Q & A: Restructuring

Firstly gather together all the information that is leading you to the preliminary view that you need to restructure.   This information may include financial accounts, guaranteed quantifiable contracts or orders,  summary of expenses and liabilities.  These will help you identify where costs may be saved, or how your business may be restructured.  Consider obtaining professional advice about this as there may be ways to make changes that you haven’t considered.  Further, your accountant may be able to put together a package of information in a more accessible way that reflects the current state of the business, and a short/long term projection.   Consider the value of providing a ‘visual aid’ in a diagram that may assist. The information you have gathered will become the ‘relevant information’ that will need to be provided to employees if it appears that positions may be affected by your restructure.   Keep in mind, that if it means that existing employees may have to take on a different role, or are required to report to a different team or person within your organisation – then they are also an affected employee and will need to be consulted.

Secondly, check your employment agreements or policies to ensure that you are familiar with any process that has been already stipulated.  In particular, does it detail any specific information being provided? Does it set out a timeline or set process that you must follow?

Yes.  You need to give those affected employees precise information about your proposal and provide them the genuine commercial reasons for making this particular proposal.  There is a requirement for clarity of purpose and particulars.   The information you provide will be to give the employees a full and thorough understanding of the proposal.  Only by providing your clear proposal will the employee be able to understand the information you have provided to them (and why you have provided it to them).  It is in response to your clear proposal that the employee will be invited to give feedback and respond appropriately.  Without clear details in your proposal, your employees may be disadvantaged in not being able to give thorough and well-reasoned feedback.  You need to ensure you have identified all affected employees.

 A formal process is your best protection in showing that you have complied with your legal obligations.  Communication with your employees can be a combination of meetings and written correspondence, but always record what happened in meetings.  Try and avoid ‘the little informal chat’.  It is almost impossible to accurately record what happened in them, questions asked (and answered), dates given or other important things discussed.  This is the genesis of misunderstanding.  Written communication allows both parties certainty of process, dates, services available to them if they require it (ie EAP services), and opportunities for meetings (with support people invited).   Certainty a process with a written document can reduce an employee’s anxiety and stress throughout the process.

Consultation. Consultation.  Consultation.  This applies to your initial proposal.  It applies to any selection criteria that you may have used if you have to ‘trim down’ staff numbers.  It means to hear your employees. This includes considering what the employee says.  It includes meeting with employees (and providing any ongoing new information), and above all having an open mind to all that your employee says.    It does not mean that you have to agree or negotiate the feedback provided.  Give reasons in response to feedback that you don’t accept or agree with.

Keep an open mind throughout the whole process.  And ensure that the language you use in all your letters and meetings with your employees avoids the suggestion that it is a ‘fait accompli’.  Use language that reflects that you have not yet made a decision (ie. ‘propose’, “may’ or ‘could’). Never underestimate the value of hearing what your employees have to say about the proposal or other suggestions they may have.  Consider fully any alternative suggestions provided to you by your employee.   They work in your business too, they may even understand the business better than you.  Also, be prepared to be a little flexible (if you can) if an affected employee is struggling and requires a little more time to give feedback.   If you have decided to adjust your timeline, ensure all affected employees are aware of this.  If you are unable to do this, ensure you provide the reasons why you can’t extend the timeline.

Report the decision (in writing) to each individual employee as soon as you have made it.  Outline in your letter why you have made the decision, and acknowledge the feedback you received (with appreciation that they took the time).   Give a clear timeline in which decisions will apply or begin to operate.   This may include the provision of notice periods (in the employment agreement) and when final pay will be made.