Restructuring process in NZ: how to plan and run a restructure properly

A restructure is any change to how work is organised that affects people's roles: merging teams, removing a management layer, creating new positions, changing reporting lines, moving work between sites, outsourcing a function or reducing headcount. It may or may not involve redundancies. Even a restructure that creates roles and makes nobody redundant still requires consultation if existing employees' positions change materially.

The legal frame is the same as for redundancy: a genuine business reason and a fair process, with the duty of good faith running through both. The redundancy process guide covers the individual steps in detail. This guide is about the bigger picture: planning the change, running consultation across a team, selecting fairly and keeping the business running.

This guide is general information, not legal advice. Take advice from an employment lawyer or HR adviser before you begin, and use the resources on the Employment New Zealand website.

Restructures go wrong when they start with an org chart. Start instead with the problem. What is the business trying to achieve or fix? Lower cost, faster decisions, a capability you do not have, less dependence on one person, a response to lost revenue? Write it down in one paragraph. If you cannot, you are not ready to consult.

Then gather the evidence: financials, volumes, customer changes, the capability gaps. This becomes the "reasons" section of the proposal and, if challenged later, the basis of your defence. It also disciplines the thinking. A surprising number of proposed restructures fall over at this stage because the numbers do not support them, which is far cheaper than discovering that in front of the Employment Relations Authority.

Only now design the new structure. Test it against the problem. Ask who will do the work that disappears from disestablished roles, whether new roles are realistic at the proposed salaries (our NZ salary guide is a useful check), and what happens if your best people choose to leave.

Before anything goes out, map the whole sequence: who hears what, in what order, on what day. A typical plan for an SME restructure looks like this:

1. Leadership alignment. Everyone who will be in the room agrees on the reasons, the proposal and the words used. Inconsistent messages from managers are a major source of grievance.
2. Individual meetings first. People whose roles are proposed to change or go should hear it privately, with the written proposal, before any group announcement. Nobody should learn their job is at risk in a team meeting.
3. Team briefing the same day. Explain the proposal to the wider team, including those not directly affected. Uncertainty spreads fast; silence spreads it faster.
4. Consultation period. One to four weeks depending on scale, with a clear closing date and a named person to send feedback to.
5. Feedback review and decision. Respond to every substantive point in writing.
6. Announce and implement. Confirm outcomes individually, then to the team, then start the new structure with a clear date.

Prepare a short set of written questions and answers for managers. Be honest about what is not yet decided, because in a genuine consultation a great deal is not.

Consultation is not a formality between decision and announcement. Legally and practically, it is the point at which you must still be open to changing your mind. The elements that matter:

• A genuine proposal. Written in proposal language, with reasons and supporting information.
• Enough information. If the reason is financial, share the relevant financial picture. Confidential detail can be summarised or shared under a confidentiality undertaking, but "trust us" is not consultation.
• Reasonable time. Enough for people to get advice and respond.
• A real chance to influence. Alternatives, counter-proposals and volunteers for redundancy should all be considered and answered.
• Support. Employees can bring a representative to meetings. Tell them so.
• A written record. Minutes of meetings, copies of feedback, and written responses to each point.

Managers often find consultation uncomfortable because it means sitting with uncertainty in front of their team. That discomfort is the process working.

When three people do similar work and the new structure has two positions, you need selection criteria, and they need to be shared in the proposal so people can comment on them before they are applied.

Good criteria are objective, relevant to the new role and evidence-based: specific skills and qualifications, demonstrable performance against documented measures, relevant experience. Poor criteria are subjective or unrelated: "attitude", "fit", length of service on its own, or anything that could be read as targeting an individual. Length of service can be a tie-breaker; it should not be the main criterion.

Where the new roles are materially different from the old ones, the fairest approach is often to invite affected staff to apply, with a structured interview and the same criteria for each. Where a new role is essentially the same as an existing one, the incumbent should generally be confirmed into it rather than made to compete.

Document how each criterion was scored for each person. This is the material a grievance will turn on.

The unspoken risk in every restructure is that the people you most want to keep read the situation, update their CVs and leave, often to a competitor down the road. In a market as connected as the Waikato, news of a restructure travels within days.

Protect against it deliberately:

• Speak to key people early and individually. Tell them how the change affects them and, where honest, that you want them in the new structure.
• Be specific about their future role, reporting line and development. Vague reassurance does not work.
• Do not let the consultation period drift. Every week of uncertainty raises the chance of losing someone.
• Watch the people who stay after redundancies. Survivor guilt and increased workload are real. Our staff retention strategies guide covers the practical side.

Sometimes a restructure reveals a gap that nobody inside can fill: a new Operations Manager role, a first Finance Manager, a commercial lead. That is a search, and the sooner it starts the shorter the gap. Our recruitment strategy and design service is built for exactly this stage, helping shape the new roles so they are realistic and fillable before you go to market.

How you treat the people who leave is watched by the people who stay, and by the market. Practical steps:

• Confirm decisions in person and in writing, with notice, final pay and support clearly set out.
• Allow time off to attend interviews during the notice period.
• Offer outplacement support. It signals the decision was about the role, reduces grievance risk and helps people land well. We deliver career transition and outplacement programmes for teams and individuals at all levels.
• Offer a reference and be clear about what it will say.
• Run exit interviews where people are willing; departing staff are often the most honest voices you will hear.

• Deciding first and consulting second. Predetermination is the most common finding against employers.
• Using restructure to manage performance. If the issue is one person's performance, that is a different process.
• Failing to consider redeployment or alternatives that staff propose.
• Selection criteria that appear after consultation closes, or that are not shared at all.
• Letting managers freelance the message.
• Announcing the new structure before it can actually start, then leaving people in limbo.
• Forgetting that the people who stay need attention too.

If you are planning a change and want a sounding board on the structure, the roles or the people side, talk to us before the proposal is written. It is much easier to help then.