Practical advice on how to restructure your business

by | Sep 6, 2022 | Redundancy & Restructuring

As a business owner restructuring and redundancies are probably the hardest thing you will ever have to do.  And, as an HR consultant who has done literally thousands of restructures, I am often asked how I cope with it mentally.  I’m not going to pretend it’s easy, it’s not, but my key focus is always on those jobs (and families) I am saving by ensuring the business can remain viable.

DIY with Caution
The good news is that all the documentation you need to go through this process is available in the document library, and I am also on hand to help you.  NB Redundancy is the most litigious point of employment law and I would therefore recommend that you contact me on 021 741 544 at the very least for a peer review

Building your business case
When considering restricting your business, you first need to present your business case to justify the changes you are proposing.  Some key pointers in this process are:

  1. Demonstrate actions already taken to prevent the need to move to redundancy (see last month’s newsletter)
  2. State what you are trying to achieve, and why
  3. State, why you believe the proposals made, are going to achieve the desired outcomes

Double check the case presented justifies the proposal i.e. if you are proposing to disestablish X position, have you actually presented the reasons why?

What are you trying to achieve?

  1. Cutting costs – is probably the most common base reason, but you need to further answer the question of why X position instead of Y position.  For example, you may be proposing to disestablish the Accounts person, but why are you doing that instead of the Receptionist?  It may be that the accounts’ function has been automated, and the residual work can be outsourced for a lower cost.  Whatever the reason, make sure you state it clearly
  2. Changing the business focus – The way we do business has changed radically over the last 2 years which may mean that you need to adjust how you are doing business.  For example, previously you may have worked mainly for high-spend corporate clients who required account management style service.  But now the swing is towards lower spend, but higher volume small and private clients, so you need to focus on a customer service type model
  3. Responding to technology changes – automation and streamlining processes takes time, but are you now at the point that you now need to realise the cost savings in terms of personnel that investing in the automation afforded you

Selection for Redundancy
If someone is in a unique position within the company (i.e. no one else does a significantly similar role e.g. receptionist) then you can ring-fence that role as being the one proposed as disestablished.   However, if you are proposing that 1 customer service out of 4 is disestablished, you need to consult about how you will select which one of the 4 is redundant.

Selection criteria will generally be based on a set of criteria (e.g. length of service, Performance, range of skills etc – see Document library for criteria Matrix), and then with a brief 15-minute interview to go over the scores and give them an opportunity to present their case about why they should be retained.

Remember, the role is disestablished, the person who is occupying that role is made redundant as a result of the disestablishment.  This is important as, even though the (e.g.) Receptionist may have the skills to do Customer Service, you can’t “bump” a Customer Service person in favour of the Receptionist.

Free Webinar
This months free webinar is on Restructuring and Redundancy, and you can register here, its on at 10am on Friday 9th September.

Call for help
Redundancy is the most litigious point of employment law and I would therefore recommend that you contact me on 021 741 544, at the very least for a peer review before you issue any letters


Lisa Mackay
HRtoolkit Founder
021 741 544

Contact Us

957 Paihia Road, Opua
Northland, 0282

0800 HRtoolkit