Restructuring a business can be one of the most effective ways to respond to changing commercial needs. It can also be one of the easiest employment processes to get wrong.
In New Zealand, employers don’t get into trouble simply because roles become redundant. They get into trouble because the restructuring process wasn’t fair.
Over the years, we’ve seen the same mistakes appear time and time again, made by well-meaning employers. Here are six of the most common restructuring mistakes, and how to avoid them.
1. Trying to make too many changes at once
One of the biggest restructuring mistakes employers make is trying to solve every organisational issue through a single restructuring process.
A proposal that changes reporting lines, creates new roles, removes existing positions, changes working hours, introduces new technology, moves locations and restructures departments all at the same time quickly becomes difficult for employees to understand, and difficult for employers to manage.
More importantly, it can become harder to demonstrate the genuine business reasons behind each proposed change.
Where practical, consider whether some changes should be introduced separately. A clear, focused proposal is easier for employees to engage with and easier to defend if your process is ever challenged.
2. Advertising new jobs before consultation has finished
This is a surprisingly common mistake.
Sometimes an employer has already decided what the new structure will look like and begins advertising vacancies before consultation has concluded.
The problem is that consultation is supposed to be genuine. Employees must have a real opportunity to influence the proposal before decisions are made. Employers often don’t realise that open vacancies should be part of the consultation itself and may represent redeployment opportunities.
Advertising positions too early can create the impression that the outcome has already been decided, undermining the integrity of the consultation process.
Wait until you’ve genuinely considered employee feedback and made final decisions before recruiting into new positions.
3. Using redundancy to remove a poor performer
Redundancy should never be used as an alternative to performance management.
If the real issue is that an employee isn’t performing, then the appropriate process is to address their performance—not redesign the organisation simply to remove them.
The Employment Relations Authority will often look beyond what an employer calls the process and examine the underlying reason for the decision.
If the role genuinely no longer needs to exist because of business changes, that’s one thing.
If the role still exists but you’re simply hoping a restructure will solve a people problem, you’re taking a significant legal risk. If you’ve got a poor performer on your hands, we can help with advice on managing poor performance.
4. Rushing the consultation process
Many employers understandably want to complete a restructuring process as quickly as possible.
Unfortunately, speed is one of the biggest contributors to poor decision-making.
Employees need enough information to understand the proposal, sufficient time to consider it, and a genuine opportunity to provide meaningful feedback.
Likewise, employers need enough time to properly review that feedback before making final decisions.
A rushed process often leads to procedural mistakes that could have been avoided with just a little more planning.
Remember, consultation isn’t simply a box to tick—it’s an opportunity to improve your proposal and demonstrate procedural fairness.
5. Forgetting about redeployment
Before confirming a redundancy, employers should always consider whether there are suitable alternative roles available within the business.
That doesn’t mean creating a job that doesn’t exist or displacing another employee. However, where suitable vacancies exist, they should be considered before employment is terminated.
Redeployment is often overlooked, particularly in businesses moving quickly through organisational change.
Taking the time to assess alternative employment opportunities not only helps meet your legal obligations but can also retain valuable knowledge and experience within the organisation.
6. Starting with the person instead of the business
Perhaps the most fundamental mistake is beginning with the individual you want to remove rather than the business problem you’re trying to solve.
A lawful restructuring process starts with questions like:
- What business issue are we trying to address?
- Why is change needed?
- What organisational structure best supports the future of the business?
Only after those questions have been answered should you consider which positions may be affected.
When employers begin with a particular employee in mind, it’s much easier for the process to appear predetermined—even if genuine business reasons exist.
Keeping your focus on the business rationale helps ensure decisions remain objective, defensible and fair. In fact, asking about the business rationale is the first thing we will discuss with you when we’re providing restructuring and redundancy support and advice.
7. Providing too little information during consultation
One of the fundamental principles of a fair restructuring process is that employees must have enough information to provide meaningful feedback on the proposal.
That doesn’t mean sharing every internal document or opening the company’s books. It does mean providing enough information for employees to understand what is changing, why the change is being proposed, and how the proposal affects their role.
This becomes particularly important when the reason for the restructure is to reduce costs.
Employers sometimes say, “We need to save money,” but provide little or no evidence to support that statement. Employees are then expected to comment on a proposal without understanding the financial problem the business is trying to solve.
The level of financial information you need to provide will depend on the circumstances. If your proposal is based on the business needing to make significant cost savings, employees should generally receive enough financial information to understand that rationale and to offer informed alternatives or suggestions. That doesn’t necessarily mean providing full financial statements, but it may mean sharing budgets, revenue trends, financial summaries, or other information that explains why the proposed savings are needed.
The key question to ask yourself is:
“Have we given employees enough information to make meaningful comments on our proposal?”
If the answer is no, your consultation process may be vulnerable to challenge, regardless of how well the rest of the process is managed.
Final thoughts
Most restructuring problems don’t arise because employers have bad intentions. They happen because businesses are trying to move quickly, solve several issues at once, or aren’t familiar with the legal requirements.
A well-planned restructuring process should achieve two objectives: it should meet the commercial needs of the business, and it should be fair to the employees affected.
Taking the time to plan carefully, consult genuinely and document your decision-making can significantly reduce the risk of legal challenge.
If you’re planning a restructuring or redundancy process, getting advice early is almost always easier, and less expensive, than trying to fix problems later.
