Avoiding the pitfalls of restructuring in workforce planning

In my last post, we looked at evaluating the current state of your workforce strategy to better prepare for the future of work and the future of your business. Today, let’s discuss what can be done when the future of your workforce hangs in the balance.

Company restructures and reorganizations are not a new thing. They will be an all too familiar process for many — I've experienced at least eight in my career — and while restructuring can drive opportunity, it can also be the cause of considerable uncertainty for people. 

We see it all over LinkedIn and in the news: thousands being laid off here and there as an attempt to “focus,” “drive efficiency,” and secure “tighter control of the cost base.” Organizational restructuring will continue to be the norm for many organizations, and there are many practical reasons for this, especially in M&A and divestiture scenarios, but is it more a failure in strategic planning?

Surely, with robust plans, processes, and early performance visibility, businesses should have ample time to course correct or afford more organic control of the cost base rather than resorting to layoffs, which appears to be more a shot in the arm of adrenaline to save a struggling business. 

As you consider the gap analysis and document the actions needed to advance your organization from its current state to its future state, be mindful of the potential for restructuring. Try to identify why and when they could happen and look to have a plan in place to mitigate. The more successful strategic workforce plans would have significant executive support, and restructuring should only occur with alignment to the future state. However, this isn't always possible if leadership must take drastic action.

Many businesses see restructuring as a shortcut to improving profitability, but growing evidence suggests this can do more harm than good. When you take out a chunk of your workforce without dealing with the process inefficiency first, you put pressure on the rest of your people, creating organizational drag that can take a long time to resolve. It can lead to reputational damage when you fail to meet the same level of service your customers expect, and lingering long-term costs can significantly offset the short-term benefits in unexpected ways. 

It isn't easy to anticipate all the external factors that could impact business performance, which puts a particular emphasis on internal factors. Ensuring you have a robust view of your key performance indicators (KPIs), a clear reporting suite, and predictive capability will help you see the coming storm.

As you continue to build out your action plans, pay special attention to the phasing of activities and the scale of transformation — know when you're moving too fast or too slow and where business performance could undermine the plans you're putting in place. Good strategies will drive business performance and help reinforce the actions you take.  

As you develop your plans, assessing whether you possess the necessary skills to begin your journey is essential. The skills required to start may be outside your organization, and an updated recruitment and sourcing strategy may be necessary. You should also consider the extent of the cultural shift you seek and whether external viewpoints can aid in achieving the desired change.

Keep data at the heart of what you're doing. For every action, set KPIs that will allow you to assess the progress and success of your actions. Develop plans to correct course when needed. Understand which parts of your plan can be done incrementally through trial and error and where you require more time, effort, and support.  

Finally, ensure you bring people along for the ride. This is not just about managing senior stakeholders — your workforce and customers are critical to the success of your transformation. Large-scale redundancies should never be the outcome of an effective strategic workforce plan.