Restructuring? 6 steps leaders must take to protect culture and retain talent

People often comment on how well or poorly restructuring was managed. The individuals who are “survivors” of restructuring, the ones who stay, are sometimes just as affected as those who leave, writes Dane Hudson.

The most challenging and sensitive communication of all is restructuring the organisation and terminating staff. As a CEO or leader, you must develop this skill because the organisation will scrutinise how you manage restructuring, assessing whether it adhered to company values, and whether the process showed respect and fairness to the individuals who were terminated. The way you communicate during this process speaks volumes about your leadership.

A badly handled process creates a demotivated, fearful culture. The people you want to stay might choose to leave if they feel the process was mishandled. Those survivors are often your strongest employees, and it’s crucial that they feel respected and secure in their roles. So, how do you do this well?

1. Start with a target outcome for your restructuring

Is it a reduction in your expenses to increase your cash runway? Is it the removal of a team that has been working on an unsuccessful product and division? Is it to reduce overlapping staff following a merger?

You must have a clear goal and remember the phrase, ‘Hope for the best but plan for the worst’. Be aggressive in your first round of cost cutting to reduce the need to do it again.

2. Know the details and be involved in planning the restructuring

This is not a task to delegate. Consider the following questions:

• What roles do you plan to remove and why?
• Do you have some high-calibre team members in those roles that you need to keep? Can you move them to another area?
• Are there poor performers who are not in “redundant roles” you could remove?
• How will the terminations be implemented? When will this occur? Who will terminate the staff?
• Do the team making the terminations understand exactly what to say and the logistics of the day? Have they received speaking notes and a Q&A?
• What does the future of the organisation look like, and why is it better than the current organisation?
• Is your post-restructure communication plan completed, and do all the leadership team members understand their roles in post-restructure communications?
• Does the communication cover internal and external stakeholders?

3. Be clear on the package

When you’re conducting a termination meeting with an individual, this is critical: Remember the acronym WIIFM – What’s in it for me?

This is all that they are thinking about. They may be in shock, but their focus will quickly shift to their compensation. Spend limited time explaining why this restructuring is happening because the individual rarely cares. What they care about is the severance package.

Keep the meeting brief, professional, and respectful. Ideally, the employee should sign a release form to avoid future legal complications.

Be sure to maintain a respectful tone throughout. They may get angry and emotional; do not lose your calmness.

4. Try to conduct all terminations on the same day

The longer the process drags on, the more uncertainty it creates among the team.

Late in the week, such as on a Friday, is generally the best day as it provides some space for the team to understand and, hopefully, accept the change.

Make sure your leadership team knows the situation and has simple answers to all questions, as their teams will interact with them after the terminations and will want to understand more details. They will want to know in particular if their jobs are still at risk.

5. Once the terminations are done, gather the survivors

This is your opportunity to energise those who are staying. Don’t bring the terminated employees into the room for this. Instead, focus on rebuilding momentum and reaffirming your faith in the organisation’s future.

Tell the team you are sad that this has occurred. Show empathy for the departed colleagues. However, confirm that you’re confident in the business going forward, while acknowledging there is still a lot to do. Your job is to put the organisation back together as one team.

6. Following the all-hands meeting, turn your attention to focus on your most important people, your key leaders and high-potential staff

These are the people you must keep in the business. Too often, talented people leave soon after a restructure because they do not have faith in the leader, nor in the future of the business. Whereas in reality, post-restructure is the perfect time for young leaders to prove themselves and achieve significant promotions.

As the leader, invest your time in meeting with the high-potential team members to inspire them with the future and their opportunities in the business.

Know that an organisation’s culture can bounce back quickly after restructuring if all the leaders conduct it fairly and respectfully, and if the organisation trusts its leaders. This is difficult. This is one of the hardest things that I’ve ever had to do in my career, and sadly, I’ve had to do it at least 20 times. So you need to be good at this.

Dane Hudson is the author of “Discipline beats vision: How to be the leader your company needs – starting Monday”.

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