HR as change agent

Organisational restructuring marks a period of change, transition and new anxieties for all those involved. Strong HR leadership is crucial in this process, with the function involved in deciding who to let go and motivating those who remain, as well as managing costs and any legal implications that may arise

Organisations undergo restructuring exercises for a variety of reasons and scales. While most aim to achieve better organisational performance, companies cannot achieve this objective by solely focusing on the ‘surgical’ removal of people from the organisation.

According to the Guidelines for Best Practice in Restructure and Redeployment by SHL Group, “the ‘aftercare’ of those who remain should be considered and planned for as part of the broader restructuring project”.

“It is not uncommon for those left behind to either feel ‘survivor’s guilt’ that their jobs are safe or a sense of ‘bereavement’ at the loss of colleagues,” says Maureen Ho, Senior Consultant – HR Practice, Talent2. “They may also experience the uncertainties of their own jobs being redesigned and potential cultural shift taking place in the organisation.

“It is therefore important to keep these employees engaged and aware of the restructured plan,” she adds.

Further to that, employees may find their career paths blocked, so careful talent and succession planning should be a critical underpin of any restructure. “In such times, HR plays a critical role as a ‘trusted advisor’ to maintain or uplift staff morale and retain and continually develop talent to support the organisation,” Ho explains.

Sony is no stranger to restructuring, having undergone numerous in the past and a much larger-scale change at the moment. Previously, Sony always restructured within its own individual business divisions, such as when it split with Ericsson in the mobile space. But the current restructuring involves exiting an entire business sector altogether. This was seen most recently when Sony successfully sold off its widely-known PC brand, Vaio, to Japan Industrial Partners.

“It is very important for any organisation to be effective and efficient. With cost pressures from the business environment and increased competition, it has become even more crucial to design a very effective organisation,” a Sony spokesperson tells HRM.

“When an organisation goes through the transformation exercise, it is a difficult time for all, especially for remaining employees who are expected to do more with less. The best approach in such a situation is to be as transparent as possible with them.”

Sony believes that while communication is important, this alone will not help. “We need to get everyone together to look at all the non-value added activities and use the ‘SCAMPER’ (see: boxout) method which has been very popular for some time,” the spokesperson explains.

“The after care of remaining employees needs to be well thought through and we need to give some time to them to adapt to the new working environment.”
 
Starring role: HR
HR can positively contribute to a strategic restructuring process, particularly if it is already well regarded as an advisor to the business. “They can play a key role in coaching and equipping line managers with the necessary skills to delivering the change message to their team,” says Ho.

Sony believes the HR team should always be on high alert when strategic restructuring is initiated. “They play a pivotal role in such instances by providing necessary information and preparing the business leaders to ensure that the transformation is managed well, with minimal impact on the employees,” the spokesperson explains.

A well-defined process is, also important during such an exercise as various members of the organisation need to be aligned before implementing the exercise.

A few factors that should be considered proactively include having a well-informed management team, and preparing effective communication with stakeholders (including government authorities, legal teams, the media, and employees).

According to Sony, all line managers should also be prepared for the exercise, with an emphasis on internal communication before, during and after the exercise. “HR should also look into managing the cost impact of the restructuring exercise on the organisation,” the Sony spokesperson says.
 
Defying the odds
During a restructuring exercise, HR teams are faced with challenges that include procedural, psychological, emotional and communicational issues.

Firstly, it is important to ensure that all steps in the process are followed. “The timelines are always tight (but) they must be followed at every single step,” says Sony. “If you do not have a well-defined process, implementing the restructuring process will be even more difficult, riddled with uncertainties and a high chance that something is skipped,” the spokesperson says.

“This can cost the company in terms of reputation and negative publicity.”

HR team members have to be present for every discussion during such exercises. They have to manage the psychological and emotional response from all affected employees.

According to Sony, it can be very difficult to keep emotions at bay. There is a chance an employee will feel that HR is not able to protect them and may question why they were selected for retrenchment.

“If the HR person gets emotionally involved in these discussions, it will be challenging to act professionally,” the spokesperson says. “So maintaining their own emotional control and managing the emotions of affected employees is needed.”

Indeed, HR may itself be impacted by organisational change. “Therefore, HR staff may be both the messenger and the recipient of bad news in times of change,” Ho adds.
 
Avoiding Broken Telephone Syndrome
It’s not just the message that is important – the way that message is communicated can also affect the success of a restructure. The HR team has to prepare business leaders to ensure that the news is delivered appropriately, and be there to support the entire communication process.

Still communication between management and ground staff is routinely lost or broken during such a time.

“Regular communication is critical, but challenging due to the confidential nature of a typical restructure,” says Ho. “Armed with a good overview of the changes, HR can articulate the reasons for change, and authentically stand behind the proposed changes.

“HR can also work with line managers in managing and playing an active role in the communication process to keep it open, transparent and consistent,” she adds.

Sony believes it is equally important for business leaders to be proactive in their communication with staff.

One effective way is to communicate with all staff (through a town hall meeting, for example) about the business situation and how the company plans to overcome the challenge. “There should also be communication with the staff again after the exercise is completed and this could be done in smaller groups at division or department level,” the spokesperson says.

Besides the challenge of effective communication, multinational companies are often faced with complex legal issues when undergoing restructuring.

“It is critical to recognise that employment law varies significantly from country to country, and employees tend to know their rights under local laws,” says Ho.

“Mobile employees may lose not only their jobs, but also their right to remain in the country – this has to also be taken into consideration.”

Ultimately, HR has to truly embody the ‘human’ aspect of its title. “It is imperative to look at the entire activity from a human standpoint,” the Sony spokesperson concludes.
 

Tips and tricks
Even the smallest restructure can be a complex and difficult exercise, says Maureen Ho, Senior Consultant – HR Practice, Talent2. She says HR should:
  • Fully understand the commercial rationale for change, be ready to stand in support of change, and be able to carry out consistent communication within the organisation
  • Ensure that line managers are well briefed and recognise their critical frontline role in a restructure
  • Be aware of the complex legal landscape and get the legal basics right from the start
  • Support and educate the business in putting in place an effective talent and succession plan as this is critical to staff motivation and retention beyond the restructure

 

SCAMPER

SCAMPER stands for:
S = Substitute
C = Combine
A = Adapt
M= Modify
P = Put to other use
E = Eliminate
R = Rearrange / Reduce
 
Source: Sony

 

HR’s restructuring checklist
 
ActivityDetails
Prepare, Prepare, Prepare
  • Prepare well in advance for the restructuring activity
  • Ensure a well-defined process is in place
  • Ensure the cost-versus-business impact is considered before the activity commences
  • Ensure all relevant teams are involved at the right time before conducting the exercise
  • Prepare managers of all affected employees
Communicate
  • Handle communication with care
  • Prepare statements for internal and external communication
  • Have a communication plan in place
Stakeholders
  • Inform stakeholders about the progress of the activity
  • Seek necessary approvals in good time
  • Inform external stakeholders like government authorities, as per guidelines
Involve the business
  • Involve business leaders in communicating with affected employees
Be Human
  • Look at the entire activity from a human standpoint
 
Source: Sony
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