Human Factor in Restructuring – Asrar Qureshi’s Blog Post #1073

Human Factor in Restructuring – Asrar Qureshi’s Blog Post #1073

Dear Colleagues! This is Asrar Qureshi’s Blog Post #1073 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to pharmaveterans2017@gmail.com  for publishing your contributions here.

Credit: Antoni Shkraba

Credit: Ron Lach

This post is inspired by real events and an article published in INSEAD Knowledge. Link at the end.

Preamble

We have been in major restructuring process in the corporate I am working with. Being Chief of the organization, I take the responsibility of carrying out the process, its outcomes, and consequences.

There is no doubt that the major affectees are the employees of the organization. In our case, it also involved a significant number of students who stood to lose their opportunity of free education. The human factor had two dimensions, both equally important and interrelated.

In his article "In Layoffs, Focus on the Human Element," Andy J. Yap from INSEAD explores the psychological and organizational impact of layoffs and provides strategies for leaders to manage them with empathy and transparency.

Let us have a look at what he says.

The Importance of Transparent and Proactive Communication

Yap stresses that employees should not be blindsided by layoffs. Leaders should openly communicate business challenges well in advance. Transparency builds trust and allows employees to mentally and professionally prepare for possible changes. Clear, honest, and timely updates on the company’s financial situation and potential restructuring efforts can help employees feel included rather than discarded.

We sent out a detailed communication well in advance, explaining the circumstances, and elaborating factors necessitating restructuring. It also lay ground for what the restructuring would look like. 

We tried to cover anticipated questions in advance in our communication so that the queries may be minimized. However, few questions were raised all the same. 

The Consequences of Poorly Handled Layoffs  

Yap highlights that layoffs, if not managed well, can significantly damage an organization. Negative effects include:  

Low morale: Employees who survive the layoffs may experience survivor’s guilt, stress, and a decline in motivation.  

Erosion of trust in leadership: If layoffs are unexpected and poorly communicated, employees may feel deceived and uncertain about the company’s direction.  

Loss of talent and company culture: Talented employees may leave voluntarily if they perceive instability, leading to knowledge drain and weakened workplace culture.  

Financial setbacks: While layoffs may seem like a cost-cutting measure, mishandling them can lead to productivity losses, rehiring costs, and damage to the company’s reputation.

Handling job losses during restructuring in a humane and ethical manner is crucial for maintaining trust, morale, and long-term organizational stability. Here’s a step-by-step guide on how to approach it effectively.

Plan Thoughtfully & Strategically

Assess Alternatives: Before resorting to layoffs, explore other cost-cutting measures such as reduced workweeks, voluntary buyouts, internal transfers, or upskilling programs.  

Define Criteria Fairly: Use objective, performance-based, and business-driven criteria for selecting employees affected by layoffs to avoid perceptions of bias.  

Timing and Logistics: Plan the timing of layoffs carefully to minimize disruption. Avoid holiday seasons or moments of high stress for employees.  

We took into consideration the Ramadan factor because of its culmination in the festive time of Eid.

Communicate Transparently & Early

Give Employees Time: Where possible, inform employees about potential risks well in advance rather than blindsiding them.  

Be Honest, Yet Empathetic: Acknowledge the organization’s challenges and the necessity of restructuring but also recognize the emotional toll on employees.  

Provide Direct Communication: Deliver the message in person rather than through impersonal emails. The conversation should come from a senior leader preferably.  

Offer Meaningful Support

Fair Severance Packages: Provide competitive severance pay, for as long as the organization can afford. We covered everyone matching the length of service.

Career Transition Services: Where possible, offer resume workshops, job placement assistance, networking support, and retraining programs to help affected employees find new roles.  

Mental Health & Counseling: Where necessary, provide access to Employee Assistance Programs (EAPs) or mental health resources to help employees cope with the emotional impact.  

Treat Departing Employees with Dignity

Personalize the Approach: Avoid mass layoffs via email. Instead, ensure one-on-one meetings where employees can ask questions and receive personalized guidance.  

Recognize Contributions: Express gratitude for their work and highlight their impact on the company to preserve their self-esteem.

Allow a Respectful Exit: Give employees time to say goodbye, return company property without undue pressure, and avoid escorting them out like security risks unless necessary.  

Support Remaining Employees  

Address Survivor’s Guilt: Acknowledge the emotional burden on those who stay and provide reassurance about job stability.  

Clarify Future Direction: Clearly outline the company’s new strategy post-restructuring to restore a sense of purpose.  

Maintain Morale & Engagement: Encourage open conversations, provide opportunities for growth, and involve employees in shaping the company's future.  

Learn & Improve for the Future

Gather Feedback: Conduct exit interviews and anonymous surveys to understand how the process was perceived and what could be improved.  

Strengthen Workforce Planning: Use the lessons learned to build better workforce planning strategies, upskilling programs, and contingency measures to minimize future layoffs.  

By handling job losses with empathy, transparency, and support, companies can preserve trust, protect their employer brand, and foster long-term resilience.

Sum Up

Yap argues that layoffs should be handled with a human-centric approach. Organizations that prioritize transparency, upskilling, and empathy during difficult transitions can maintain employee trust, minimize disruption, and position themselves for long-term success.

Our experience is more or less the same. The heartburn still persists. Situation in Pakistan is different due to cultural differences and also due to the fact that there is a high percentage of unemployment. Losing one’s job hurts seriously because the next job may take a long while to come. Due to economic pressure, people come under extreme stress due to unemployment. We did one things differently though and it was received very positively. We did not pay additional salaries at once; we offered to pay every month like the regular payroll. The intent was to let their lives stay smooth and that they get time to find the next job.

Human considerations are not opposite to professional work; it is part of that. The outcome shall be the same, however, the hassle and the unrest shall be minimized.

Concluded.

Disclaimers: Pictures in these blogs are taken from free resources at Pexels, Pixabay, Unsplash, and Google. Credit is given where available. If a copyright claim is lodged, we shall remove the picture with appropriate regrets.

For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intent to infringe upon anyone’s copyrights. If, however, it happens unintentionally, I offer my sincere regrets. 

Reference:

https://knowledge.insead.edu/leadership-organisations/layoffs-focus-human-element