TQ Restructuring

By Julika Benz

Restructuring processes present companies with a variety of challenges. Internal communi­cations should not be under­estimated in the vital role they play here. They must address concerns, present a com­pre­hensible vision of the future and encourage employees to actively participate – the objective being to motivate and retain the work­force despite insecurity and fears of job cuts.

Restructuring as a complex communi­cations task

From a communi­cations perspective, restructuring is always a mammoth task. With a large number of internal and external stake­holders, each with their specific demands and needs, a limiting legal frame­work, and in many cases, a heightened state of emotion, the situation is complex and there are many factors to consider.

The success of a re­struc­turing process depends on both the employees and the managers. They must support the re­struc­turing measures and keep the business running. And it requires talented people who will implement the vision of the future once the re­struc­turing is complete. But how can companies meet these needs when leaders and employees “quietly quit” – and in the worst case, even leave the company? Studies show that a workforce reduction of just 1% leads to a 30% increase in staff leaving of their own volition in the following year. Such a scenario puts the success of a restructuring process at risk.

Special attention must be paid to young employees. For them, it may be their first experience with drastic measures. And we are relying on their generation to make the company of tomorrow innovative and competitive.

Communications help

When internal communi­cations activities are used during the re­struc­turing process, the emphasis should be pre­dominantly on the affected employees – but not just those whose jobs are to be cut. It is often under­estimated how strongly the re­struc­turing measures also impact employees who are not directly affected by changes. There are many reasons why employees lose their commit­ment to their employer:

• Insecurity: Employees ask them­selves to what extent the measures affect them and their own jobs.
• Survivor syndrome: If their co-workers are made redundant, employees develop a guilty conscience and feel that they do not deserve their jobs.
• Doubts about the company: Employees start to question the future viability and attractive­ness of their employer.

In addition, leaders are often negatively affected. On top of the day-to-day business and project work involved in re­struc­turing, the emotional strain of over­seeing redundancies often leads to extreme pressure.

Keeping in mind the ongoing skills shortage, successful internal communi­cations must also be able to answer the question of how talent can be persuaded to stay in a company that has already run into difficulties or is about to do so. Three aspects need to be taken into account in this context:

Offer an attractive vision of the future

Given the clearly defined KPIs that convert the principle of “reduce costs – increase performance” into specific measures, communi­cations around re­struc­turing can quickly get technocratic and overly fixated on describing the problem. However, the questions should be “What happens after­wards?”, “What does the ‘after­wards’ have to offer employees?”, and “What are the long-term benefits for the employees?” Buzzword bingo should be avoided at all costs, as “flexibility”, “competitive­ness” and the like are notoriously clichéd concepts that may arouse suspicion. Instead, specific benefits are what need to be communi­cated. Offshoring may bring inter­national career prospects, re­organisation helps to over­come silos, digitalisation accompanying the re­struc­turing process improves efficiency and makes work easier etc.

Penetrate the “paralysis level”

With a credible, specific, and cliché-free vision of the future in place, the company can then start to individually empower leaders at all levels. In this context, “individually” means that this should not, under any circumstances, rely on the autonomous functioning of the organi­sational cascade. While the first tier of manage­ment often keeps their finger on the pulse of the strategic manoeuvre and are thus able to respond quickly, the levels below find it more difficult to get their messages across. The result is what has often been called the “paralysis level”, the middle and lower manage­ment, who lack sufficient information and consequently slow down change processes or even cause them to fail. However, these leaders on the “frontline” are particularly important. They are the employees’ first point of contact for questions, concerns, and fears. They know how the business is going and are familiar with any skeletons in the closet. Communi­cations and empower­ment measures should thus be tailored to this management level. This includes providing them with advance information and preparing them emotionally and conceptually for discussions and questions. It is essential to raise aware­ness of the risk of a brain drain. If the leaders are visible and accessible, they can also credibly advocate for the future of the company, and address employees’ concerns and requests. This empowerment costs time and money. All the more reason not to wait until the target structure is in place before considering appropriate measures.

Help employees overcome the feeling of power­less­ness

Those employees who stay on after re­struc­turing must continue to do their jobs – often with smaller teams and with reduced resources. Strictly top-down attempts to enforce necessary changes to organisation and processes are seldom success­ful. Giving employees the opportunity to have an active part in building new processes and structures is much more rewarding. This can help counter­act employees’ perceptions of power­less­ness in the face of restructuring. In this case, communi­cations must encourage the employees to engage with the questions raised by the process of re­struc­turing. And they must offer them platforms that serve as a forum for discussing these issues. The scope of employee participation must be considered in specific terms – for example, by involving representatives of the work­force during the analysis phase, when the measures are being implemented, or when the target operating model is being designed.

Addressing the fears and needs of the employees who are to support the re­struc­turing process and implement it success­fully, is an essential task of internal communi­cations. Regular internal communi­cations about the progress of the re­struc­turing process are key, as is highlighting personal career prospects and opportunities to actively shape and participate in the measures. Neglecting this may eventually back­fire, even when it seems as if the sacrifices and difficulties of re­struc­turing have long since been overcome.

A previous version of this article was published in November 2023 in Restructuring Business, edition 04_2023, you can download the article in German here.

Photo: iStock.com/travenian