The term 'restructuring' covers a structural change carried out in a sector, company, and/or establishment level. It can be seen as the response of the organisation to the long term forces of economic development or to political demands in the public sector. Restructuring is a reality for most employees and all employees will most likely experience at least one restructuring event during their career.
It has long been known that employee health and wellbeing suffer as a result of restructuring both for those that are laid off but also for those who get to keep their jobs. A recent review of the literature reveals that poor employee health and wellbeing may even be the result of restructuring without lay-offs.
Job insecurity is one major reason for poor employee health and wellbeing during restructuring. Job insecurity concerns both the fear of losing your job (quantitative job insecurity) but also concerns about the future of one’s job within the company. Employees may worry about what their role is going to be in the future, what responsibilities may they have to take on and who will they work with? This type of job insecurity is also known as qualitative job insecurity.
Other factors that may explain the negative relationship between restructuring and employee health and wellbeing may be more conflicts between employees and between line managers and employees and increased workload. Not knowing what is expected of you in your new role is also an issue during restructuring.
What can organisations do?
It is not all bad news. Some studies show that employee health and wellbeing may be kept stable or even improve after a restructuring event. A large European study in Denmark, Finland, the Netherlands and Poland found that three factors are essential for ensuring employee health and wellbeing during restructuring.
1. Communication is essential
Management and HR should openly communicate what the aims and objectives are of the restructuring. They should also communicate what the process will look like: which changes will take place when and why?
To avoid rumours developing, it can be better to openly admit that not all outcomes are known upfront rather than giving the impression that some information is being withheld.
2. Employee participation in the planning and implementation of the change is essential
Employees are experts in their job and they know what is feasible and which changes can be implemented. Participation also helps ensure buy-in and commitment to the changes that are to be implemented.
3. Support is crucial
Senior management should ensure that decisions are fair and equal and employees should be supported both through the change process but also in their jobs. Jobs may change drastically as a result of restructuring and a job analysis may be required to find out whether employees possess the necessary skills to complete any new tasks associated with the job. Training may be necessary even if Mr Smith has been in the organisation for 30 years.
Written by: Karina Nielsen, Professor of Work and Organizational Psychology University of East Anglia