Restructuring: Mistakes every NZ business owner should avoid

Published 4 October 2024 | 2 min read

As Kiwi businesses face an uncertain economic landscape, driven by rising costs, and evolving consumer needs, restructuring has become more prevalent across industries. Whether you’re a small business in Nelson or a corporate giant in Auckland central, restructuring can present a complex challenge. But it’s important to remember that restructuring doesn’t always mean redundancy.

KPMG restructuring

The reality is that businesses of all sizes are being forced to re-evaluate their structures. Recently, KPMG announced the redundancy of nearly 50 consulting roles due to shifts in client needs and buying behaviours. While KPMG had been evolving its consulting services, the rapid pace of change prompted a move from gradual adjustments to a more transformative approach. This highlights a common issue New Zealand businesses face today — having to adapt faster than expected to market changes.

But even in the midst of these challenges, not all restructures must result in redundancies. Sometimes it’s about reshaping the business for the future, focusing on new priorities like technology and digital transformation.

Value of planning

According to employment law experts, the key to successful restructuring lies in planning and consultation. Rosemary Wooders, a partner at Bell Gully, told HRD that one of the most common mistakes businesses make is not consulting employees before making restructuring decisions. The New Zealand Employment Relations Act mandates consultation before changes that affect employees' roles, and failure to follow this process could lead to legal claims for unjustified dismissal.

The restructuring process must begin with a well-thought-out rationale. If the proposed change involves more than a 20% alteration to someone’s role, it could potentially trigger a redundancy situation. But before jumping to conclusions, employers must fully consider redeployment options and alternative solutions. Clear communication and thorough consultation are crucial steps that can prevent misunderstandings or disputes.

What should we avoid when restructuring?

Here are some crucial mistakes businesses should avoid during the restructuring process:

• Failure to consult: The law requires genuine consultation with affected employees before any decisions are made. Avoid presenting decisions as a done deal without considering feedback.
• Lack of clarity in communication: Affected employees must be given all relevant information about the proposal, including how their role will change. Provide detailed explanations and opportunities for feedback.
• Skipping the redeployment process: Redundancies should be the last resort. Employers must actively look for redeployment options and other alternatives to keep employees within the organisation.
• Ignoring employment agreements: Every step in the process should comply with individual employment agreements or collective agreements, particularly where unions are involved.

How to get restructuring right

Planning and clear communication are critical. By following a structured process, businesses can avoid common pitfalls and maintain trust with their employees during times of change. HR Today's Change Management Process Checklist is a valuable resource for New Zealand managers, helping them to navigate restructuring with transparency, fairness, and compliance.

The restructuring process doesn’t have to be disruptive or overwhelming. By carefully planning each stage, consulting with affected employees, and keeping their well-being in mind, New Zealand businesses can ensure they stay agile while remaining compliant with employment laws.