Christmas Restructures

Are you thinking about a restructure in the new year?

With an eye on the year-end, we’re noticing a seasonal bump in the volume of potential restructures being mooted. Driven in part by the lingering echoes of the global economic slowdown which are expected to reverberate through 2024, and exacerbated by geopolitical tensions and weather-related trade disruptions, the future remains uncertain for many New Zealand businesses.

As a business owner or leader, you might spend some time over the Christmas and New Year break reflecting on the year that was and wondering, worrying, and planning for the year ahead. With the complexities and risks for employers involved in these types of decisions, if a restructuring is something you’re considering, here are some of the things you’ll want to be thinking about:

What’s the problem to be solved?

You must have a genuine commercial reason to undertake a restructuring process. A trap for employers here is that a restructure must be about roles and positions, not about people, which is why using a restructure to rid yourself of a troublesome employee is high risk. 

The most obvious genuine commercial reason is financial, but it’s not the only one.  It could be that you are looking at new ways of working, owners are becoming more hands-on in the business, new markets, products or services requiring different services as examples. 

Thinking carefully about the reasons for a restructure is a crucial first step.  Should a restructure be challenged down the track, the genuine reason behind it will be looked at, and you will be required to show that you had a genuine reason and that it justified the restructure.

Who is impacted by the change?

Restructures must follow a robust process, and this essentially involves consulting with employees who could be affected by what you are proposing.

This is critical and must be done carefully and genuinely, despite the circumstances often being difficult. For the potentially affected staff members, it may come as a shock, and they will need time to catch up to where you are in the process.  Give them that time. Remember, when you as the employer are at the point where you are presenting your proposal to restructure to staff, you will have been working on it and will be well acquainted with it. 

Once your proposal is presented, you must give affected staff proper opportunity to consider it and give their feedback.  Once received, you must genuinely consider all feedback before deciding on the way forward.  The feedback may change your mind, or it may not. 

If a decision is made that results in roles being declared redundant or substantially changed you must act in accordance with the terms of the employment agreement and you must also consider if there are any opportunities to redeploy that employee.   You have heightened obligations at this point to do what you can to mitigate redundancies. 

What does your timeline look like?

Christmas is an emotive time of year, and while announcing changes at this point in the year can cause unease, it’s also pertinent to engage with your team and bring them in on potential changes early on in the process. Think about whether a longer close down period would afford an opportunity for reflection and consideration.

Zoe Nutten, CPO of WSP Canada, talks about the importance of change 'with input and reflection', and notes that “When you are bringing new ideas forward and you're challenging different perspectives, you want to make sure that it's being seen as a value-add and not just because it's different and new — but it's really ‘How does it fit?’ And so you start at different points of how you can have those conversations because your reference point is different than perhaps some of the others that you're speaking with.”

Having a well-thought-out and documented rationale for the restructure, that follows a robust and timely process, is an absolutely must.

If you are thinking about making changes in your business, give us a call and we will support you right the way through.