally unpopular tactic amongst workers and has been heavily criticised in the media, so businesses must think carefully before taking this approach, as it may bring reputational consequences.
Restructuring a business often comes with changes to departments, job titles and hierarchy – all of which can be very important to employees.
There is a misconception that because a person will have the same salary and job title, they won’t mind changes to who or how many people they report to.
However, access to the senior leadership team can be incredibly important to individuals, and having access taken away can feel like a demotion – despite it not being one on paper.
While businesses often view restructures as offering opportunities and progression, employees could view it as a threat to their job security.
Therefore, employers must put themselves in the position of the employee and consider how they will interpret their position within the new structure.
For example, when a restructure is first announced to employees, they may be concerned that it might lead to redundancies. It is imperative that if there are no redundancies this is communicated quickly as uncertainty can often lead to speculation, which in turn fuels false rumours around job security.
Clarity of message will gain and maintain employee confidence in the business and its decision-making throughout the process
If the restructure does come with redundancies, then transparent and frequent communication is vital to maintaining employees’ trust.
The mandatory consultation period should be commenced as soon as the redundancies are announced, and the outcome should be communicated internally as soon as possible.
Be clear upfront
It is crucial that if more than one round of redundancies is likely, this is also stated from the beginning of the process, as otherwise employees may feel misled, leading the employee/employer relationship to deteriorate rapidly.
Messaging around restructuring a business should not only revolve around the logistics, but also the purpose and benefits of the intended restructure, as well as clear timescales for the change.
Clarity of message will gain and maintain employee confidence in the business and its decision-making throughout the process, and it is key for managers to be involved at this point as they are the ones who will form the ‘front lines’ for employee queries or concerns.
Managers who can reassure employees and answer questions with confidence will make an enormous difference to how the restructure is viewed internally.
Preparation and planning are vital for a smooth restructure. From the first phase, business leaders should ensure that employees are central to every decision made, to make sure that the restructure is best for both the business and the people who make it successful.
Employers must view launching the restructure as an internal project to win hearts and minds as well as making sure that opportunities and benefits are highlighted, and any worries or concerns are considered properly and rectified if possible.
Employees are vital to a successful business, and when considering a big change to a business, retaining talent should always be a priority.
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