The global economy has recently been affected by several factors such as the war in Ukraine, rising energy prices and inflation. These developments have an impact on companies and their employees, reorganisations become a possibility. But as an entrepreneur, how can you best prepare for them? What mistakes can be avoided? To answer this question, we talked to Esther van der Meulen, Partner and employment law lawyer at Lexence, and Wilco Bontenbal, Partner and business transformation specialist at Quintop. They talk about their experiences with reorganisations, each from their own discipline.
Reorganisations are not new. There have been economic movements for years that make the choice to reorganise necessary. Esther and Wilco notice the changes are small in their subfields: ”Legally, things did change in the formal dismissal route. In the past, for instance, no severance pay was due if the Employee Insurance Agency gave permission to terminate. But a preventive dismissal test has long been in place. What does strike me is that in some sectors, despite staff shortages, restructuring has to take place. That dynamic is special,” Esther said.
Wilco agrees: “There are no major changes, although digital development has brought us a lot in assisting reorganisations. We can now offer personal guidance, even in large reorganisations. By providing good information and more personal follow-up, we ensure a better experience for everyone, both during and after reorganisations. Guidance to work also becomes easier, better and more appropriate as a result.”
Don’ts when reorganising
When reorganising, good preparation is a must. Yet the obvious steps are often forgotten, such as making a good business case and carefully going through the employee participation process. ”I see quite often that the first thought is to let an X number of positions disappear and then later this turns out to be too few or too many. Then, after the reorganisation, it must be scaled up again in no time. That costs a lot of time, energy, and money,” Esther explains. It is also important to go through the employee participation process carefully, especially in large companies. Finally, the works council is not your enemy but your partner, just like vice versa. You will need each other.
Also, according to Wilco, people underestimate how long steps in the preliminary process take, such as recreating, describing, and weighing jobs and fitting them into (HR) systems. In large, but also smaller companies, it is important to devote sufficient time to this. He adds: ”Don’t forget that also the process with trade unions, if a modified or new social plan is to be put in place, can take some time. In short, good time planning based on experience can help.”
When we ask Esther and Wilco what the most common ”mistake” in a reorganisation is, they see a similarity in their areas of expertise. They say that starting a process too late because you put it off as an entrepreneur is common. As a result, you fall behind, which is difficult to adjust. Wilco adds that a common mistake is to think that the (legal) rules don’t apply to you. Then it really is better to prevent misery than to fix it afterwards. That costs a lot of time, money and does not add to your credibility. It also creates risks regarding the employer brand.
Get a grip on change
As an organisation, it is important to keep a grip on a change that is coming. To do this, it is wise to have knowledge and expertise in-house. In this, Esther mentions (labour) legal knowledge, knowledge in negotiations with unions or knowledge of the implementation steps.
Wilco recommends setting up the reorganisation as a project, with an experienced project leader who keeps an eye on progress, overview and monitoring of important (financial) milestones. And because changes in organisational design bring about change in your reorganisation approach, it is also important, according to Wilco, to monitor the data concerning the steps employees need to take during reorganisations: ”The – often confidential – handling of all the steps employees have to do in reorganisations should also be tracked and documented. Setting up support for that in advance is important.”
The challenges in international reorganisations
Carrying out a reorganisation within a country already requires a huge effort, but how do you tackle it when it involves a reorganisation across countries? Reorganisations across countries are more complex because of differences in legislation, but also because of different employee representatives, trade unions and regulations surrounding them. It is therefore important to plan this well and understand the right steps for each country or region. Wilco stresses: ”Our experience here is that while there are opportunities to reorganise across countries, local attention is also necessary. Perhaps the biggest challenge is also to get the cultural differences and communication right.”
Esther adds: ”Global focus on outlines, local focus on details and in between don’t go too much into a European level, because then you get too many lines. Getting the right local advisers in time and working together. One challenge is that redeployment efforts at global organisations can also apply globally. Try to explain that to an American.”
Key lessons for successful reorganisations
Lexence and Quintop help companies go through a reorganisation as successfully as possible. Wilco explains: ”Our HR Consultants often help with the project management of reorganisation, but also with the implementation of the various steps, from making a business case to setting up mobility facilities. And from making job descriptions to change management. HR Consultants ensure that there is a clear line, approach and feasible timeline, with a special focus on the employees going through the reorganisation.”
An honest story and a good business case help enormously in achieving the intended result, Esther says. ‘’If you have to negotiate a social plan with the unions, it is useful to know best practices.”
Finally, we asked them to share their main lesson in their experience with reorganisations. Esther’s lesson is to always have a transparent story: “If you don’t have a transparent story, the Employee Insurance Agency, the work council and/or employees will see through it. If you have a good story, reorganising is not complicated because the Employee Insurance Agency just checks off a list and the severance payments are known in advance.” Wilco concludes with: ”Good planning is key alongside clear communication. A reorganisation can be overseen and managed well, as long as everyone knows where they stand and enough time is given to make a clear plan.”