Reason for restructuring
Restructuring is about making sure you have the right roles to deliver to your customers and your strategy – it’s not a way to manage individual employee performance issues.
If you’re having an issue with an employee’s performance, you can’t ‘restructure’ to get rid of them – you need to manage their performance through the proper channels. If you’re restructuring, you need to have a genuine business reason, otherwise you could face personal grievance cases.
You need a genuine business reason to restructure your business. You’ll need to state this clearly as you go through the process.
Genuine reasons include:
- realignment of brand
- changing your product or service offerings
- financial issues resulting in the need to downsize or realign
- no longer using a department
- wanting to outsource certain business functions
- merging with another business.
Principles of restructuring
If a restructure might impact people’s jobs, you must follow a process based on good faith. This means you and your employees act fairly in your dealings with each other.
This means you:
- are communicative and responsive
- don’t mislead or deceive one another
- are active and constructive in establishing and maintaining a productive relationship.
During a restructure, good faith means that employees who might be affected have the right to comment on and feed into the restructure. When you propose the new structure, you need to genuinely consider any feedback, including their thoughts and suggestions.
Throughout the restructuring process you can keep some information confidential, but there must be a good reason.
Examples include:
- following statutory confidentiality requirements
- protecting your employees’ privacy
- protecting your business’s commercial position.
Redeployment and downsizing
There are specific rules around redeployment and downsizing.
Redeployment is when you create a new role that isn’t very different from an old role. You must redeploy a person in the current role to the new one.
Downsizing is when you’re reducing the number of a certain type of existing role. For example, if you currently have three junior hairdressers, but you think you only need one, you’ll need to set out specific details in the proposal, including the selection criteria for how you’ll choose the successful individual.
Both redeployment and downsizing are technical areas. If you’re not familiar with these rules and process, you should get legal advice.
Steps to restructure
- Step01
Document your proposal
Put your proposal in writing, so you can communicate it to your team.
Your proposal needs to talk about roles, not people. You don’t need to go into too much detail, but you need to clearly state:- the reason for the restructure
- the expected benefit.
You also need to clearly explain:
- your genuine business’ need to restructure
- what you propose the new structure to be
- how that will impact the current structure
- roles that are being disestablished or substantially changed in this proposed restructure.
If you include specific facts, like how much money you need to cut from the business, make sure those facts are right. You must be able to back up what you’re saying if you’re asked in a grievance process.
- Step02
Invite people to a meeting
Email or write to your employees, letting them know you’re proposing a restructure and inviting them to a meeting to hear about it.
You must:- advise and invite people whose roles might be affected – but you might want to include your whole team
- let people bring a support person or representative to the meeting, and tell them they can in the invitation
- leave enough time between the invitation and the meeting date so they can digest the news and get support in place, but not so much time it leaves them hanging – two or three working days will be about right.
If a meeting is going to be hard for you – logistically or emotionally – send an email giving the employees a heads-up that a proposal for restructuring will be sent to them on a certain date.
- Step03
Have the meeting
The meeting can be with everyone at once, and it can be informal.
In the meeting, you should talk through your proposal and give your expectations on timeframes. You should:- talk them through the proposal document and give the proposal as a handout
- outline the process you’ll be going through to determine the restructure and give the process in a handout
- set expectations regarding timeframes for the process and give timeframes in a handout
- be clear on the roles affected under your proposal
- state that anyone can provide written feedback to you, or request a private meeting to give feedback, and they may bring a support person or representative to that meeting – they’ll need to tell you they want a meeting, so you can schedule it in.
If you’re not meeting the employees in person and you’ve already emailed them about the proposal date (see step 2), send them the proposal on that date, along with the steps and timelines for going through the process.
Leave enough time between sending the email and the proposal that they have chance to digest the news and get support in place, but not so much time that it leaves them hanging. - Step04
Gather feedback
Your employees can submit feedback in written form or in meetings with you. It’s important you consider what they have to say about your proposal.
Give them enough time after the proposal meeting to digest your proposal, think of suggestions and get support, before you close feedback – but not so much time that it leaves them hanging.
The feedback process will usually be for at least a week – especially if there is a chance an employee will lose their employment. - Step05
Genuinely consider the feedback
You must genuinely consider feedback you’ve received, and whether you’d benefit from a different structure than you proposed. This process takes time. Leave yourself at least a couple of days after closing feedback for consideration.
- If you still think your original proposal is best, go to step 6.
- If you want to change your proposal, go back to step 1.
This is particularly important if your new proposed structure affects different roles.
- Step06
Confirm the structure
This step assumes you’re happy with your proposed structure. If you’ve made changes to your original proposal, go back to step 1.
You must provide the outcome of your consideration in writing, to the affected people. You need to:
- confirm that the proposed structure will be the new structure
- outline the feedback you considered and your decision regarding that feedback
- be clear about the affected roles and what this means, including details of follow-up meetings and a notice period if relevant
- offer to have individual meetings to discuss the outcome.
- Step07
Meet to discuss what next, if required
Schedule and hold meetings with affected employees to discuss next steps. Give them the option to have a support person or representative at the meeting, and enough time to organise them to come. When dealing with downsizing and redeployment, it’s a good idea to get legal advice.
If you’re making roles redundant, steps 6 and 7 will be different. See our redundancy page for what to do when an employee’s job is no longer needed.
Common mistakes
Keep an eye out for these common mistakes to reduce the risk of a personal grievance:
- Treating the proposal as a done deal before you’ve heard and considered feedback.
- Leaving too little time between stages – your employees need time to consider things and arrange support.
- Not being clear about what the proposed structure is.
- Giving out confidential information, or refusing to give out information that you should disclose.
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