Like the Grim Reaper in folklore, team restructuring is a dreaded recurring character in corporations, universities, governments, and other organizations and institutions. It entails reorganizing existing team structures for the supposed good of an enterprise, such as to reduce costs, gain efficiencies, or achieve closer team alignment with business units or constituencies being supported.

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Team restructuring may involve eliminating, rescoping, merging, or adding positions, and/or modifying reporting lines within organizational hierarchies. It may be prompted by new leaders with different visions and philosophies, financial strain that warrants cost cutting, M&A activity involving the addition or subtraction of personnel, a perception that the status quo is not working, political pressures, or other reasons.

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At least in its immediate aftermath, restructuring commonly anoints both winners and losers. Winners typically include colleagues who are promoted, receive greater responsibility or recognition, or otherwise expect to enjoy staying power post restructuring. Losers include those who are terminated, demoted, or otherwise rendered more job-insecure by the changes.

 

Sometimes overlooked are restructuring’s potential insidious, lasting effects on an organization, including the destabilizing of teams, toxifying of team culture, and loss of human capital and talents that may be in limited supply or not readily replaced.

 

Downstream impacts can reach far and wide outside the restructured organization. The second Trump administration’s efforts to significantly reduce the size of the federal workforce highlight this phenomenon on a large scale.

 

Although team restructuring tends to destroy in some respects in hopes of creating a more prosperous future, there are strategic and humane ways in which to approach it.

 

C-suite executives, organizational leaders, and other relevant decision-makers can leverage the following tips to increase restructuring’s benefits and reduce its human costs and disruptions.

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Tip #1: Think Carefully and Creatively Before You Make Final Decisions

 

A typical restructuring scenario involves two types of decision-makers, whom we’ll call “architects” and “arbiters.” The architects are leaders who make recommendations on how to restructure teams. The arbiters are senior leaders who ratify or veto those recommendations.

 

Getting team restructuring wrong may come at a high net price to your organization, even if it checks positive boxes such as near-term cost savings. Given the high stakes, arbiters should take care not to fall into the trap of ivory tower decision-making.

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Arbiters should take a holistic, collaborative, and hands-on approach to guide architects and ensure soundness of their recommendations. This includes asking, and vetting answers to, questions such as:

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1. Why is restructuring needed and what are its specific objectives?

2. What specific near- and long-term positive effects are likely to result from the recommended restructuring plan, and how likely are they to result? Consider aspects such as business and human outcomes, strategies, operations, service delivery, monetary cost, team culture, team stability and retention, internal and external relationships, and knowledge, expertise, and institutional memory.

3. What specific near- and long-term negative effects are likely to result, and how likely are they to result? Consider the above aspects.

4. Do the positive effects outweigh the negative effects over a reasonable period of time? By how much?

5. For personnel you propose to terminate from the organization, what knowledge and talents do they possess? Why are these not needed or valuable? Who else on the team possesses them?

6. How will each terminated person’s workload be distributed among remaining employees? With expanded responsibilities, can such employees continue to perform at a high level without burning out?

7. For personnel you propose to promote to leadership or enhanced leadership positions, what beyond tactical talent do they bring to the table that justifies their promotion? How have they previously performed as leaders?

8. For personnel you propose to demote, what is your rationale and how will such demotion impact their ongoing loyalty to the enterprise?

9. Overall, what effects on team morale and stability are foreseeable?

10. What new headcount do you plan to request in the next year? What areas of need currently are not being handled at all or sufficiently by the department? Why can’t the person or persons you propose to terminate or demote take on those duties, such as by creating new or modified roles?

11. What, if any, less drastic alternatives to your recommended plan have you considered? What are their positives and negatives, and why have you discounted these alternatives?

12. To what extent did you consult with human resources (HR) colleagues for advice on your plan? What inputs and feedback did they provide?

 

The arbiters’ vetting process should entail gathering perspectives from multiple persons in the organizational ecosystem, not just from the architects or others who may have limited line of sight to the reality on the ground.

 

Critically, the arbiters should be cognizant of the strengths and limitations of the architects. If an architect is a strong tactician but a weak, scarcity-minded leader, the arbiter should apply stricter scrutiny to the architect’s recommendations and underlying rationale. Indeed, such architects are more likely to take a skewed, scarcity-driven approach and formulate plans without giving due consideration to the full range of benefits, costs, and alternatives.

 

Absent meaningful due diligence, decision-makers may pursue low-hanging restructuring options that on their face seem sensible, but actually are suboptimal and counterproductive to the interests of the enterprise.

 

Tip #2: Act Humanely

 

The human toll that may accompany team restructuring can be significant, extending to individuals and their families and having persistent ripple effects. Loss of livelihood, lapse of insurance coverage, prolonged unemployment, fear, depression, and feelings of shame, confusion, loss of identity or dignity, or loss of a sense of belonging are very real and profound effects in many cases.

 

Designated decision-makers often have discretion on how to treat terminated employees. For example, in recognition of the anticipated impacts and an employee’s past service, enterprises can offer any of a number of benefits. These include severance payments, full or partial reimbursement of health insurance premiums for a limited period, counseling services, or job placement services. The monetary cost and administrative burden to provide some or all these benefits may be relatively low from the enterprise’s standpoint, yet the value of helping a former employee land on solid footing may be substantial.

 

Similarly, for a demoted employee or an employee who has been reassigned to a new manager, decision-makers should proactively schedule one-on-one candid discussions to explain the organization’s rationale for the change, acknowledge the employee’s concerns, articulate future career progression opportunities available to the employee, and convey a genuine commitment to helping the employee succeed.

 

Many organizations espouse noble core values that include compassionately caring for people. An organization that truly believes in these values should treat the casualties of its restructuring decisions accordingly.

 

Tip #3: Gather Transition Information and Insights

 

Stories of how enterprises went about terminating employees are legion. News travels fast, especially when loyal employees feel blindsided, demeaned, or betrayed by a seemingly cold, callous corporate machine and its agents of misery—often the very same leaders whom they respected, liked, and worked tirelessly to support.

 

We’ve all heard about an employee being called to a conference room, greeted by a manager and an HR representative, summarily terminated, and then walked out of the building by security guards. In the current hybrid and remote workplace, an employee may receive an unexpected video meeting invitation from one’s manager—such as with the vague subject “Touch Base” or none at all—and, upon connecting to the meeting, learn that he or she is being terminated with immediate effect.

 

Just because many enterprises take such a tack doesn’t mean that it’s the right way in every case of team restructuring.

 

Decision-makers should attempt to pursue a collaborative approach with an employee whom the enterprise intends to terminate, rather than follow the demoralizing path of least resistance. This can involve offering a wind-down period of appropriate duration, rather than terminating the employee on the spot.

 

Additionally, decision-makers should ask the employee to share inputs to facilitate as smooth a transition as possible, including status information, strategic background, and key documents for projects, disputes, initiatives, and customer, service provider, or contractor relationships. They also should seek feedback on the performance of the employee’s direct reports since their most recent formal evaluation, to ensure as fair and informed an evaluation process at upcoming review milestones.

 

Effective leaders also seek and value the employee’s perspectives on the organization, department operations, team culture, and other non-tactical matters. Such insights can inform good-faith efforts to improve the work environment for the sake of those who survive the restructuring process.

 

Not attempting to pursue any meaningful dialogue with the employee may impede an expeditious internal transition, as well as telegraph disregard for the employee’s past contributions and commitment to the enterprise.

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Tip #4: Prepare and Implement a Go-Forward Plan

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To reach a new steady state as quickly as possible, architects of team restructuring should craft a comprehensive, detailed transition plan and refine it in consultation with the arbiters.

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The plan should address aspects such as the following:

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1. Communication: What information about the restructuring will be communicated to persons in the organization, when and how will it be communicated, and who are the recipients? Common recipient groups include close team members, the department at large, other internal colleagues, and relevant external parties. Messages should be tailored to the applicable audience. In-person or virtual meetings may be advisable for team members, while written communications may be appropriate for others.

2. General roles and responsibilities: Going forward, what changes in team member roles and responsibilities are being implemented?

3. Active projects: What is the new division of labor in projects in progress? What handoffs or triage are needed so that service levels are not jeopardized?

4. Other operational changes: What other changes are being effected with regard to departmental policies, processes, procedures, approval matrices, and the like?

5. Follow-ups: What transition meetings will be held, and how often, to monitor departmental performance and effectiveness and make necessary modifications after restructuring?

 

Granularity of planning and consistent follow-through by leaders are key components of an effective plan.

 

The absence of a realistic, in-depth plan is a recipe for potential organizational chaos. Team members stretched by current demands may be pushed to the brink when abruptly tasked with additional duties. When new roles are created by the restructuring effort, the failure by leadership to allocate necessary resources to recruitment also may strain and frustrate the team. The resulting stress and disillusionment may snowball into widespread upheaval, underperformance, and resignations.

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Transparent communication is another essential component of an effective transition plan.

 

Leaders who take an avoidant, delayed, or haphazard approach to communicating and dialoguing with affected team members about the occurrence and implications of restructuring enable heightened stress and confusion to set in. As such, the transition may become even more fragile and fraught. In contrast, erring on the side of communication can help to keep the team closer together during rough days ahead.

 

Tip #5: Facilitate Pathways for Interpersonal Connection

 

“The best way to terminate an employee is immediately.” “A clean break will allow the team to get back to work quickly.” “Terminated employees are unpredictable, volatile, and dangerous.” “We feel badly but don’t know what to say.” “It’s just business.”

 

These are some of the ways in which architects, arbiters, and organizations rationalize the “here today, gone tomorrow” paradigm of team restructuring.

 

In reality, there never is a clean break: Abruptly and unexpectedly terminating an employee sets in motion dynamics similar to those accompanying the sudden death of a friend or family member or the loss of a significant relationship.

 

Shock, sadness, confusion, anger, lack of closure, and other negative emotions may be felt by both the outgoing employee and those left behind.

 

The remaining employees also may infer from the enterprise’s actions or inaction that engaging with the terminated employee on a personal level would be frowned upon or met with reprisals. As a result, feelings of fear, awkwardness, and uncertainty may dominate, chilling attempts to connect.

 

In the final analysis, the remaining employees may treat the terminated employee as essentially radioactive. This makes that person feel even more isolated.

 

Your enterprise can do better. A restructuring plan should expressly contemplate and encourage the bidding of farewells, the extending of expressions of gratitude, and the provision of personal contact information if the terminated employee wishes to share it. Physical cards or e-cards can be signed by remaining team members and sent to the terminated employee. Other avenues of authentic connection can be facilitated and welcomed.

 

A kind, affirming approach for saying goodbye to valued colleagues is beneficial for all concerned. It can help mitigate negative effects of restructuring and acknowledges that workplaces ultimately are about people, relationships, and collaboration.

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How You Restructure Is a Measure of Leadership

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Team restructuring is a highly consequential undertaking impacting the lives and well-being of individuals, teams, and organizations. Leaders who treat it as yet another tactical project risk sowing unnecessary pain and destruction and destabilizing their organizations in the process. To increase the benefits of restructuring and reduce its costs, enlightened leaders and organizations should take a comprehensive, methodical, and people-centered approach consistent with the above tips.