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How to achieve restructure victory

Two-thirds of companies fail to achieve cost savings or improve profitability after a restructure. We speak to Georg Hirschi of Lee Hecht Harrison and Joanna Price of Adshel about their strategies for a successful adjustment.

Video transcript below:

Donna Sawyer, HC TV
Donna Sawyer:
 A staggering two thirds of companies failed to sustain cost savings or improve profitability after a restructure.  Georg Hirschi of Lee Hecht Harrison says there are a number of common mistakes made during restructures that can cause headaches down the track.

Georg Hirshci, Lee Hecht Harrison
Georg Hirschi:  Quite often there is just inadequate preparation how to handle that restructure and that often results into poor communication, the wrong channels chosen in terms of distributing that communication etc.  Number two, there is lack of very specific training to the group the actually remains in the company.  Quite often it’s technical training and it should really be more focused on the career development of those that remain.  And thirdly and the last point, costs are unfortunately literally not counted in the right way.  There is a focus on the direct cost savings, but there is a lot indirect costs that actually occur in those types of restructures.
Donna Sawyer:  Joanna Price of Adshel says she was recently involved in a restructure.  She says keeping the lines of communication open is critical with any upheaval.
Joanna Price, Adshel
Joanna Price:  Last year we did actually undertake a restructure and HR and me in particular was very relevant to that restructure and convened a lot of the key stakeholder meetings.  I acted as the devil’s advocate,  a trouble shooter.  I ensured as part of that process that communication strategies were involved as part of the restructuring in terms of communicating that, so that we were reducing as much negative impact about that restructure and ensuring that people just got back on with their jobs as quickly as possible.
Donna Sawyer:  Most importantly don’t forget the remaining staff in the wake of a restructure.  Georg Hirschi says it’s these people who are the key to the company’s future success.
Georg Hirschi:  Obviously in a restructure people are affected.  So HR should really play a key role and add commercial value to a business in restructure.  Because the remaining employees are the ones that carry the employer into productivity, so HR has a key role to play.  
Joanna Price:  I think HR practitioners in general need to be seen more than just compliance process and admin driven or where the agony aunt lives.  I think HR practitioners of the future really need to immerse themselves in their businesses.  They need to understand the challenges, the pain points, what the market trends are, so that they can actually have a proactive view of how people will impact on our ability to stay sustainable and relevant in a highly competitive marketplace.  
Donna Sawyer:  This Donna Sawyer reporting for HC TV.

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