Restructuring in 2022: What are the risks?
We explore the 5 key risks that get over-looked in a large-scale restructuring programme and how best to mitigate them.
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The scale of restructuring
With companies being forced to downsize in order to survive, organisations that will remain standing at the end of this year and beyond are those who handle this transition period effectively. Large-scale restructuring programmes are highly complex and require an extensive collaborative approach across the organisation as well as a significant investment in time and resources. The risks of getting a large-scale restructuring programme wrong can be huge and sometimes fatal for organisations.
Putting people at the heart of a restructure
Businesses will be depending on their HR professionals to deliver and provide support for a key part of any large-scale restructuring programme. Putting people at the heart of any restructure is what separates a successful process from a high risk one. This people aspect requires technical expertise in topics such as employment law, social plans and specific career transition approaches as well as programme management, communication and change management. Additionally, any complications that arise with various regional and/or local requirements will only add to the complexities of a restructuring programme.
Here are 5 potential risks that get overlooked in large-scale restructuring programmes:
1. Employee engagement and morale drop
Risk - High
The risk of low engagement and a drop in morale is high. Employee issues and concerns need to be addressed appropriately as any confusion or frustration left unattended will quickly lead to negativity that will seep onto remaining employees. Some of these concerns may also include how those who are leaving are treated as they evaluate how fairly the process is handled.
2. Significant productivity loss
Risk – Moderately high
Due to the inevitable disruption caused by a restructure, productivity will be affected. But by how much? If managers fail to lead and provide transparent communications throughout the process, the risk of productivity taking a significant loss is moderately high.
3. Employer brand damage
Risk - Moderately high
An erosion of trust caused by a poorly handled restructuring programme can have a negative impact on turnover, engagement and the employer brand. The impact of this may not be felt immediately but can certainly be seen over a longer period which is why this risk is moderately high.
4. Restructuring goals not fully met
Risk – Moderately high
In the absence of clarity of what success looks like and how it will be measured, the restructure effort presents a moderately high risk of failure. The difference a well thought-out and realistic plan can make on the success of a restructure can be substantial.
5. Negative leaver sentiments
Risk - Moderate
If any part of the consultation or communication process is dealt with badly, the impact on leavers sentiment may be negative. Even though these people are leaving the business, the risk is still moderate as any loosely defined processes, false starts or inconsistencies has a potential to come back and harm the organisation.
With more changes looming this year, there are positive steps HR professionals can take to support their organisation with planned restructuring programmes. Putting the building blocks together now ensures that line managers, the HR team and the business leaders are prepared to implement a smooth transitional process and that risks are kept to a minimum.
To learn more about how you can support your business and prepare for a large-scale restructuring programme you can download our guide here.