5 Tips For Properly Managing Organizational Restructuring Through Layoffs

Eric Mochnacz
August 2, 2022

If you’re active on LinkedIn or a regular consumer of business news, daily you’re reading about a number of companies who are undergoing organizational restructuring, often leading to layoffs.  Although it’s unfortunate, sometimes reductions in force are a business necessity.  The key to successfully managing an organizational restructuring (which results in layoffs) is how you deliver the message and having the right HR support.  In this blog, we provide tips on how to properly manage restructuring and effective and empathetic approaches to delivering incredibly difficult messages.

1. Be Open and Honest

When a company decides to undergo a restructuring that will result in employee terminations, it is critical the business has a clear rationale, or business case, guiding their decision.  It does require open and honest self-reflection about the current state of the business and where it hopes to go and be successful, even after the restructuring has occurred.   It is essential leadership define the criteria by which they will be evaluating the business and making employment decisions.  It may be straightforward, in that you are eliminating a certain business function because it’s no longer profitable or aligned with business goals.  If the situation is more complex, in that market conditions have you fearful about the viability of the business, your decisions need to be driven by the business case.  This ensures if you are ever challenged, you are confident that your decision was even-handed, factual, and driven by the established business case for employment separation.  

Business leaders may also have a difficult time making these critical decisions, especially since their input will impact their team and individuals with whom they work, and restructuring may also require they work more with fewer resources.  Whoever is guiding the restructuring, whether it be HR or the CEO (in partnership with HR), needs to create an environment where transparency is accepted, because discussions about reductions in force require directness, openness, and honesty.  In the context of the established business case, trusted leaders need to frankly evaluate individuals against that criteria and make critical decisions about the future of their team and the business.  

Once you’ve finalized your decisions, it’s time to map out an effective communication strategy in which you will inform the affected employees about the company’s decision.

2. Communicate Effectively

We’ve already established layoff communications aren’t easy, but are necessary.  How you communicate the information makes all the difference.  It doesn’t benefit the business, or the impacted employees, to go into employee separation meetings without a structured communication plan.  Having a thorough, highly detailed communication plan ensures the manager relays the critical information, the terminated employee has all the information they need, and the conversation stays on track and doesn’t devolve.  

When we partner with clients on organizational restructuring which results in a reduction in force, we work closely with them to develop highly detailed schedules, scripts, and Frequently Asked Questions to ensure effective communication.  We require that a leader in the organization deliver the message verbally to the impacted employee, and we, as their HR resource, are part of the meeting to offer support to both parties.  We make sure the leader is properly trained in message delivery and we then step in to outline the terms of separation and keep the meeting focused and on schedule.  Although a discussion like this has the potential to become emotional, HR serves as the anchor to keep the conversation focused and direct.  

The goal of the termination conversation is to have the affected employee leave knowing they are no longer employed and what they are entitled to as a result of the company’s decision.

3. Show  Empathy

Even with the decision being fact-based and a business necessity, it still requires the impacted employee to be treated with empathy.  Regardless of how difficult it is for the leader and HR to communicate the message, it’s ten times more difficult for the employee to hear it.  Although you want to keep the conversation brief (between 10 and 15 minutes), you also want to create the space for the employee to react.  It is completely reasonable for a newly terminated employee to react with anger, frustration, or other extreme emotions.  Demonstrating empathy means you are able to provide the employee the opportunity to work through those emotions, ask questions, and even share some direct negative feedback in the moment.  Empathy to other impacted employees also means you hear an employee’s individual concerns, direct the conversation back to its purpose, and make yourself available after the call or meeting to discuss further with the individual employee.  

An additional way a company can show empathy is how they evaluate separation packages.  Often, the business case for organizational restructuring and layoffs is purely financial.  The business cannot remain profitable if it maintains the current headcount.  So, you need to consider what your severance philosophy will be.  The question we often ask businesses is “How can you support the employee after they’ve separated, and what can the business afford?”  Empathy can be demonstrated through a generous severance package, benefits continuation (if the plan allows), or payment of COBRA coverage.  The company can also offer outplacement services to help the affected employees line up their next position.  Most recently, I read about a company that is purchasing a new laptop for all their terminated employees, since they were provided a company computer at the start of employment. 

4. Offer Support and Encouragement

In the evaluation of the schedule and scripts for employee transition conversations, we build them out with support and encouragement in mind.  For example, our FAQs answer any questions an employee may have about their rights and responsibilities upon separation.  We’ve put ourselves in their shoes to make sure they have clear direction once the meeting is over.  Additionally, we always make sure that the employee knows where they can direct any questions and concerns once they’ve left. In the moment, they are still processing a difficult message, and will most likely have questions once they’ve been able to process the news.  It’s important they know they have an internal resource who can offer ongoing support and guidance.  This is an extension of the empathetic treatment your company is actively choosing to demonstrate towards your employee, even when the employment relationship has ended.  

Additionally, you need to acknowledge that the retained workforce will be impacted by the organizational restructuring.  First, you will want to hold a meeting with them once all the terminations have been completed to inform them of the decisions that were made.  They will be concerned that this is the start of a series of layoffs, and it’s your responsibility to address and assuage their concerns.  And since you were clear in your business reason when you decided to take this course of action, that same openness and honesty should be extended to your team members who are still with the company.  Clearly outline and explain how the company’s organizational restructuring will impact them and what they can expect in the coming weeks and months.

5. Work With a Seasoned HR Consultant

When it comes time to lay off portions of your workforce, you want to do it correctly and mitigate risk.  You also don’t want to be the company that gets dragged across LinkedIn for handling a reduction of force poorly.  We’ve all read about situations where people didn’t know they were laid off until they received their severance payment in their final paycheck or were kicked out in the middle of virtual meetings with clients.  I can’t help but think that those situations could’ve been handled better had they had a seasoned HR consultant guiding the decision and developing communication plans and rhythms.  Additionally, we work closely with your employment counsel – or connect you to one of our legal partners – to guarantee legal compliance as you navigate this complex process.

Are you looking toward the future of your business and aren’t sure how to start an organizational transformation through restructuring?  Do you need guidance in mapping out a reduction in force?  Are you not sure how to deliver the message directly, but with empathy?  Do you need to skill up your leaders and managers in guiding the employment separation conversation?  Red Clover consultants have direct experience in helping small and medium-sized businesses manage organizational restructuring and the subsequent impact on the organization and its employees.  Not sure how to begin?  Reach out!

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